Publisher's Guide to Ad Revenue Optimization


 
 
 
 
 
 
 
 
 
 @ AdTech SF Edition 4/09 The Online Publisher’s Guide to 
 
 Ad Revenue Optimization Includes strategies for medium online publishers to significantly improve ad revenue while protecting your brand 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 Rajeev Goel, Co-Founder & CEO 

 The Online Publisher’s Guide to Ad Revenue Optimization 
 
 Table of Contents About PubMatic Introduction 3 -9 4 5 6 9 11 7 3 Optimization Strategies 4 Tip #1. Diversify Your Ad Networks Tip #2. Implement a Segmentation Strategy Tip #3. Better Monetize International Traffic Tip #4. Monetize Every Impression Tip #5. Sell New Inventory 8 10 Tip #6. Call Your Ad Network Representative Tip #7. Experiment with CPA Tip #8. Re-examine Your Ad Server Options Moving Forward 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 The Online Publisher’s Guide to Ad Revenue Optimization About PubMatic PubMatic provides online publishers with a full service solution to manage and monetize their non-premium ad inventory. PubMatic's real-time ad price prediction technology and dedicated team service drive significantly higher revenues and simplify ad network management for more than 5,500 large and medium publishers. Introduction Up to 80% of online ad space goes unsold from direct sales, so publishers generally turn to ad networks to help sell the inventory. While this helps to some extent, publishers still need new levels of efficiency, control, and transparency to ensure they truly maximize their revenue. The Online Publisher’s Guide to Ad Revenue Optimization provides detailed information on strategies that publishers can implement immediately, and without the help any third party companies, to improve their revenue. If you have any questions about the content of this guide, or are interested in working with PubMatic to increase your online ad revenue, don’t hesitate to contact me directly. Regards, 
 
 Rajeev Goel Co-Founder & CEO PubMatic Rajeev.Goel@pubmatic.com +1-408-480-0998 
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 The Online Publisher’s Guide to Ad Revenue Optimization 
 Optimization Strategies #1. Diversify of Your Ad Networks What: All ad networks are not equal. In fact, most ad networks differ in seemingly subtle ways that are actually quite varied: targeting approaches, geographic focus, vertical focus, mix of advertisers, and ad campaign targets (branding, clicks, conversion) are just a few examples. The result is that different ad networks will determine relevance of ads relative to a publisher’s web page differently. Take CNN as an example. CNN maintains several subsections within one site. One ad network might conduct page-level contextual analysis and determine that a page mentioning news in Hawaii is a page is about travel, and therefore, show a travel ad. Another ad network might conduct site-level demographic or behavioral targeting and determine that the site appeals to moderate to high-income business executives, and show a life insurance ad. A third ad network might be looking at the users that view the site, rather than the site itself, and identify a given user as an in-market auto buyer and show that user a Lexus ad. Benefits: By diversifying your mix of ad networks, you as the publisher, can determine what the most valuable aspect of your audience and content is, and therefore, determine the best mix of ad networks that can monetize your audience. What to do next: Look at the mix of ad networks you are using, and classify them along the lines of behavioral, contextual, and demographic targeting capabilities. Depending on the size of your site, look to get one to three ad networks in each area and identify which targeting mechanism works the best for your site. 
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 The Online Publisher’s Guide to Ad Revenue Optimization #2. Implement a Segmentation Strategy What: Smaller websites that are more targeted in content and are niche-oriented tend to have a higher eCPM than large, broad websites. The reason for this is that these smaller websites generally have a more targeted audience, and therefore, they typically perform better for advertisers than broad websites, and so advertisers are willing to pay a higher rate. So what can you do if you are the owner of a large, broad website like WashingtonPost.com? You can carve your large website into a collection of smaller websites. By making your large website appear like a bunch of small websites, you can get the benefit of large website scale along with higher advertising rates. Doing this is easier than it might seem. For example, if you have a website that covers a variety of subjects, you may have a navigation bar that includes News, Politics, Opinions, Local, Sports, Arts & Living, and a City Guide. Instead of creating one 728 X 90 ad tag to go across the top of every page on the site, create six of them instead – one for each navigation area on the website. Once that has been done ad networks can better target your website’s ad inventory. Callaway can show ads only in the Sports section of the website while American Express can show ads only in the Arts & Living section of the website. You can extend this strategy even further by carving up each of the six areas into smaller areas (Men’s sports vs. Women’s sports, for example). Benefits: Smaller websites enjoy ad rates that are up to three times as high as large websites. You can significantly raise your monetization rates if you can present a more targeted advertising opportunity to the advertiser. And you can do this by limiting the scope of a single ad tag to the most relevant areas possible. What to do next: Check out the navigational areas of your website, and use that as the basis for carving up your large, broad site into a collection of smaller sites. Create one set of ad tags for each smaller area of your site, and use those ad tags with each of your ad networks to get more targeted advertising. 
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 The Online Publisher’s Guide to Ad Revenue Optimization #3. Better Monetize International Traffic What: For a typical U.S. website, 30-40% of the website’s traffic comes from outside of the U.S. We all know the Internet is global, but on top of that, English is often times the language of the Internet in foreign countries. For example, the vast majority of Internet users in India are visiting English language websites, which means your content and services on your U.S. based website may be readily consumed by an Internet user in India. The same is true in many parts of Southeast Asia, Africa, and parts of Europe. On top of this strong foreign contingent on many U.S. websites, the weak U.S. economy and dollar can lead to higher monetization rates outside of the U.S. The slowdown in the U.S. economy has lead to a drop in ad rates in the U.S. and the weakness of the U.S. dollar makes it relatively cheaper for foreign advertisers to buy U.S. ad inventory. Benefits: As a result of the significant foreign readership of a typical U.S. website, the drop in U.S. ad rates, and the weak US dollar, monetization rates for the 30-40% of foreign traffic on a U.S. website can be higher than that of U.S. traffic, resulting in up to half of a website’s revenues based on foreign visitors. This foreign traffic is often overlooked as a source of revenue for U.S. websites. If you’re not making a significant stream of revenue from your foreign visitors, it is time to re-evaluate your monetization strategy. What to do next: Check your server logs or Google Analytics reports to identify your top 5-7 geographies outside of the U.S. You will likely be surprised by the amount of foreign traffic. Then determine if your current ad networks can monetize inventory in these geographies. You need an ad network that can reach advertisers in these foreign countries. A U.S. ad network will often default (show blank or empty ads) to visitors from foreign countries, and you typically have no way to know this because you’re sitting in the U.S. and won’t see the default ads! Check if your ad networks have a sales office in the foreign country. If not, do a bit of research to find an appropriate ad network in that country and start working with them right away. 
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 The Online Publisher’s Guide to Ad Revenue Optimization #4. Monetize Every Impression What: Nothing frustrates a publisher more than a default (empty or blank) ad. Defaults occur when an ad network does not have an ad to show to a user on your site. Website publishers leave an estimated $1 billion on the table annually as a result of default ads. There are two main problems that cause this: • Problem 1: Not having an ad to show. A network runs out of ads for your site, they have reached a frequency cap, or they don’t have ads for the geography of the user. This means you get a $0.00 eCPM. • Problem 2: When an ad network does default. That means they are not reselling that impression to the highest paying ad network. This problem is just as bad; publishers often setup static daisy chains of ad networks based on historical pricing data in case one ad network in the chain defaults. With a static chain, there is no way to ensure that the highest paying ad network will fill the impression. How big of a problem is this? In a study conducted by PubMatic, we found that on average ad networks default 56% of the time, and can default as much as 87% of the time. That’s over half of a publisher’s ad inventory! This is an important one to get right. The solution is a dynamic marketplace in which default ad impressions are collected and then routed to the highest paying ad network. Benefits: A solution that both eliminates defaults and ensures that the impression is sold to the highest possible ad buyer can add 30-50% to a publisher’s revenue base. The key to the solution is detecting when a default happens, then re-selling that ad impression to ensure that the sale is dynamic, and not through a pre-determined or static daisy chain of ad networks. What to do next: See how often your ad networks are defaulting. If it is more than 10% of the time, consider a dynamic default optimization solution. The only known solution is one that PubMatic provides. To learn more, read our white paper on dynamic default optimization, available for download on our homepage (PubMatic.com). 
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 The Online Publisher’s Guide to Ad Revenue Optimization #5 Sell New Inventory What: Consider selling new ad units on your website that can be incremental to your existing ad revenues. There are numerous ad units that you may not already be selling, such as page takeovers, in text ads, or pop-ups. Of course, you don't want to annoy your user base but at the same time most users realize that your wonderful content is paid for via advertising. As long as you stick to ad units that your users have seen before, the annoyance factor can be minimized. Benefits: New ad units can lead to entirely new revenue streams. For example, in text ads can pay $1 CPMs and up, as can page takeovers. This is new revenue that is almost entirely new to your website. Moreover, you might find that these new ad units are so beneficial that you can remove some of your existing ad units. Best of all, trying out these new ad units won't cost you any money as you can leave your existing ad units in place. What to do next: Take some notes for the next week as you surf around the Web. Write down any new ad units you see that you aren't currently using on your website. For example, I saw a page takeover on the Wall Street Journal's website for the first time last week (courtesy of new owner Rupert Murdoch). Once you've got a short list, find ad networks that provide these new ad units (your existing ad network partners might provide some of these) and get them up and running. And don't try them all out at once - rotate them through one at a time, and see what performs the best for you. Be open with your readers and let them know that you're testing new ad options to bring them more of the content they love, and they will probably help you in the process. 
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 The Online Publisher’s Guide to Ad Revenue Optimization #6 Call Your Ad Network Representative What: Despite all of the automation in the online ad industry, there is still a lot of manual work that is done to sell ads on a website. Media buyers need to know what inventory they can secure from publishers, what the characteristics of that inventory are, in terms of content and audience, and how long that inventory will be available to them. By calling your ad network representative, you can better understand how they target ads to your site and you can better inform them about what is unique about your content and audience. When a new ad campaign comes in, you and your site will be on the top of their mind in terms of where to run that ad campaign. Benefits: By being on the top of an ad network representative’s list of sites to work with, you can help ensure that you get first crack at new ad campaigns. This means more advertising dollars can flow to your website, and you will see higher monetization rates. What to do next: Identify representative at each of the ad networks you’re working with. Call them up and spend 15 minutes getting to know them and how they work, then explain some of the differentiating aspects of your website content and audience. Set a regular check-in period – once per month for example – and keep in touch. 
 
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 The Online Publisher’s Guide to Ad Revenue Optimization #7 Experiment with CPA What: CPA (cost per action) offers can sometimes outperform traditional ad network advertising. CPA offers work like this: you select a relevant offer to appear on your website, such as a credit card offer, cell phone offer, or similar; if a user clicks on the offer and fills out a qualification form or application, you get paid a fee that can be anywhere from a few dollars to hundreds of dollars, depending on the value of the offer. Advertisers like CPA offers because they transfer risk from them to you – if the ser doesn’t fill out the form, the advertiser doesn’t pay for the ad. Benefits: Depending on your site and audience, CPA offers can often times outperform regular advertising. If you are seeing low monetization rates (10, 20, or 30 cent eCPMs), then you may want to consider adding some CPA offers to the mix on your website. The key is finding relevant offers that will be attractive to your audience and will pay you a significant amount each time a user completes the required action. What to do next: Identify the lowest paying ad spots on your website. Then find some appropriate offers. This might take a bit of research but there are affiliate networks out there like Commission Junction that can provide you with a broad array of offers in one place. Put the offers on your website, be open to experimentation, and see if you can raise your monetization rate. 
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 The Online Publisher’s Guide to Ad Revenue Optimization #8 Re-examine Your Ad Server Options What: Many publishers have an ad server that they pay for to help them manage creative, ad campaigns, flights, and even ad networks. 3rd party companies typically host these ad servers, so website owners do not need to pay for the infrastructure themselves. The cost of ad serving has come down significantly in the last 10 years. The marginal ad serving cost is estimated at a roughly 0.5 cent eCPM, down from 10 cents 10 years ago. The decrease in ad serving cost is being driven by lower bandwidth, server, and software costs for ad serving providers. The cost of virtually every component of computing infrastructure has dropped, and therefore, so has the cost for service providers. Benefits: While the cost of providing ad serving has dropped, uninformed publishers continue to pay the same rates for ad serving that they paid several years back. As the cost of ad serving has come down, you should consider re-negotiating your ad serving contract annually, and ensure that some, if not most, of those savings are accrued to you. What to do next: Check your contract to see when you last negotiated your rate. You likely do not want to switch service providers, as this can be disruptive, but check with other publishers who have recently switched to your ad serving provider. Get a sense for the market rate, and then have an open discussion with your service provider. You may be able to save a few cents on your eCPM. 
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 The Online Publisher’s Guide to Ad Revenue Optimization Moving Forward Never before have website publishers like you had such an accessible opportunity to improve the performance of your advertising; ad serving costs are down and the explosion of ad networks has created an opportunity to get highest possible price for your inventory. Yet, even though there are some things that your company can do easily, such as implementing the strategies listed above, some of these new opportunities that can increase ad revenue can also create a lot of extra, and sometimes complex, work for your company. PubMatic is already working with over 5,500 online publishers to help them increase their revenue by making every impression count, let us know if we can help you too. Thank you for reading; this is an abridged version specifically edited for AdSpace @ AdTech SF, April, 2009. Regards, Rajeev Goel Co-Founder & CEO Rajeev.Goel@PubMatic.com +1-408-480-0998 
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