Publishers Lag in Tech Arms Race

Pity the online publisher. The latest, coolest whiz-bang analytics technology rolling out is helping folks who manage e-commerce sites maximize revenues. Other applications are being designed to help agencies, advertisers, and email marketers optimize and target campaigns. What of the lowly publishers? What tools can they add to their arsenals?

Online publishers seem to be a bit behind the technology curve. A difficult economy, advertiser demand for accountability, and a rise in CPC and cost-per-acquisition (CPA) deals aren’t helping. They’re adding pressure to an already dire situation.

“You have marketers with sophisticated CRM systems and email management systems, and you have agencies with sophisticated online media planning tools and email planning tools,” said Dave Morgan, president and CEO of Tacoda, a technology vendor that works with publishers. “The agencies are using the ad servers with far more sophistication than the publishers are. The publishers, in many cases, are clueless.”

Worse, increased adoption of CRM media such as email, which brings advertisers in direct contact with customers, threatens to marginalize publishers further. Why do advertisers need publishers when they can produce their own content-rich email newsletters and interactive Web sites — essentially getting into the publishing business themselves? Interactive technology and a poor economy have turned the tables on publishers. It’s not a situation they’re prepared to deal with.

“In the old days, the publishers called the shots,” said Morgan. “They controlled the audience, so the agencies and the marketers had to deal with whatever the publisher was willing to give them. That’s not the case today, and certainly not the case in online.”

Don’t count publishers out just yet. Advertisers still need to win those customers in the first place, of course. Brands gain exposure via online media. But publishers now play a bit of a different online role. They’re changing their ways to equalize the balance of power. Some recent technology innovations may help by providing information publishers need to better manage their sites and their advertising placement.

Assigning Value to Visitors

Technology has flowered in recent months to help e-commerce players analyze activity on their sites and measure the effectiveness of their media buys. The most valuable customers? Simple. The ones who spend the most money — or buy the highest-margin items.

For publishers, things are not so easy. People don’t buy on their sites. How do they know who’s a valuable visitor and who isn’t? Tacoda’s technology addresses that issue. Since publishers’ revenues come from advertising and site visitors view that advertising, visitors who view the most expensive (high CPM) advertising are most valuable. If a visitor has volunteered registration data, he’s even more valuable. Publishers can use those demographics to deliver targeted advertising — usually sold at a higher CPM. With the capability to gather that information, all you need to do is modify your site to maximize viewing of the high-CPM ads.

Tacoda’s technology was inspired by some forward-thinking publishers, such as NYTimes.com. The company is doing other things right, too. Realizing the importance of visitor data, NYTimes.com embarked on a campaign to get site visitors (who were already registered) to verify their information was correct. Following the Times’s lead, washingtonpost.com began to require registration for access to parts of its site. Newspapers across the country have followed suit or plan to, according to Morgan.

Empowering Publishers in CPA Deals

That’s great for publishers able to hold the line and accept only CPM-based advertising. Increasingly, even the most prestigious among them are cajoled into CPC or CPA deals.

“With the recent collapse in advertising revenues… revenue-starved publishers are now forced to enter into these contracts under terms almost entirely dictated by the advertiser and with very little ability to influence the results,” said Bill Badeau, cofounder of CentrPort, a marketing analytics software firm.

“Publishers now receive the advertising and show it to their readers with no ability to change the ads, and they have precious little information available to help them determine where and when the ad should run. Without that information, determining the most effective placement for the advertising is like reading tea leaves,” said Badeau.

While the capability to connect clicks to short-term sales exists, measuring the long-term value of these acquired customers isn’t as easy. As you may guess, CentrPort’s technology addresses this issue. It’s not targeted at publishers, rather marketers. Marketers and advertisers can distribute results of in-progress CPA campaigns to publishers so they can see “exactly where and when the readers best suited for specific advertising can be reached,” said Badeau. “They also receive enough information to actually increase the results with less allocated inventory.”

That, of course, equals more money, making such deals more attractive to publishers. If information really is power — and information online is gathered via technology — publishers have some catching up to do. If these innovations are any indication, publishers may soon inspire envy, not pity.