Watch Your 4th Quarter Buys

Three weeks ago when you negotiated the deal, you were ecstatic. Who would have thought that you were capable of negotiating a Cost Per Click media deal in the middle of 4th Quarter? And at 15 cents a click, no less! The client was thrilled, and you and your department all went out to the corner bar at the end of the day to celebrate your negotiating prowess.

One week later the buy went live. Creative arrived on time. The launch went off without a hitch. The banners were on spec – even the ALT text had no typos.

It’s now two weeks after launch and you’re holding your first campaign report in your hands. Out of the 10,000 clicks you purchased in the first two weeks, 300 were delivered. You call your sales rep to find out why the buy isn’t delivering to guarantee and he gives you some lame excuse having to do with his company’s adserver. Right after you get off the phone with the sales rep, your account executive tells you the client is waiting to talk to you on the phone about that “fabulous” buy you put together.

Has this ever happened to you?

Sometimes, it seems like media planners simply can’t win. They bust their butts to get the best deals for their clients, and then they have to clean up the mess when publishers can’t deliver what was promised. No one ever said this was fair, but it happens. Here’s why…

When you sign the insertion order for that terrific CPC deal you negotiated, the sales rep usually hands the buy over to his traffic department. When a traffic coordinator gets the buy, he enters it into the publisher’s ad management system. All the buy parameters are entered, including the fact that the buy generates revenue for the publisher at a measly rate of 15 cents every time someone clicks on an ad associated with the buy.

I’m simplifying things a bit here, but the ad management system will use this buy information to construct a queue of ads that fit the targeting criteria for a given ad placement. In the event that several advertisers are using identical targeting criteria, ads will queue up according to how much revenue they can generate. In other words, ads that are bought at a $10 CPM will most often run before an ad that is bought at a 15 cent CPC, with all other things being equal.

Fine, you say. Then why doesn’t my sales rep tell me when his site can’t guarantee my buy?

Remember that online advertising is an extremely fluid market. Online advertisers book, cancel and revise campaigns a lot more often than advertisers in traditional media do. This makes it difficult to predict availabilities. As a result, inventory can be overbooked at almost any given point in time.

I’m not trying to make a case here for overbooking ad inventory – personally, I think it’s wrong and I think it’s high time that someone calls publishers on the carpet for doing it. Rather, I simply want to demonstrate how shortfalls happen in practice.

With inventory overbooked, particularly in the 4th Quarter, the online ad market can take on a bizarre auction-type feel. The ad sales side of the industry seems to have a lack of concern for running advertising within flight and to guaranteed levels.

The common sentiment is that underdeliveries can be made good in subsequent weeks and months. In this type of environment, the advertisers who pay the most for their ads will be the ones most likely to actually run.

How can we prevent this? My suggestion is to start including clauses in your contracts that penalize publishers for failing to deliver guaranteed ad inventory. A contract in which makegood impressions count for a fraction of regular ad impressions is a good idea. Maybe publishers will be motivated to watch their guarantees closely if ad impressions delivered out of flight are counted as half or two-thirds of ad impressions delivered in flight.

I do think that we’re at a point where advertisers need to do something about delivery shortfalls. Until something is done, though, watch your 4th Quarter buys carefully. The great deals you negotiate could be your undoing.