A Publisher’s Perspective: Will Buyers Pay More?

“The Sell Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Erik Requidan, vice president of programmatic strategy at Intermarkets.

Advertisers have demanded more of publishers in recent years, including for more inventory, more viewable inventory, a broader range of accepted formats and better targeting options.

None of these demands are inexpensive or easily met. But publishers, eager to maintain and grow revenue, have overwhelmingly complied. Over the last few years, they’ve invested in development, page layout changes, overserving of inventory, ad-serving fees and third-party vendors to improve viewability.

Yet some buyers who demanded these improvements seem unwilling to pay more for highly viewable inventory. This makes it even more critical that, as more money pours into digital from other media, publishers create value in order to be paid more.

Publishers and advertisers should be partners, yet the relationship seems to favor the advertiser. While some developments may appear to favor publishers, such as Ads.txt, header bidding and first-price auctions, many were executed to promote fairness and give publishers the means to charge more for better inventory. Prior to these advancements, publishers did not greatly vary CPMs across their inventory.

The IAB’s Ads.txt initiative, for example, was created not to help publishers make more money but to improve transparency and reduce domain spoofing and unauthorized reselling of inventory. It’s more of a quality initiative and is great for buyers.

Header bidding created fair auctions for premium inventory, which compelled buyers to pay more for quality placements where they had previously been paying pennies. Publishers, again, would consider this fair. And first-price auctions help buyers shorten old bid patterns – which, incidentally, they don’t have to buy – and award impressions to the highest bidder.

Publishers have invested heavily in improving viewability, yet it has been difficult to recoup those investments. Adding to the challenge are the confusing and often controversial discussions of viewability’s value as a metric. A few years ago, there was an assumption that once the industry sorted out its “viewability problem,” brand dollars would further flood into digital. That hasn’t been the case, partly because it’s difficult to measure viewability’s impact on performance and a fairly easy metric to game. Nonetheless, publishers have been striving to get viewability rates up – as far beyond 50% as possible. That collective effort has sadly shot everyone in the foot, because with higher viewability across the board, it’s even harder for publishers to ask for higher CPMs.

Ads generally pay the bills for publishers, fund good journalism and provide premium content. The investments in the advertising improvements were expected to yield premium pricing. What can publishers do to earn back their investment in a better, more advertiser-friendly infrastructure? There are some publishers – newer players mostly – that are just happy to keep their advertisers satisfied and the income flowing. Others are less complacent, questioning why highly viewable ads aren’t worth more than less viewable ads and trying to achieve fair market value for the inventory they offer.

It’s a conundrum the industry will have to sort out. As CPMs begin to level off in the digital space – and get even pricier in the mobile space – advertisers are going to have to come to terms with the idea of getting what they pay for. While some recognize the cost that publishers must incur to deliver high-performing ads, still others seek the lowest possible CPM for their campaigns.

Progressive agencies and marketers understand that programmatic isn’t cheap. They also know that the supply isn’t unlimited and have expected that prices would increase.

Buying media is not a cost-cutting exercise. There are other bloated areas that can be reduced, such as multiple, redundant data-signaling, along with heavy creatives and ecosystem tech-fee inefficiencies. For their part, publishers can create more demand for their inventory and help teach buying partners that, similar to everything else in life, you get what you pay for.

Follow Erik Requidan (@Requidan), Intermarkets (@intermarkets) and AdExchanger (@adexchanger) on Twitter.

This post was syndicated from Ad Exchanger.