I’ve never liked the ad network business. They’re a very short term solution and they are very damaging to high-end publishers because they create massive channel conflicts (i.e. many people selling your inventory confusing advertisers), they run horrible ads that people hate (think punch the monkey), and the space is filled with dishonest players (i.e. they promise to not run certain types of ads… but they do).
Nick Denton stopped running ad networks realising he was better off having one phone number for people who wanted the Gawker audience. He also made his sites look MUCH better to users by not running Lowermybills , Netflix, Blockbuster, and AdultFriendFinder ads. We were on the verge of doing the same thing when we sold Weblogs, Inc. to AOL, and now ESPN is kicking out the ad networks.
This ESPN quote says it all:
“the use of ad nets diminishes the value of their brand and content by spreading it so widely, ultimately threatening existing relationships with advertisers“
It’s so obvious to anyone with premium content that giving it away is a huge mistake in the long term. HUGE. It is a zero sum game: you have a limited amount of inventory. Give it away and folks get trained to think your inventory is cheap. Do it for too long and marketers don’t want your audience.
Many of my friends give their inventory away to 3rd party networks and I’ve told them in no uncertain terms they are fools–really, really fools. In order to be a REAL publisher you must have control of three relationships:
- Your writers
- Your readers
- Your advertisers
You can not build a *real* publishing business (as in tens of millions of dollars in revenue) on the backs of ad networks. They simply take too much money (40-50%?!?!?! really?!?! What a waste of money… you internal sales group will cost 10-25%), they are spread too thin, and even with their absurd 50% fees they don’t have enough margin.
If you’re under $250,000 a year in advertising? Sure, go for it. Break $250,000 a year, you should go for it with an ad sales person.
My advice if you are midsized publisher is to:
- Hire three advertising people
- Spend 50% of your time going to advertising meetings
- Kick out your ad networks and replace with something simply like Google Adsense as your backfill (note: i don’t consider Adsense an ad network like the display ad networks out there… AdSense is content in the form of advertisements to me… but that’s another post).
That’s it. Grow up, publishers… you have to take ownership of your advertising relationships, not give them away. Don’t buy this BS that you can’t do it and you should focus on making great content–that’s a crock. Your inventory is pure gold and you can sell it. These ad networks try to intimidate small publishers into thinking they can’t sell their own inventory–NOT TRUE! You don’t have to get a yes from every advertisers, all you need to do is get one out of 25 advertisers to say yes and you’ve got a HUGE business. More from PaidContent.
Jason Calacanis is the CEO and Founder of Mahalo. He writes the well-read blog calacanis.com.