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The recession is hitting publishers hard. This is true online and offline as advertisers aren't limiting what gets put on the chopping block.

Many believe that the trackability and accountability will keep online publishers in good stead and despite declining online ad spend, it's easy as an online publisher to look at the woes of the newspaper industry and feel pretty confident about the future.

Ben Kunz, director of strategic planning at media planning agency Mediassociates, wrote an interesting guest piece on BusinessWeek that suggested online publishers may be in more trouble than they think.

His argument: behavioral targeting technology is giving advertisers the ability to reach their target audiences for less and this is squeezing publishers, especially those at the high-end.

It's an interesting argument and he provides an example that he says is based on a real cost reduction experienced by one of his clients:

Say your company sells "Bidgets," a luxury product. Ordinarily you'd run banner ads on FancyOldSite.com, which reaches your target audience of men and women who earn more than $150,000 a year. The ads are expensive—say $60 per thousand impressions—but they reach your ideal audience.

You might instead embed a snippet of code in the banners that run on FancyOldSite.com. This places so-called cookies on the computers of everyone who sees the ad so you can track them when they visit other Web sites. That's where retargeting kicks in. Every time a former FancyOldSite.com reader who saw your ad visits other Web sites, your Bidget banner ads pop up again. The banner ads reappear because the cookie on that computer flags a retargeting "network" of thousands of sites, saying "This desirable reader is back." These new ads are cheap—$3 CPM—but they reach exactly the same audience.

According to Kunz, retargeting gives advertisers a huge opportunity to save money and achieve their goals and it poses a threat to online publishers who don't choose to track their own audience data and sell aggressively against it.

Kunz is right on many counts but as an online publisher myself I think he misses one important point: many times, it's not just about the audience.

While nobody is going to advocate spending $60 on something that you can get for $3, there are often intangibles that make a campaign cost analysis more nuanced.

Example: if I'm a financial services firm, even though I might be able to reach an affluent audience on the cheap through retargeting networks, paying a significantly higher CPM for a campaign on the Wall Street Journal website may make sense. I personally think there's often value in the association that advertisers receive when they advertise with recognized and respected brands and a particular advertiser may receive more value advertising with the WSJ than with a hodgepodge of sites that have a similar audience.

When paying more, there's often the ability to haggle for throw-ins that have real value and the brand-name publishers that usually have higher CPMs are often more experienced when it comes to execution and delivering on higher-impact custom campaigns.

All of these things might factor into advertiser spending decisions and they're not immediately obvious if all you look at is CPM and audience profiles.

What I do think Kunz's article makes clear: online publishers need to know what they have and what they're selling. Whether you're selling your audience, your brand, your multi-platform capabilities, etc., you can't just sit back. Newspapers aren't struggling primarily because their business models died; they're struggling because they got too comfortable cashing checks and they forgot what they were selling.

Photo credit: wili_hybrid via Flickr.

Patricio Robles

Published 7 April, 2009 by Patricio Robles

Patricio Robles is a tech reporter at Econsultancy. Follow him on Twitter.

2392 more posts from this author

Comments (4)

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Neil Vincent

As a media planner I've experienced mixed success with behavioural targeting.  Whilst I do not doubt the importance of this method of targeting I tend to agree that aligning a campaign to well respected destinations can often drive greater value for the advertiser.  Quite often I find the quality of audience is higher and the resulting campaign traffic has a greater rate of conversion compared to behavioural inventory.  Whilst the lower CPM rates associated with behavioural ad inventory compensates for this somewhat, campaign ROI data has shown this is not always enough.

Despite these observations though I remain committed to the concept of behavioural targeting and will continue to incorporate an element of this inventory along side other targeting options.

over 7 years ago

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Ben Kunz

Patricio, thanks, this is a very thoughtful summary and response. I think we are both right. The intent of my column for BW was not to advocate one position as better than another -- there are times when high prices for contextual placement make sense -- but to discuss the overall trend. I think at the aggregate level, price pressures will continue; the laws of supply and demand, well, demand it.

I believe the real solution is for publishers to learn new ways to decommoditize their audiences, which in turn would prevent outside technologies from "peeling off" the readers at a lower cost. Data can be used two ways, and publishers, if smart, will learn how to wield data to help marketers achieve better results by using the insights within their systems.

- What results can marketers expect? (Simple, I know, but try asking any publisher's sales rep today for forecasts on online banner results and you'll get a blank stare.)

- What added-value comes from contextual placement?

- Are there behavioral elements within the publisher's network of sites that can be used to make the advertisement work better?

- Are there other non-competing advertisers the marketer can partner with to retarget similar audiences most responsive within the publisher network?

- Does the publisher have unique information on readers -- say, from surveys or sign-up forms -- that can help build awareness/impressions/responses to the advertising message?

Frankly, I think in the past online publishers resorted too heavily on their own brands: "We're WSJ.com, isn't that enough, here's our high CPM." Those days are gone. It's now about really helping advertisers think creatively to get results from very specific audiences.

Marquee sites can still sell at high rates, but they'll have to earn the rights to do so.

Cheers.

over 7 years ago

Patricio Robles

Patricio Robles, Tech Reporter at Econsultancy

Thank you for your response, Ben.

You make a lot of good points and I agree that there are a lot of valid ways to look at this complicated issue.

I think your point about decommoditization is very important. Far too many publishers commoditize their ad inventory with every action, from not managing inventory well to not tracking audience data and leveraging it to sell and help advertisers build more successful campaigns.

You are right: a brand is a powerful sales tool but it can only go so far, especially in tough times. Of course it's worth pointing out that most of us online publishers aren't the Wall Street Journal and can't rely on that type of brand strength so we're forced to demonstrate value in other ways.

As a side note I think the WSJ is a good example of a big brand that gets it. If I recall correctly its online ad revenue is quite competitive compared to the NYT even though it still has a pay wall. One of the obvious reasons: the pay wall puts a lid on ad inventory growth. With less inventory to move, there's less downward pressure on its pricing. The NYT on the other hand has more inventory to sell, putting downward pressure on its pricing power.

over 7 years ago

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Tony Evans

Sorry, this article would have had a point in 1999 but, ten years later, behavioural targeting is a lot more than just retargeting. Retargeting has been around for years, and to reach relevant customers you first have to run a campaign on, say, FancyOldSite.com (at that $60 CPM) before you can establish your audience – and the number of people you can retarget is limited to the number of impressions (divided by the frequency cap) that you bought in the original campaign. Also bear in mind that with retargeting every ‘new’ impression reaches a user who has already been exposed to your ad a number of times.
 
If you use an ‘ad-tag’ behavioural targeting company, you will pay a lower CPM for a ‘pre-defined’ segment, but there is a more serious consideration to think about. These segments were built using campaign data from similar previous advertisers and are resold to potential competitors of the clients who helped create the segment. For example, a BMW campaign creates the ‘luxury car’ segment which is sold to Mercedes then Audi etc. Often these segments contain users who were added to the segment some time ago and have dropped out of the buying cycle.

With behavioural targeting companies that create audience segments from publisher partners that use ‘page tags’ throughout the site you can buy fresh, pre-defined groups of web users that more closely match your target audience. For broad categories (such as the very imprecise  $150,000+ earners) you could reach a brand new audience , with much more precise targeting (if you wish) in much larger numbers – without spending $60 CPM to find them.

Campaigns run with proper behavioural targeting companies that use page tags are more cost-effective and  provide valuable campaign intelligence. This might put the squeeze on ‘high-end’ publishers, as Kunz says, and they might have to work harder for their money (or lower their CPM), but behavioural targeting helps spread the advertising wealth to publishers who cannot normally command premium CPMs - supporting many thousands of sites that rely on ad revenue to stay afloat.

Yes, I agree that contextual ad placements in a well-known, highly respected brand website can have a positive effect (and boy, do you pay for it!), but you are competing with many other advertisers offering mostly similar products. With behavioural advertising offering ad delivery to your target market out of context, but on reputable sites, your ad really can really stand out – and studies have shown that this has a positive effect on click-through and the final ROI.

Before buying behavioural it’s essential to do your homework so you know how segments are created, how recent the data is, what sort of sites the campaign will appear on and what sort of campaign intelligence is offered. This takes a bit more effort than just running a basic retargeting campaign – but it’s worth it.

over 7 years ago

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