As the economy wobbles, advertisers and publishers at the top end of the market go more and more direct
Every downturn, like clockwork, publishers try to remind marketers why they should buy their ads directly from them — or at least as directly as possible. It’s a pitch that goes something like this: if ad dollars are shrinking for marketer x then why not spend more of it with us? At least you know what you’re buying this way.
This year is no different — except for one thing: the pitch is less romanticized, that is to say less predicated on why advertisers should support journalism, more on the upside for their businesses.
That seems especially true in programmatic, where publishers appear to be having success pulling more dollars into the deals they have direct control over. In the first half of the year, private marketplaces and programmatic guaranteed accounted for 35% of the total money spent globally on programmatic (including in the open exchange, according to Ebiquity. The year before that percentage was 31%. As ever, demand drives prices. The cost per thousand impressions in these curated deals was up 240% in the first half of the year compared to those prices in the open exchange. The year before that increase was 188%
“There’s a growing recognition among some marketers that it’s better to buy off premium publishers than just from the open web,” said Nick Waters, CEO of media management firm Ebiquity. Or rather, these publishers, armed with first-party data, seem more able to put their best foot forward in pursuit of ad dollars, he continued.
The anecdotal evidence from publishers backs this up. Commercial execs from The Athletic and Minute Media are going after ad dollars directly, not via independent ad tech vendors. They wouldn’t be making those moves if they thought marketers weren’t interested. The same goes for publisher alliances. And investments from marketers are growing. In some cases, they even seem to be taking what dollars they would’ve spent with Google et al to do it.
“The size of budgets we’re seeing lined up for our business now compared to two years ago are materially different — they’re proper platform budgets,” said Craig Tuck, chief revenue officer at Ozone Project, a U.K.-based consortium that includes the Guardian and Stylist. “You can never really prove it but the narrative we’re being told by marketers is that some of those larger budgets we’re seeing flow into our business would have normally been spent on the platforms or with ad tech vendors.”
To be fair, these sort of gains are to be expected. Whenever markets are thrown into disarray, there’s usually a flight to quality and scale — the two things premium publishers pride themselves on. That puts a premium on the collective reach (or audiences) these alliances can offer.
“We’ve been seeing more effort around responsible media buying with trusted publishers,” said a spokesperson for Trustx, a digital advertising alliance that sells inventory belonging to Digital Content Next members. “Trustx has had very strong growth this year and we’ve heard from DCN that direct deals with premium publishers are way up as well.”
Whatever this shift is, don’t call it transformational. It will take more than some good fortune to reverse all that ails the publisher ads business. The truth is these publishers are the exceptions, not the norm. They’re able to continue to articulate to marketers why they’re “premium” investments at a time when many publishers can’t. But that’s only going to get harder now that the era of scale, volume traffic as the core business model for journalism, has passed.
Until then, these publishers are focused on trying to make commercial hay out of the fact that ad dollars are being redistributed. The Athletic’s decision to sell ads through direct deals with advertisers rather than through programmatic deals done on the open web is a case in point.
“The reason why the upper tier marketers get out of their programmatic routines to work with us is because of our value and differentiation as a consumer product,” said Sebastian Tomich, chief commercial officer of The Athletic.
Granted, these dollars are a small part of the market, he continued. But they’re also valuable, and more importantly attainable for the premium sports publisher. After all, there are few places marketers can go to reach hundreds of thousands of sports fans who are willing to pay for long-form content. Well, that’s the gamble anyway.
“Currently, we are seeing more insertion orders sales (with guaranteed impressions, pre-rolls and products),” said Thomas Lue Lytzen, director of sales and ad tech at one of Denmark’s biggest news publishers Ekstra Bladet. “Programmatic deals are fairly stable, agency marketplaces (like Omnicom Zero and MSupply) are lagging a bit behind. “Actually, we see a bit more open market these days — some agencies pursue a strategy where they both buy via deals/agency marketplace and open market.”
Which is to say that marketers — at least the ones that can afford to buy premium inventory — don’t automatically cut advertising budgets when the economy gets tough. They also rationalize where those dollars go — i.e. wherever they can get safer, contextually relevant and better curated impressions. History proves that time and again. If anything, this crisis creates an opportunity for a handful of publishers, perhaps even an incentive, to evolve and experiment with advertising, in anticipation of more ad dollars shaking out.
The definition of “direct deals” is unavoidably arbitrary and, invariably means different things to different publishers. There aren’t many in as gilded positions as The Athletic that can afford to cut out the ad tech middle men entirely. Lue Lytzen’s rundown on the prospects of his business made that abundantly clear.
Sometimes, a direct (ish) deal just means fewer hands in the cookie jar. Indeed, there are many premium publishers who still rely on ad tech vendors to make these deals happen — just fewer of them. These are the vendors that are having success ‘convincing’ agencies and advertisers that inventory creation is a job better handled by exchanges. That’s part of a broader effort by exchanges to move inventory curation away from the demand-side platforms, or the ad technologies that actually buy the impressions on behalf of marketers.
“We continue to see an increased interest in deals from both sides of the ecosystem, and there’s been a marked ramp up in deals particularly from media owners,” said Jessica Breslav, chief customer officer at supply-side platform Index Exchange. These “deals are valuable because they allow buyers to leverage their purchasing power to negotiate price and / or priority while providing the ability to target audiences based on the criteria most relevant to the marketer, ” she said.
“Conversely, they let media owners maximize the value of the inventory through agreements with strategic buyers, providing the inventory, content, and targeting the buyer requires.”
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