Do publishers fear change? Are they worried that automated platforms will commoditise their ad impressions? The “pork belly” mandate – namely, putting inventory through exchanges is prohibited for fear of commoditisation – has been zealously adhered to by some of Europe’s largest publishers over the past couple of years. But there’s serious changes happening in online advertising: technology and data is fundamentally shaping the way display is being bought and sold. Publishers are now realising they have to adapt to the changing forces in the market. ExchangeWire got the perspective of Richard Foster, Digital Director at Future Publishing Ltd (UK), to understand how one leading publisher views the current trends in the market and how it’s addressing the challenges of trading display advertising.
2009 was a difficult year for the display advertising market? Has there been an improvement in the past couple of months? And will this year see a return to growth?
RF: 2009 was one of the most difficult years in living memory for the broader economy and the ad market. In Future’s most recent trading update in February, we said tPublishershat we expected market conditions to remain tough during 2010. Remember too that as a special-interest portfolio business (with over 100 mini profit centres), we tend to see ups and downs in different parts of the portfolio.
There has been a lot of debate over the past twelve months about how best to monetise unsold ad impressions. Does Future Publishing use ad exchanges and ad networks to monetise non-premium inventory?
RF: Mid last year, Future took the decision to significantly reduce the number of ad networks it worked with in the UK. The goal was to push for quality over quantity. We also signed up with AdMeld in Jan 2010 and so are in the early stages of that relationship. Initial signs are encouraging. Future’s US arm is engaged with ad exchanges and we’re assessing how these might work for the UK business. We think there’s opportunity to work with exchanges on both the buy and sell side.
Do you think using yield management platforms like AdMeld, Rubicon Project and Improve Digital, can help European publishers monetise unsold inventory?
RF: We’re certainly anticipating the increasing automation of the display ad model and believe that such technologies will have a part to play in how Future monetises its audiences in the future. We work with yield optimisers now and will continuously assess what platforms/services are most appropriate for Future going forward. We’ve already identified the need to build the internal skills/expertise to define and manage audience management solutions, whether these are contextual, behavioural or data-driven, and we have a team already assessing opportunities in this area.
What’s your view on ad exchanges? Do you think ad exchanges offer publishers a strong sales channel for unsold inventory? What do you think European ad exchanges need to do to attract more quality inventory form top-tier publishers?
RF: Liquidity is an essential component of an effective market system, to arrive at a fair value. Poor liquidity is currently a key challenge for the Exchanges operating in the European arena. At the moment, too many media owners are using Exchanges simply as an outlet for their unsold inventory - rather than understanding how they can be used to increase value.
We’re at the ‘learn’ stage of understanding how we achieve better returns from the inventory we put into Exchanges. And, Future also sees an opportunity to use Exchanges to add reach to its highly targeted and engaged audiences.
Would Future ever consider trading its premium inventory on the exchange platforms?
RF: In principle, yes. But realistically, I think the industry isn’t ready yet to pursue that opportunity. The immediate goal for Future is to build understanding of the value of our audiences in the market….and to evangelise that not all audiences are equal…ours are better!
What’s your view on the new German publisher exchange, AdAudience? Do you think a similar initiative could work in the UK and elsewhere?
RF: Personally, I’m fascinated by what AdAudience and its j.v. partners are seeking to do. I think this is an opportunity that UK Publishers should be actively considering.
Campaign performance has become even more business critical to advertisers and agencies. Do you think the “audience buy” has become more important than context and branding?
RF: The KPI’s for any campaign need to be clearly defined before the campaign buy happens. This then determines what the most appropriate buying strategy should be. I can’t say that audience targeting is more important than contextual targeting or branding because there are many different reasons/needs for running a campaign.
Data is fast becoming a valuable strategic asset for publishers. Can publishers leverage their own user data (audience segmentation and user profiling for instance) to improve the value of ad inventory?
RF: Absolutely. If Publishers don’t do this then someone else will do it to them. By standing still, we run the risk of becoming disintermediated from our audiences. That’s why Future is building the in-house skills and expertise to manage audience solutions and is assessing which technology vendors we should work with.
Last year saw the emergence of data exchanges, like Exelate and BlueKai. Can you see this type of trading as a future revenue stream for European publishers?
RF: This is a more difficult area because of the legal challenges in place about data usage. The boundaries have yet to be clearly set for this. But logically, data exchanges are a natural extension to the behavioural targeting marketplace which has become a standard part of display media. The challenge for publishers will then be to understand the value of our audience segments.
How do you think the display market will develop in the coming year?
RF: I’d anticipate the whole industry – advertisers, agencies and publishers – looking to engage with the new technologies coming onto the market and that this in turn will drive more liquidity and therefore more value in the Exchanges. Future is building its knowledge and expertise in anticipation of this. As a special-interest media company, there is additional value attached to many of our audiences: they’re the passionate, loyal, committed opinion formers that so many advertisers want to reach; so we’ll look to continue to leverage this value in the contextual and behavioural ad programs that we run.