News Corp's drawbridge mentality locks in value, but there's another way
News Corp's drawbridge mentality locks in value, but there's another way
A view from Guy Cookson

News Corp's drawbridge mentality locks in value, but there's another way

News Corp's move to eliminate third party ad networks is understandable, but other publishers can extract more value by simply reducing the number of ads that run on their sites, says Guy Cookson, co-founder of native ad provider Respond.

Given the well-publicised difficulties digital publishers are having monetising their publications, it didn't raise too many eyebrows in the industry when News Corp announced last month that they were cutting ties with third party ad networks and creating their own ad exchange.

They'd been planning the move for a while, the announcement coming roughly a year after News Corp had implemented a test-run private exchange at the Wall St. Journal, a concept they've now extended to all their titles. It's a bold move aimed at combating dwindling ad revenue – something which is afflicting digital publishers of all sizes, not just the behemoths like News Corp.

The status quo of online advertising is hurting publishers’ bottom lines. Publishers need to adapt their current ad revenue strategies, and recognise that some of their attempts to boost ad revenue are actually doing more harm than good.

Many publishers have attempted to increase ad revenue by giving over more space in their digital publications for ads. Yet this increase in the quantity of digital ad inventory available has led to a growing supply and so prices have continued to tumble. This saturation of online ad space means that publishers are struggling to get good value for their ad inventory.

The increase in inventory for sale has been fuelled in large part by publishers’ partnerships with third party ad networks, which offer publishers low-risk, efficient processes to sell remnant inventory. Publishers have become evermore dependent on third party ad networks in their efforts to monetise their content.

Yet an over-reliance on third party ad networks, a product of focussing on the quantity not quality of ads, can lead to publishers overlooking the value of their own brand and the unique proposition their publication can present to advertisers.

Publishers develop content for their media titles which is intended to be enjoyed by specific demographics. Their loyal readers who return to the site to consume the quality content on offer develop an affinity with the publication’s brand. Being able to reach an engaged, targeted readership is an attractive prospect for brands and advertisers, and publishers need to develop ad strategies which reflect the value of such a proposition.  

Whilst News Corp’s approach of working to boost revenue by eliminating third party ad networks entirely is an extreme response to industry-wide concerns, publishers must nonetheless recognise that such a drawbridge mentality to advertising has advantages – namely that it ensures publishers have a more direct role in the sales and placement of advertising on their sites, enabling them to take greater control over their main source of revenue, and to maximise the value of the proposition they can offer advertisers.

Rather then shutting out ad networks, another approach is for publishers to simply reduce the number of ads that run on their sites. Publishers who run fewer ads create a better user experience and a more premium feel to their sites. The scarcity of inventory on each page also enables publishers to charge advertisers more, as the limited supply increases demand from brands who wish to reach a publication’s audience, putting publishers in a far stronger negotiating position.

Publishers wishing to charge a premium need to go further than decreasing the quantity of the ads they run on their sites, they must also increase the quality of their ad offering. In short, they need to sell ad placements that are worth buying.

Firstly, the value of reaching a particular media title’s audience must be asserted to advertisers if they are to be persuaded to pay more for the ad space. Then publishers need to ensure they provide marketers with a high quality environment in which brands can interact with these consumers.

One way publishers can achieve this is by deploying ad formats that are more native to their media titles’ form and function. Instead of running ads which rely on distracting or interrupting the consumer’s content consumption, publishers can deploy formats which match the look and feel of the quality content the consumer came to the site to enjoy.

Ads which are consistent with the media title’s brand avoid snapping consumers out of the focussed mindset they’re in when consuming content, enabling advertisers to leverage the trust consumers have in the media title.

The main thrust of News Corp’s strategy is that they want advertisers to have a greater sense of their media titles’ value. By developing an over-reliance on third party ad networks, publishers are often neglecting the unique ad placements they can offer advertisers through their direct sales teams.

It’s a far stronger position to negotiate from if publishers are able to offer advertisers bespoke opportunities within their editorial which can only be bought directly from the publication. Sales houses and ad networks are effective at selling remnant inventory in standard ad formats to advertisers.

However, when something becomes so common place, it loses its value. This is the crux of the problem – publishers are failing to leverage their differences, and the differences of their audiences, to advertisers. Banning ad networks is simply not an option for the vast majority of digital publishers.

Like News Corp, other publishers need to assert their worth, and leverage their publications as unique ad opportunities to brands and marketers. They are likely to continue to see disappointing levels of ad revenue if they don’t.

Guy Cookson is co-founder of native ad provider Respond