The Siren Song of Ad Mediators in Brand Advertising

You’ve all heard the promise and perhaps you’ve fallen pray to the hype and actually implemented a mediator for mobile brand advertising. If so, you are probably rethinking your decision now as the mediator’s promises of the “highest CPMs possible,” have not materialized. And, in fact, while your fill rate has increased your average CPMs keeps dropping precipitously, annoying your mobile users with more ads, and less relevant ads just to keep up to the revenue goals you were originally sold.

What happened?

The mobile advertising mediator said that “when networks compete publishers win!” Seemed to make sense. Then they said they take the highest CPM from a range of bidders. So why are your CPMs one quarter to one third of where they started? And going lower? The answer is the core of the Siren Song of mobile brand advertising mediators: they really choose the best of the lowest common denominator, meaning you lose.

Let me explain. Good brand advertising is concerned with placing a compelling message in front of the right eyeballs at the right time. Advertisers know this and pay a premium for it because it works. Representing inventory directly to advertisers and crafting compelling messages and campaigns along with highly engaging units with great context and targeting is the bread and butter of the brand ad world. Mediation is not good brand advertising, and ultimately bad for mobile publishers who implement it, for three reasons:

1) Mediators work on a “double blind” sale with publishers. This means they aggregate networks who aggregate advertisers. This puts two steps between the advertisers and the inventory. The pitch sounds good, “We just take the highest CPM from all the networks.” But it is dead wrong. Because it is a double blind sale, the only campaigns they access are left over campaigns, or “remnant” campaigns. These are typically low cost campaigns that the advertiser just wants to saturate in any channel. So with mediators, out of the gate, the publisher is artificially constraining their brand inventory to a low cost pool of advertisements. Getting the highest CPM in a low cost pool is getting like dancing with the tallest midget.

2) There is no brand representation of publisher’s brands to the advertisers because the mediators do not have a sales force. Again this degrades the value of the publisher brands. Mediators just throw publishers in a bucket of “Mobile Video.” Advertisers never see or learn about publisher brands and audiences and therefore gain no respect for the context of the brands being sold.

3) Mediators homogenize inventory, creating one class of sale and making a mobile impression look like an online impression. Instead of creating customizable ad units that meet brand objectives with compelling engagement opportunities, the mobile mediators just squirt an “ad” into a “placement.” This further erodes value for the publishers because mobile engagement can be more effective than an online engagement if treated with the proper unit customization and contextual care. We’ve seen mobile video get consistently higher CPMs than online video, but the units and campaigns need customization and mobile specificity. It is worth the effort of marrying objectives to engagement to publisher inventory to get the higher CPMs and value the audience and inventory. That builds value over time.

So in the end mobile mediators may get you a higher fill rate (more of your total inventory sold), but they do so at the expense of your inventory value (it’s sold at a lower price). The end result is advertisers who don’t understand the value of the inventory and publishers with heaps of commoditized lower CPM inventory they had such high hopes for. Unfortunately, once inventory is degraded it is very hard to build the value back up. The vicious cycle is that the publishers then have to rev their apps with more ad placements to hit revenue targets, saturating the user experience with low cost untargeted campaigns. Bleech! This is why Apple launched iAd and why Transpera has taken so much time to craft great video brand advertisements with a network to back it up.

Elevate your Inventory

This is the better way. I call it “Elevating the Inventory.” Instead of hooking up hoses of cheap fill to millions of impressions, craft a content/audience/advertising experience that meets advertiser objectives better and thus makes you, the publisher, more money for fewer ads shown. This is what we do, and it is why we are different.

The rules are simple.

1) Work with one great network that will form deep relationships with you, your brand and your sales team. Think about it. You want a long term relationship, not the cheap one-nighter the mediators promise. Working deeply with a great network ensures you get the right representation of your brands. If you have your own sales team it mitigates channel conflict as there are only a few people out there selling. Respect your inventory, respect your partners, and the advertisers will respect you. That respect means $$$$.

2) Differentiate your inventory. Not every ad unit has to be custom (in fact you don’t want that because debugging is a beeeeeach), but shouldn’t the ad unit placements and interaction models mimic your content interaction model? Shouldn’t the inventory have engagement that is relevant for the campaign being run? Resist homogeneity of units and your users and advertisers will flourish.

3) Get intimate with your audience. There is nothing more disrespectful than pushing untargeted, interruption based media like pre-rolls and interstitials to 100% fill rate at a low CPM. Learn about your audience. Get registration data. Know your users and you can respect them. If you know that your user is a twenty four year old female you can push her one well targeted ad for a $40 CPM vs. if you don’t know who is watching and have to push her/him ten untargeted ads at a $4 CPM. Why wouldn’t you do the former? Take the care to sell well around your curated environment to an audience you are intimate with. This elevates the value of your inventory and the consumer/advertising experience, while also building value in your company because you have a deeper relationship with the folks that love you, that give you their time out of their day.

The good news is with the right deal making, you as a publisher have a remarkable opportunity to build a serious business around advertising. A business that you love, your free users respect and advertisers love you for.
Remember if it sounds too good to be true, it most certainly is. Don’t fall pray to the mobile mediator’s siren song. It will wash you up on the rocks.

Elevate your inventory!

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About Frank Barbieri

http://about.me/frankbarbieri
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