For many web publishers, advertising placements are their main source of revenue. So optimizing advertising placements should be high on the to-do list – whether you’re an international news site or a small beauty blogger.
But the potential of advertising can be limited by intermediaries – or ‘middlemen’. The year 2017 was sufficient proof of this, with 70% of digital advertising budgets disappearing before they reached publishers.
Understandably, many publishers don’t have insider knowledge of the ‘ad tech’ industry, which leaves them in a vulnerable position. So we’ve identified the top seven things that publishers need to be cautious about.
1. Net Revenue and Revenue are not the same
Revenue is the amount of money earned through advertising placements (impressions*CPM).
Net Revenue is the amount that is left after paying for the costs of running ads on the website (the ad serving fees).
This is important in the context of revenue share, which will be a percentage calculated from the Net Revenue.
2. eCPM and CPM are not the same
CPM (Cost per Mil) implies that the advertiser pays a fixed price for every 1,000 impressions. eCPM (effective Cost Per Mil), on the other hand, is a figure that can fluctuate.
eCPM is calculated based on revenue earned and impressions sold. In a way, it measures the effectiveness of ad placements.
In the case where a publisher is selling on a CPM basis, the eCPM should be the same as the CPM. But when the payment is done on CPC, CPA or CPI basis, this figure can vary a lot.
3. Average CPM rates vary across verticals/geos/ad formats
CPM rates are mainly determined by how much advertisers are willing to pay to appear on a website, and how many advertisers compete for that placement. CPM also depends on country, device and competitiveness across different niches.
Agencies will pay more for video ads, and for larger ad formats, so keep that in mind when organizing a website for ad placements.
4. Payout threshold can deter revenue
Most advertising partners require a minimum amount of earnings before paying the publisher. This needs to be taken into consideration when planning budgets.
5. Each intermediary takes a cut
Publishers need to understand how many intermediaries are involved in the ad supply chain. There can be multiple ad networks, trading desks and other agencies between publisher and advertiser. Each of them needs to take a cut, thus reducing the revenue that the publisher receives at the end.
With the adx.txt initiative gaining ground, publishers have better control over how their inventory is sold. Furthermore, it helps block unwanted advertisers and malicious ads. With ads.txt implemented, publishers are also regarded as being more trustworthy.
6. Finding advertisers for direct sales can be difficult and time-consuming
The most obvious solution to the problem above would be for publishers to get in contact with advertisers directly. However, this can prove to be tricky and inefficient. In such a highly competitive market, the advertisers hold the bargaining power.
Properly pitching your audience segments and the quality of your content might not be enough to draw in the ad supply. Publishers also must be aware that they need to handle ‘ad-ops’, which requires further time, and training investment. Collaborating with an SSP is an easy solution, since their focus is to optimize publishers’ earnings.
7. Focus on ad quality and relevancy instead of ad impressions volume
If you’re inclined to think that more ad units mean more profit, think again. This strategy is not working anymore, with users having an easy way to fight back – the mighty ad blockers.
Websites that overwhelm their users with irrelevant and annoying ads will have a negative impact on audiences, as well as on revenues. Excessive ad placement also impacts Google ratings and traffic. It’s important to pay attention to the quality of ads, where are they placed and how many are shown to users.
A video unit like vi stories is a great solution. As a native player that blends into your website both visually and in terms of content, it is less aggressive than traditional advertising. By showing relevant video content to your audience, it helps improve user experience. High quality, targeted video ads are shown only when the audience is engaged, leading to high CPMs. Watch our video to understand why vi stories is a perfect match.