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How Publishers Can Leverage the Upturn

  |  October 25, 2004   |  Comments

Emerging ad technologies help broaden online revenue potential.

Online ad spending is growing rapidly in both the U.S. and Europe. Jupiter Research (a Jupitermedia Corp. division) estimates spending in the U.S. will almost double from now and 2008, from $7.6 billion to $14.8 billion. Demand for online advertising is growing, driven by the increasing appeal of Web media.

Online publishers' prospects are looking up. Favorable market conditions present an ideal opportunity for business growth, especially through customer acquisition. In a recent Jupiter Research executive survey of online media owners, 83 percent of respondents said adding new advertisers is the best way to improve revenue performance in the upturn.

To attract advertisers, publishers are offering ad solutions that are flexible and adaptable. In our survey, 57 percent said they'd develop more customized solutions for advertisers. Publishers feel adapting real estate to suit advertisers' needs is a better way to enhance online revenue than by simply adding more ad units to the site (13 percent are considering this) or raising prices (17 percent are considering).

The result? Increased customization costs. Integrating ads deeper in site content is resource- and time-intensive. It requires editorial and production staffs to work with the sales team. All must ensure any advertiser-led site amendments enhance the user experience, not diminish it. Publishers hoping to offer tailored solutions must weigh implementation costs against potential returns before pitching the business. Though big publishers with well-resourced teams can handle the task, smaller publishers with fewer resources might struggle.

In addition to acquiring new advertisers, leverage technological opportunities to maximize Web site yield. Only 30 percent of respondents wanted to offer more targeted or rich media ad formats. Ad technologies from providers such as 24/7 Real Media (OpenAdStream) and DoubleClick (DART for Publishers) offer improved ad targeting, more efficient ad serving and administration, and better reporting capabilities. With such technology, publishers can add value to inventory and build confidence in client relationships.

Take advantage of all site areas, whether high-value sections, such as category home pages, or low value, such as deep content. Fully monetize both audience and inventory.

Differentiate

Partnering with rich media ad-serving providers, such as Tangozebra, Eyeblaster, and CheckM8, enables publishers to differentiate premium advertising positions, thus justifying higher prices. Future Publishing's ratecard price for a rich media ad (€80 CPM (define)) is double that of a standard banner.

Be careful not to create a cluttered environment. Consumers can backlash against over-contented ad formats. Additionally, there's high involvement required to traffic, implement, and report. Use rich media ads judiciously and cap the frequency.

Segment

Inventory demand sometimes exceeds supply in high-value site areas. Behaviorally targeted ad serving can help boost pricing by creating additional high-quality inventory packaged by audience, rather than content. Systems such as Poindexter's POE 3.0 segments audiences into clusters based on demographics, geography, time of day, and user patterns. The system optimizes online ad campaigns and can determine which audience segments warrant higher media rates.

Contextualize

In buried site areas where content is valuable but low traffic makes them hard to monetize, consider adding contextual advertising links from providers such as Google (AdSense), Overture (ContentMatch), Espotting (Content Solutions), and Vibrant Media (IntelliTXT). These technologies require little to no involvement from sales, creative, or trafficking staff. They help publishers disassociate content from ad inventory and create additional, constant revenue streams.

Outsource and Aggregate

For site inventory that's difficult to sell and has low traffic, try joining an aggregated inventory network such as ValueClick, 24/7 Real Media, or Advertising.com. Those looking to outsource their entire sales effort can take advantage of the experience, connections, and advanced technology these companies offer.

Exclusive Web site representation complements a publisher's business model by generating ad revenue with little overhead and risk to the publisher. Further, these providers are developing new audience-based behavioral contextualization capabilities, such as Accipiter VIBE and 24/7 RealMedia Insight ACT. These capabilities will help increase low-end inventory prices.

To incorporate, manage, and control these new opportunities publishers must tune their sales, editorial, and production teams, sites, and servers. As the number of ad products and technologies increases, tight inventory management is required to minimize discrepancies and overlapping sales. Better trafficking must occur as implementation becomes more complex. Implement these management controls, and you'll maximize site revenues and truly capitalize on the industry upturn.

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ABOUT THE AUTHOR

Julian Smith

Julian Smith conducts research and analysis on the European interactive marketing and advertising arena as an analyst with Jupiter Research, which shares a parent company with ClickZ.

His areas of expertise cover all aspects of the online advertising industry, e-mail marketing, mobile (SMS/MMS) marketing, search engine marketing, eCRM, online branding and Web site design. His particular area of interest is in the use of digital media for the acquisition, retention and development of customers.

Prior to joining Jupiter Research, Julian spent over six years working in a variety of interactive marketing agencies in London. These included Razorfish, Euro RSCG Interaction and TBWA/GGT where he worked in strategy and client service roles helping develop online solutions for leading blue chip clients. Most recently he assisted in the integrated marketing launch of 3, the new 3G video mobile phone, one of the largest new product launches in the UK in 2003.

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