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There are plenty of reasons why newspaper and magazine publishers are seeing their advertising revenue decline, but one major sticking point for them is the existence of ad networks. Publishers remain convinced that sending their unsold inventory to third parties to sell online is pushing the general value of their online ads down. There may be some truth to this.
But until publishers figure out how to sell all of their inventory in-house, networks will continue to serve a purpose — and irritate media moguls.
This month The Online Publishers Association (OPA) put out a study (which I wrote about here) that tried again to discount the value of ad networks, saying that ads sold through ad brokers are significantly less effective than those sold directly through publishers.
And today, Jim Spanfeller, the outgoing CEO of Forbes.com (and treasurer of OPA), took to PaidContent in attempts to banish the notion of remnant advertising from the lexicon.
Should that happen? Maybe. But not for the reasons he thinks.
According to Spanfeller, online and offline advertising is more similar than different.
He has a point that the lack of scarcity in advertising is not new to the Internet. Magazines can always print more ads. The only place in traditional media where the amount of advertising is absolutely finite is in programmed television slots. However, his argument that magazine and online ads are the same when it comes to leftover inventory falls flat. He writes:
"Countless research has shown that almost all positions in magazines and newspapers have similar impact with readers. Print publishers have aggressively argued this for years—for the most part, successfully."
Onilne it's a different story. Readers don't flip through a website they way they page through a magazine. Says Spanfeller:
"On the web, ads generally perform the same regardless of when or where they are viewed. Sure, some inventory is better than others, but that is due mostly to the audience it attracts and the environment it provides (impressions in email applications for teenagers, for example, are not as valuable as contextual ads in high-value editorial products viewed by affluent adults)."
But here's another thing that's not as valuable online: unsold advertising. Ads on different pages within a website can have widely different values. And even sites with premium ad rates can have trouble selling some of their inventory on low traffick pages.
Spanfeller would rather have publishers eat the cost of unsold advertising than get the profits generated for them through ad networks:
"At the end of the day, the inventory that is now getting sold as remnant, mostly through horizontal ad networks, is generating so little revenue that it is inconsequential to the bottom line of the business."
But the entire reason that publishers send excess inventory to networks and third parties is because their sales force cannot sell it in house. If publishers fixed that problem, there would be no need to complain about networks. Because networks would cease being useful to them.
Spanfeller's semantic problem has some weight. He writes:
"A big part of the problem is this notion of “remnant” ad units. Remnant, as most folks know, has been around for a long time in analogue media. Broadly, it is the idea that certain inventory, because of position or proximity to extinction, is more or less valuable then other units."
Getting rid of the notion of remnant advertising is not altogether a bad thing. Unsold inventory isn't neccessarily worse than what has been sold. It is just as yet unmonetized. If the term is misleading, we can do away with it. But that won't help online publishers. Until they figure out how to sell all of their inventory, third party sellers are going to remain a part of their business.