Some quick comments on this morning’s Ad Age article on CBS stepping away from networks. The “publishers vs. networks” issue has ebbed and flowed pretty consistently since I started in this business at Yahoo! in 2002. It seems to ebb when revenue is scarce and flow when demand picks back up, with clear evidence of both trend and seasonality. There is obviously some rationality to this pattern, but I have always thought that the “turn ‘em on, turn ‘em off” approach is a blunt instrument that doesn’t serve publishers, particularly in the long term.
For example, in this article, CBS draws a distinction between the third party networks they are turning off and agency-owned networks (e.g., Vivaki) with whom they will continue to do business. As Michael Zimbalist of NY Times points out in another recent article, from a publisher perspective these agency-owned entities have a lot in common with third party networks. So it’s unclear how leaving them “on” makes sense if the best solution for third party networks is “off”.
Apart from this inconsistency, two other big issues with the on/off approach are lack of resolution and poor responsiveness to dynamic market conditions. While networks overall may monetize at a lower rate than direct sales efforts, certain networks will be more or less competitive for certain inventory (resolution) and at different times (dynamics). RTB was designed to address these two “hard coding” issues (amongst others), but neither AdX 2.0 nor Right Media are close to ready to be relied upon as sole indirect demand channels. Internal agency network efforts are still nascent as well. The bottom line is that vastly more demand still flows through third party networks than through of any of these channels.
So rather than bowing out of a significant majority of the quickly evolving ad ecosystem, I think the right publisher solution is a framework that coordinates direct and indirect sales efforts to create the competition for inventory that drives maximum revenue for the publisher. Based on my long experience at Yahoo!, I laid out the broad strokes of such a framework in an article for MediaPost earlier this year. Publishers that learn fastest and best how to apply such a framework in their particular circumstances will achieve levels of monetization that increasingly distinguish them from their more isolationist peers.
None of us is as smart as all of us; the key to staying on the cutting edge of monetization is coordinating the best efforts of both direct and indirect channels on a dynamic basis. Today and for the foreseeable future, third party ad networks are an important part of that picture.
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