August 6, 2021
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Directly Sold Ads Offer a Position of Strength

Advertising has gone through a lot of changes throughout history. At the start of the ad business, brands had to buy directly. With the rise of the internet, centralized ad networks popped up, giving brands the ability to target contextually related audiences. Then we got true targeting-based programmatic where brands could find the individual with ease.

Publishers played along every step of the way. We were happy to work with partners one-on-one to give ad campaigns. But as the sale moved increasingly to networks and ad tech providers, we became more dependent on them. Many lost the skill required to sell advertising.

This became a real problem because it made the publisher irrelevant. The brand didn’t care where they found the targeted viewer so long as they found them. This was a devastating outcome. Year-after-year, publishers made less money from advertising. It became a race to the bottom. The only winners were the adtech players.

That’s why I was surprised when I read this recent Digiday+ research study:

If that’s true, publishers might not like where they’ve been taken, according to new Digiday+ research. At the start of the third quarter of 2021, publishers are more reliant on direct-sold advertising than they were a year ago, and many incremental or complementary revenue streams now play smaller roles than they did 6-12 months ago.

This reads very negatively. Publishers no longer like that they are being taken toward a path where they have to sell more of their ads. That’s a very curious and, admittedly, bizarre way of looking at things. Why would publishers want to continue giving up control of the sale of their ads?

This perceived disappointment is the wrong way to look at it. On the contrary, selling advertising directly—where brands are specifically seeking out your audience on your platform—is an incredible position of strength. And for the publisher that is able to sustain that business, there should be far fewer worries about sustainability.

Think about it. Unlike programmatic advertising, which only requires ad tech companies to bid on impressions, a directly sold ad requires a conversation between a brand and the publisher. That means that if an ad is sold, it’s because there is some conviction that the advertisement will perform in a way that the brand wants.

Why else would an advertiser come play? It is easier to buy ads programmatically. The brand just has to pick the profile of a prospective customer and have the ads flow. That’s a lot less work than buying ads directly.

And yet, there are publishers that are thriving on purely direct. There are a few things that they all have in common that makes this a possibility.

First, there is something unique about what they have to offer. I interviewed someone on Thursday and one of the things she said was that she was tired of chasing the same story that so many other publications were. That resonated with me. If there’s nothing unique about what you’re publishing, what separates you from someone else?

It’s one of the reasons I have grown very tired of the daily general news publication. If President Biden does something or there’s an outcome at the Olympics, 100 different publications all have the same story. In a digital world, how does that help anyone? It’s a lot of content that the world doesn’t really need. Having something unique to offer is critical.

Second, there’s a strong connection with the audience. You can typically tell what kind of publication you’re dealing with if they use the word traffic in lieu of audience. Traffic drives by; an audience sits and engages, like at a movie or a sports game.

That doesn’t mean we can’t ever talk about traffic. There are a lot of people that drive by sites. But the best publishers are those that are able to convert some of that traffic into an audience. They pull off the digital highway and stay a while.

Third, they offer something that feels unique and custom. Since joining Morning Brew in November, I haven’t had to think about 300x250s or 728x90s. It has been incredible. We produce an advertisement that fits our client’s needs. It looks and feels like our newsletter. There is a reason our ads perform significantly better than a banner ad.

There is something consultative about selling ads directly. You don’t sit back and passively wait for an ad to fill. Instead, you have to understand your client’s goals and actually try to offer them something that makes sense. For some advertisers, they want brand awareness. For others, they want leads. You need to parse that and figure out what each wants and give them the right solutions.

Great, differentiated content. An engaged audience. And unique, custom ad products. That’s the makeup of a media company that has a thriving direct ad business.

Does that look like a company that is weak? Not in a million years. On the contrary, that looks like a company that is creating a great product that its readers really want. And because of that desire by the reader, the brand gets to put their message in front of them in a synergistic way.

There is nothing to be sad about here. If more of your business is coming from direct advertising, perhaps it’s because what you have to say actually matters. Maybe your audience actually matters. Maybe the confluence of content and audience is worth advertising against.

This is the profile of a strong publication. This is a publication that can continue to grow its advertising business even when the major platforms are gobbling up such a large percentage of the market.

Does that mean programmatic has no place in the advertising stack?

No, I don’t believe so. Direct ad sales is a very variable business. One day you may sell something, the next you may not. It is hard to get 100% inventory sold (though some of us are getting very close). This is where programmatic can make a lot of sense to publishers. If there is a sudden influx of users to the site, programmatic can help monetize this traffic.

But it shouldn’t be the first choice especially when we’re talking about monetizing our audience rather than traffic.

We have to come up with ad products that are compelling to a brand and keep our audience engaged. Lead with those advertisements. And when there is still inventory that has not been sold, run with the programmatic.

Now there is an exception to all of this. Increasingly, directly sold ad deals have still gone through programmatic pipes. For advertisers, it was easier to use programmatic guaranteed deals because they still could experiment with creative while committing to a certain buy. I’ve never loved programmatic guaranteed deals, but they necessitate a conversation between the publisher and the brand.

The truth is, we should be encouraging advertisers to come work with us directly. Between the 1st-party data that we have available to us and the fact that programmatic is full of fraud, they’re likely to come out ahead. Some have suggested that nearly half of every dollar spent doesn’t go where it’s intended.

How is that a good business? It’s not.

Being in a position to sell ads directly means that you have something that matters. It reduces the middlemen that are siphoning off their cuts of the pie. It means that an advertiser can extend their campaign or that a publisher can charge more. In both instances, the two participants that actually matter—the advertiser and the publisher—get more.

We shouldn’t lament programmatic decreasing as a percentage of our revenue. We should celebrate it. And get better at it.

Thanks for reading today’s newsletter. If you have thoughts, hit reply. Or join us over in the AMO Slack channel. I hope you have a great weekend and see you next week.

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