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. 

Competition & DFP SB's Dynamic Allocation

Many publishers find themselves at a unique point where it makes financial sense to invest in an ad server in order to bring in new sources of demand that compete with each other. For these publishers, a secure and easy to use ad server will help them grow their ad operations and enable them to source new streams of revenue.

This post will cover DoubleClick for Publisher's dynamic allocation feature, which allows publishers to set different demand sources to compete with Google's own AdSense ad network.

Competition is a publisher's best friend. Inherent to the dynamic allocation feature is the notion that competition will yield more buyers who will bid higher for inventory thus driving up revenues for a publisher. This concept is so critical that many publishers have seen double digit increases in their revenue simply because of more non-guaranteed competition.

A few things to note:
1. Make sure you have a valid AdSense account associated with your DFP account.
2. When trafficking new demand sources, be it other ad networks, etc., always traffic these demand sources at a Price Priority and ensure the right CPM is being used within DFP. This will allow DFP to accurately price impressions within the auction, ensuring you as the publisher will win out over the long run.
3. Check to make sure that dynamic allocation is enabled for each new ad unit. This will ensure you have some demand to fill even if there are no other sources of demand in the ad server.

The goal here is and always will be to drive more revenue to publishers in a smart and methodical way. In another post, we will explore direct sales and specifically the concept of direct non-guaranteed ad sales, thereby allowing you to maximize the value of your remnant inventory while also commanding higher premium CPMs.

Know Your Audience

It goes without saying that in any industry or field, knowing your audience is crucial. Whether you're a speaker about to give a presentation or a company about to enter a new market, understanding the people who will be consuming and using your product/service/good will ensure that your efforts are not in vain.

In this vein, publishers need to start focusing on understanding their own audience in order to take advantage of the growing opportunity to attract buyers who want to know this information. Online publishers are starting to see their bottom lines get hammered as advertisers look towards audience targeting and buying to guide their buying decisions, rather than traffic volume and pageviews. In this increasingly competitive world, publishers who don't know their audience are at a total disadvantage, as they are unable to service these increasingly sophisticated (and higher paying) online advertisers.

Comscore by Cirino, Zheng [Paperback] (Google Affiliate Ad)

Why is it important for publishers to know their audience? Simply put, knowing your audience allows you to offer targeted offerings to advertisers, which in turn allows you to command higher CPMs when offering deals to buyers. In the increasingly data-driven and ROI-focused world of online advertising, publishers need to make sure they are servicing their advertising clients by offering demographics and (hopefully) psychographics on their user base and audience.

Luckily for publishers, there are a number of ways to approach this unique problem. Many data companies exist to anonymously track and monitor audiences, providing publishers with the data they need to command higher CPMs in any direct deal negotiations. Companies that publishers should look for include Quantcast, comScore and eXelate. For each of these companies, a simple bit of code is dropped on the publishers website which then sends back information via the code or "pixel" to the companies, providing the publisher with valuable information on their audience and demographics. This data, in turn, can then be used to make informed decisions on where to focus outreach efforts to buyers, ensuring that any sales efforts taken forth will thus be put to good use.

Know your audience, and command a higher CPM. It's that simple.