Publishing’s Privileged Class

There’s a magical land in digital publishing where ads sell out, ad networks don’t exist, and advertisers clamor to close deals at high CPMs in an upfront process. Welcome to the digital world’s Shangri-La: car comparison sites.

These sites often strong-arm advertisers into paying higher rates because their audience has exhibited a clear buying signal — and for a high-ticket item. Manufacturers have to play hard ball with car-comparison sites or risk losing a customer at the very point the buyer is ready to purchase.

According to industry sources, RPMs can be as high as $300 with eye-popping $100 CPMs in some cases. These fat-cat publishers have flipped the script on advertisers, pretty much setting a price and presenting it as a take-it-or-leave-it proposition.

“When you provide content and services that help an audience make a decision on purchasing, you’re always going to be able to generate a premium based on that service you provide,” said Dave Marsey, group media director at Digitas.

The open question is whether the good times can continue for this class of pampered publisher that doesn’t so much create content but aggregate it. These sites are exceptionally powerful with search because people looking to buy cars know what they’re looking for.

“We have an engaged audience,” said Chris Sanchez, director of advertising products for Kelley Blue Book. “Meaning beyond clicking on ads, it’s being able to convert on the back end for advertisers and the various measures: submitting leads, sign ups, whatever behavior advertisers look for.”

This means that ad networks create profiles of people who kind of look like automotive shoppers, but can’t say for certain if users are in market to purchase. Just because someone read some stories about cars doesn’t mean that person is in the market to buy one. But you can be pretty sure that person is after comparing models on a car-comparison site. However, since car-comparison sites collect the data themselves, they’re able to sell to advertisers wanting to reach people ready to buy, not just thinking about buying. This can, and often does, lead to Don Corleone-type tactics. Car-comparison sites, because of this data, make offers advertisers can’t refuse.

Advertisers pony up cash to place their brand’s ad next to the user researching/looking at their brand on the site, otherwise they face conquesting, which is when the car-comparison site shows a competitor’s brand instead.

“We do know [conquesting] exists, but our approach is definitely not to come off that way and not have that type of angle,” said Sanchez. “We try to demonstrate the value of our site of why you need to be advertising on make/model pages, etc., why you need to make sure you’re shopping for brand. At the end of the day, we recognize that it comes down to performance.”

There is an extreme, Mitch Golub, president of cars.com cautioned. He says some sites have conquesting on every page, and clearly that is not a good philosophy to have as a publisher if you want to build quality relationships with advertisers.

“If you go to Edmunds.com, Edmunds pushes to the edge on conquesting,” he said. “If they’re a hawk, we’re more of a dove.”

Car-comparison sites also differ from other publishers in that not only do they have upfronts, but they also sell out. Both Cars.com and KBB.com said a large part of this has to do with their specified sales forces. But there’s also a chess match happening. Over the last couple of years, buyers noticed that if they don’t play in the video up-front, they run the risk of being locked out of the more premium placements. In the case of car sites, these placements are traditional banners.

“When we think about upfronts on the display side of the business, you’re securing that inventory,” said Marsey. “As a good agency, you’re doing that to secure better rates.”

If an agency were to ask a car site for a specific campaign, the impact of doing upfronts is that the pricing on scattered inventory is going to go up. Not only are scale and relevancy important, but so is scarcity. This is the flip side to the modern-publisher dilemma of supply far exceeding demand.

“The most established properties tend to draw the biggest audiences, and every marketer, brand and/or manufacturer wants to have a presence there, bigger than their competitors,” said Adam Schlacter, managing director at MEC. “Knowing that, those properties seem to be able to dictate pricing better than others as a result of their offering, and the scarcity of space and opportunities, whether actual or perceived.”

But there is a lesson for broader content publishers here: Know as much of your audience as you can. If an audience has a need, provide content that serves that need.

“When you go to a specific section, providing content or tools can be as simple as a car payment calculator in the auto section or mortgage calculator in the real estate section,” said Marsey.

Golub’s and Sanchez’s advice for content publishers: Spend time building a strong sales staff that knows the audience as well as making an investment on the consumer-facing side of the website.

“While we’ve conditioned consumers to come to us for auto,” Golub said, “newspapers haven’t conditioned users to go to their sites. The thing about classifieds is that it doesn’t carry over to the Internet when people are looking for jobs, homes, cars. They want to shop with the brand they know.”

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