Capturing Value from High CPM, Low Fill

After publishers start to surpass a certain threshold of traffic, many start to get a lot of inbound requests from verticalized ad networks who are able to offer significantly higher CPMs than their run of site network. It's important to recognize that the CPM isn't the only factor in making a decision to run these tags.

Vertical Networks: An Overview

Vertical Networks came about as a way for demand sources to band together around an industry vertical and gain access to similar inventory sources. The idea here being that buyers wanted some sort of scale in the form of multiple different properties centered around a vertical, but also wanted to reach a somewhat pseudo-targeted audience by virtue of the content on that inventory, without the hassle of entering into direct relationships with those publishers. As the industry has evolved, many vertical networks are rebranding themselves as programmatic exchanges to ensure they are not losing out to RTB demand currently dominating the market. 

Publishers Have Power

In a fairly rare instance where publishers have negotiating power at the table, it's always best to understand the fill rate that a vertical network is able to provide. Generally speaking, fill is going to be low (anywhere from 10-30%). The CPMs may be high, but a low fill will ultimately cost publishers who decide to pass all their traffic to these third party demand sources.

The Optimal Setup

Recognizing that there is a pricing histogram whereby impressions are valued differently along a curve, we can see that these networks should be trafficked so that publishers can capture the high CPMs offered yet monetize the remaining inventory via an exchange. In this vein we recommend publishers to set a fairly aggressive frequency cap to ensure they are able to capture incremental value and ultimately add to their bottom line.