Why Traditional Publishers are Shifting Their Ad Strategy

Sarah Wheeler
Sarah Wheeler
Why Traditional Publishers are Shifting Their Ad Strategy

Traditional publishers and advertisers historically go hand in hand. But standard ad monetization isn’t working for many publishers anymore. As non-traditional publishers and marketplaces launch walled gardens-–and see billions in returns–-traditional publishers are following suit. This article discusses this transition and its implications for your business.

What is a traditional publisher?

A traditional publisher is a company who makes their money almost entirely from ads, such as media companies, free content producers, and mobile games. Even if they offer subscriptions, like most digital newspapers, ads drive a substantial percentage of their revenue.

For reference, the PEW research group reports that from 1956-2020, newspaper advertising revenue surpassed circulation revenue every single year. And in 2020, digital advertising made up nearly 40% of that ad revenue. Traditional publishers, free or subscription-based, depend on ads.

Pew research chart

Since their survival depends on ad revenue, these brands often resort to OpenRTB programmatic ads for scale, resulting in ad-heavy pages, slow loading experiences, and standard ad units. When you think “digital ad publisher,” you likely picture this.

Traditional Publisher Ads

Why are traditional publishers launching in-house ad platforms?

It’s true that ad networks/exchanges like AdX, Criteo, and OpenX drive quick and easy revenue for publishers.

But the digital advertising landscape is changing. These JavaScript-based tools are causing problems like:

  1. Slow sites and apps — Ad tags and in-app SDKs are notoriously slow, causing jumpy content and lower revenues.
  2. No revenue from ad block users – Expect roughly 30% of your potential impressions to never get filled.
  3. A reliance on third-party cookies — Third-party cookies enable ad networks to retarget users around the web and show highly personalized ads. When Chrome deprecates them in 2023, however, publishers will undoubtedly see their eCPM payouts drop.
  4. Malware — There is always the chance an ad tag gets infiltrated by malware. According to Fast Company, this costs publishers nearly $1B a year
  5. Lost Revenue - Research has shown the “ad tech tax” is over 50% - meaning for every $1 an advertiser spends, the publisher gets just $0.50
  6. Off-brand ads- Many publishers have gone under fire because of off-brand ads. For example, this news publisher faced backlash when a story about bullies pouring bleach on a child simultaniously displayed a bleach ad.

example of improper contextual targeting

These shortcomings can have major repercussions: slow page loads alone could greatly hurt your revenue. Amazon reports that just a second delay in load times would result in a $1.6B loss in yearly sales revenue for them. For a traditional publisher, this could translate into fewer people subscribing and/or users abandoning the site versus reading multiple pages in the same session.

Due to these limitations, traditional publishers are increasingly launching homegrown ad platforms to drive new revenue and future-proof their ad offerings.

What type of ad product could traditional publishers build?

Though traditional publishers typically focus on programmatic “sponsored content” and standard banner ads, there are many innovative ad units they could incorporate, such as engaging, user-friendly native advertising units.

Examples include:

  1. Weather.com - Weather.com shows engaging, high-qualty in-app native ads as users scroll. Weather image
  2. MotleyFool - These embedded, relevant internal promotions are more likely to drive upsells. They appear seamless to the article, drive user engagement, and load faster than traditional programmatic ads. Motley Fool
  3. Vox Media - Vox’s homegrown ad platform boasts first-party data monetization, contextual targeting, and ads that don’t slow down page loads or obscure content. Vox example
  4. Allrecipes - Allrecipes displays sponsored ingredients from local grocery stores within it’s recipes. These relevant, native ads aid user experience and don’t distract from the organic content. Allrecipes
  5. Buzzfeed - Buzzfeed’s homepage takeover product, homepage carousels, and sponsored content make for innovative and dynamic user experiences.Buzzfeed example

On top of engaging ad units, you have the ability to integrate unique targeting options that advertisers will pay more for, like:

  1. Day/time: You can target ads based on the local day and hour. Starbucks, for instance, may choose to bid more in the morning to win those ad auctions
  2. Behavioral targeting: Build targetable user segments based on past user behavior, such as “people who read tech-related articles.”
  3. Frequency capping: Add this feature so the same ads aren’t promoted over and over to the same person.
  4. Geo-targeting: You can target brands/products based on the user’s location, like city or zipcode. Local products could be targeted just to local people. in-app geofenced ads on pinkberry
  5. Weather: Adding weather targeting lets advertisers show ads based on the local weather around the screen, something of interest to, for example, a raincoat or sunscreen manufacturer.
  6. Contextual targeting: Enable advertisers to target users based on the webpage’s content. Campbell Soup, for instance, may be interested in targeting the “Food & Drink” page, but nowhere else.
  7. Search/intent targeting: Target ads based on what the user is actively searching or browsing for.
  8. Any other first-party data: Have proprietary data around demographics, psychographics, household income, where they work, etc? If so, you could build segments and charge premiums for advertisers to target them.

How would native, direct-sold ads impact my revenue?

As mentioned, most traditional publishers rely on standard programmatic ad networks to scale their revenue. Moving away from this model is understandably scary.

The good news? You don’t have to! Most publishers building their own native ad platforms are doing it alongside their programmatic programs, not in lieu of it.

Indeed, the value of building a native, direct-sold offering can’t be understated. As Facebook reported, native ads benefit both the publisher and advertiser:

  • Native ads have 200% higher CPMs than standard banner ads.
  • User engagement is 2x higher.
  • User retention is 3x.

In this world, then, you could maintain your current revenue stream while incorporating high-value, innovative native ad units that won’t annoy your users.

How does one build an ad platform?

Building an in-house ad platform can take years, cost millions of dollars, and require dozens of ad tech engineers. Even if they see the value in native ad monetization, many traditional publishers are unwilling to make this sacrifice.

Maintaining this ad product, moreover, requires even more time and resources. Between server costs, engineering resources, certification fees, refunds for bugs, and so on, the costs involved can scale greatly over time.

Given these hurdles, many brands stick to the status quo and never launch their own ad programs — a boon to competitors who have.

Fortunately, there’s another path: Kevel. We provide a suite of ad APIs that make it easy to launch your own ad platform in just weeks. You get the customization of an in-house build with the speed of a third-party solution. With Kevel, you can keep using your current ad server for programmatic ads, but integrate native ads alongside them (with all the targeting features you want). Contact us today to learn more.

Sarah Wheeler
Sarah Wheeler

Sarah is an experienced writer with a software background, allowing her to translate between ad tech experts and lay readers. As Kevel's Associate Product Marketing Manager, she helps broadcast new products and features.