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Ad Networks: A Publisher’s Path to Profits

Ad Networks: A Publisher’s Path to Profits
Stephen Yagielowicz

Successful online advertising requires a balancing act, where advertisers strive to maximize profits by capping ad costs, while publishers seek to maximize profits by raising ad costs. Supply and demand then come into play, where advertisers may not see the number of visitors they require because their ad bids are not competitive — while publishers that price their inventory too high may see lower ad fill rates — in both cases, self-imposed pricing restrictions are limiting volume, and ultimately, profitability.

While much attention is paid to ways that advertisers can reach better audiences, the realities of today’s ad-driven adult ecosystem are also causing publishers to seek better advertisers in order to monetize the free (and premium) content they present to consumers. Let’s take a closer look:

Ad network account managers create a buzz around your site and are constantly working to push your ad spots to the right advertiser with the right offer, which gives more relevance to your users. They are working to open your site up to new geos and boosting your traffic quality which in turn increases the value of your ad zones. -Ada Llorca, ExoClick

The term “publishers” may seem grandiose for those that grew up in an offline world, but in the world of digital media, a publisher includes any website operator, regardless of niche, size or traffic volume. Within the context of this article, a publisher is a site owner with one or more ad slots available for sale — and a desire to make the most money possible from that inventory of page views and visitors.

In its simplest form, this may involve the static placement of in-house ad sales, such as personal deals for “30 days in the top slot,” or rotations that can include the publisher’s own affiliate links and more. This time-consuming process is more often than not relegated today to an ad network that places the top offer selected from numerous advertisers automatically into the publisher’s ad slots.

When working with today’s ad networks, publishers can take steps to optimize the location, lifespan and profitability of their ad zones. For example, A/B split testing can reveal which ad zones are most likely to be clicked — and which ad zone clicks are most likely to result in a sale — two very different actions and values.

Other times, optimization is a matter of policy. For example, a publisher sets a floor price, below which he will not sell an advertisement. By lowering this price, more advertisers will be able to bid on that slot, and this means that there is a higher likelihood of the slot always having paying customers, rather than being filled by “house ads.” It is then a matter of finding the sweet spot so that you’re not giving away your best inventory while ensuring maximum fill rates. This is vital, according to many experts, because 100 percent fill rates tend to be more profitable for publishers than lower ad fills at higher per-ad prices.

Another strategy involves using multiple ad networks, stacking them in order of profitability in much the same way that billing services are cascaded by premium membership sites; where a declined transaction is passed through a chain of billing companies until one is able to successfully process the payment.

“With the introduction of all these new features,” Adamo CEO Judy Shalom told XBIZ, “the ad networks are becoming more and more adept at not only showing the publisher what type of traffic they have but also at selling it for the publishers.

“Working together with your ad networks of choice is always going to be your best bet for getting your website inventory sold as efficiently as possible, over all the segments and verticals on a global scale,” Shalom explained. “In this, the Big Data analytics that your ad network partners will provide you with is invaluable in giving insight into what type of traffic you have to sell and how you can maximize your revenue by sending the right type of traffic to the right audience, giving you the highest revenue.”

One strategy for deploying multiple networks is to give priority to the top-paying network, then to the next in line, until house ads are required to fill the inventory. For example, a small publisher with 10,000 daily ad impressions may receive 100 percent placement with a single network at $1 CPM, thus earning $10 per day. If a second network offers $2 CPM but is only able to provide a 50 percent ad fill rate, then that network could be prioritized to earn $10 per day, with another $5 per day from the remaining 50 percent sold to the network paying $1 CPM. This is a simple example, but the math scales to any traffic level or amount of networks.

Using multiple ad networks also opens the door to discovering profitable advertising partners that might not be working with every available network, boosting the quality of offers presented to your audience.

For smaller operators, one recommended strategy is to use a network that guarantees full fill rates, augmented by one higher paying but lower volume network.

ExoClick’s head of publishing Ada Llorca told XBIZ that those who do direct deals with advertisers have a limited marketplace to chose from while working with a network opens numerous opportunities.

“An ad network has a global market place that you can tap into,” Llorca explained. “Ad network account managers create a buzz around your site and are constantly working to push your ad spots to the right advertiser with the right offer, which gives more relevance to your users. They are working to open your site up to new geos and boosting your traffic quality which in turn increases the value of your ad zones.”

As for how to choose and stack ad networks, writing for ClickZ.com, Chris Crawfurd advised publishers to “focus on the bookends.”

“A great ad stack has one partner targeting your high-end CPM goal at the top and a max fill solution at the bottom. First work to figure out these two partners and then focus on filling in the gaps in between,” Crawfurd explained, adding that 20 is the golden number. “Regardless of how many partners you squeeze into the mix, you want the fill rate for any given zone to stay about 20 percent [because] dipping below this threshold puts you at a higher risk for discrepancies.”

Crawfurd says that it’s important to bolster each partner’s strengths since each exchange will perform better under different circumstances.

“Try to send ad calls to the network that is most likely to fill them. You may find that one partner is strong with international traffic, while another has higher yields for mobile traffic,” Crawfurd revealed. “Beyond performance, there are other factors that are important to the success of a partnership. Make sure you are comfortable with a potential partner’s payment terms, their publisher support, reporting capabilities and so forth.”

ExoClick’s Llorca told XBIZ that potential partners should look for transparency and real-time statistics.

“At ExoClick, publishers have access to all their Big Data [with] free, comprehensive filtering tools so that they can experiment and optimize their ad zones to see which zones are making money, and why?” Llorca said. “Additionally, they can monitor traffic sources and geos so they can quickly adapt their content to grow their localized traffic.”

Once the most profitable partners are in place, further tweaking can focus on issues such as the number of clicks a given ad receives, along with conversions and overall CTR; with top performing creatives then displayed more often. Likewise, sites that may pay better for their ads, but which do not convert as well, may be blocked. Users that do not accept cookies may also be blocked, as they are less measurable and thus less attractive as prospects.

As for specific ways that site owners can maximize profits from ads, Llorca told XBIZ that publishers can begin optimizing their ad zones by placing ads “above the fold.”

“This is the area displayed on the screen before the user begins to scroll down, therefore it is the most impacting area,” Llorca explained. “More specifically for tube sites, ensure that you have ad zones next to your video player, that way when the user is watching the content the banner ad is always displayed.”

Llorca says that also using in-stream video ads allows publishers to double their income for that area.

“The optimum amount of ad zones would be two ads above the fold in a premium position and three ads below the fold, and a popunder,” Llorca advised. “However, never allow more than one popunder.

“Sites that bombard users with popunders could drive a user to install an ad blocker and more importantly, Google will penalize your site, which will affect your SEO,” Llorca added. “Optimization is all about the balance between making money and not being obtrusive.”

Jay from JuicyAds told XBIZ that publishers must understand that more ads do not mean more money.

“Too often we review publisher websites and are bombarded with 5-10 pops which dramatically hurt clickthroughs on display ads. Worse, it drops the CTR and value of all the pops being fired,” Jay delineated. “The visitor has far too much time to close them all before they even load.”

Jay said he sees higher bids and higher quality from websites that embrace a “less is more” mentality, which he describes as “one popunder and minimal advertising.”

“For display ads, the more distraction you have for your visitors, the less they will click each individual item,” Jay said. “There was a study some time ago where shoppers were given a huge amount of choice in a food product, and the end result was that those customers bought less because there were so many choices they couldn’t choose one.

“When provided with only a half-dozen choices, sales went up because they were more easily able to make a decision,” Jay adds. “Don’t clutter your website full of ads and pops because it will have the opposite effect in the long-term.”

Taking the advice of these experts takes some of the guesswork out of site monetization for online publishers: work with several networks to find the best fit and only utilize several ad slots, to provide a better user experience and more revenue per visitor — and then, as is so often said in this business, test, test and then test again, until the optimum approach and partner profile is achieved.

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