Thank you to all of the publishers that attended our breakfast session at OMMA Publish in New York on Tuesday. The session was early, at 8am, but I was pleasantly surprised to see over 50 high quality publishers and ad networks in attendance. Here’s a recap for those of you who couldn’t make the event and the slides from the presentation.
The slowdown in the U.S. economy continues to negatively impact online advertising. In April, overall publisher eCPMs declined by 23%, and stayed virtually flat through May. It’s clear that the online advertising industry is not immune to the challenges facing the economy, including the housing crisis, skyrocketing oil prices and rising unemployment.
While eCPMs are declining for many publishers, others are growing their businesses and increasing their eCPMs. One of those publishers is Technorati, which is optimizing both direct sales and sales of impressions via ad networks. Shani Higgins, Technorati’s VP of Business Development, joined me and explained that her team uses a very targeted direct sales approach and just sold its highest single campaign in the company’s history. Technorati is using PubMatic’s services to optimize some of its inventory, boosting eCPMs by 37.5% on those campaigns.
While Technorati is much larger than most Web sites, publishers of all sizes can increase their eCPMs by segmenting larger Web sites, selling some of their inventory directly to advertisers, and monetizing every impression. In addition, many publishers we talk to simply do not monetize international impressions, which are usually 30% to 40% of their overall traffic. Others are losing significant revenue because of default ads. Using more ad networks and working with PubMatic can help ensure that you’re earning revenue for every impression.
Take a look at the below slides for some more details and some ideas that can help you increase your Web site’s revenue. The economy may be struggling, but there’s plenty you can do to grow your eCPMs.
After initially aborted merger discussions, Microsoft and Yahoo were pursuing a strategic transaction in which Yahoo would sell its under-performing search business to Microsoft. Yahoo would retain its significant display business (recently bolstered by acquisitions of Right Media Exchange, Blue Lithium, and Maven Networks).
Microsoft ended talks with Yahoo – it appears as though any deal between the two is now very unlikely.
Yahoo has struck a non-exclusive deal with Google in which Google will provide ads for search results on Yahoo, alongside Yahoo paid search results and other providers.
Implications:
For search market in general and end users:
The Search market in general will likely suffer significantly over the next couple of years as the #1 player has consolidated the search market with #2.
Over time, Yahoo’s ability to compete will further decrease as their R&D investment will be spread across fewer search results. Google could very well pick up 80% of the market as a result.
With such market dominance, we can safely assume that innovation in the search space will slow significantly – think of your browser from 2001 – 2006, after Netscape and prior to Firefox
For Yahoo:
Yahoo decided not to sell its search business to Microsoft because Yahoo believes that search and display will converge from the advertiser perspective – advertisers want to go to one place to spend their search and display budgets. As a result, Yahoo wants to maintain control over search as a complement to its display advertising business.
However, with Google now monetizing search for Yahoo, Yahoo’s solution for convergence will remain unrealized. Yahoo will continue to play a leading role in display advertising but advertisers will continue to look to Google for search monetization.
For Google:
Search advertisers should be prepared for Google to monetize its market dominance by increasing its margins. As Google will control so much of the paid search inventory, they will have the ability to increase rates and keep the money for itself.
Interestingly, Google is now best positioned to realize Yahoo’s vision of convergence. Google is the undisputed leader in search monetization and increases its dominance. With its DoubleClick acquisition, Google will now be able to build a leading position in display advertising. Google owns one side (search) and has the tools needed to build the other side (display).
For Microsoft:
Microsoft is the biggest loser, having failed to acquire a display business or a search business. Worst of all, Microsoft has neither in house and it will take them at least a decade to build either or both.
If I were a betting man, I would bet that Microsoft will acquire AOL’s Platform A business unit. It’s the only other viable option for Microsoft after losing out on the Yahoo opportunity. The time required to and risk involved in building an advertising business from the ground up is too significant for Microsoft to pursue a go-it-alone strategy.
We’re going to be in New York on June 17 and invite you to join us at OMMA Publish. PubMatic is hosting a complimentary breakfast where we’ll discuss current data from thousands of publishers.
Recent market data and earnings reports indicate that the economic slowdown in the U.S. is impacting the online advertising industry, with overall monetization rates dropping this quarter.Despite these negative trends, enterprising publishers can protect their revenues and even increase them by adopting a few key strategies.During the workshop we’ll also share a case study that details how these strategies dramatically increased a major web publisher’s eCPMs.
We’re offering a complimentary full pass to OMMA Publish, which normally costs $695, for those that sign up for our session. The complimentary passes are subject to approval.
To sign up, please contact Tabi by email at tabi.ansari@pubmatic.com. Breakfast starts at 8am in the Marquis Ballroom of the New York Marriott Marquis Hotel. We look forward to seeing you there.
Today we’re introducing a powerful new service that helps publishers recapture revenue they’re losing due to the mismanagement of default ads. We estimate that publishers are leaving more than a billion dollars on the table each year because a sizeable chunk of their inventory is going to waste.
A default ad is what’s served when an ad network is unable to fill an ad impression on a Web site with a paying ad. Often times a non-paying public service announcement or a blank spot is shown. Many web publishers chain several ad networks together to reduce the chances that a non-paying ad is served, but these methods are far from perfect.
We’ve developed a system that detects when an ad network is unable to serve a paid ad and we immediately hold an auction for that impression amongst the rest of the ad networks a publisher is working with. This ensures that each impression is being sold for as much as possible and eliminates public service announcements or the reduced revenues that a static daisy chain solution provides.
Over the past several months we’ve studied just how severely default ads are affect our publishers and the numbers are jaw dropping. We found that ad networks defaulted 56% of the time on average and as much as 87% of the time. We also found that that the traditional static daisy chain of ad networks may be effective at reducing blank ads but is highly ineffective at maximizing a publisher’s revenue. Between 20% and 30% of publishers’ ad inventory is going to waste.
I can’t imagine any other industry that would stand for this kind of waste on a consistent basis. It would be unthinkable for an airline to continually run flights at 70% capacity or for an auto manufacturer to let 30% of the cars they build rust in a parking lot. In fact, some of those industries are doing exactly this and showing record-breaking losses as a result. There’s no reason for Web publishers to continue doing the equivalent with their valuable ad inventory.
So far we’ve optimized default ads for dozens of our publishers and have successfully boosted their revenue by as much as 50%. Flixster, a very popular movie reviews Web site, saw a significant increase in incremental revenue because of this new service.
We’ll continue to perfect this system in the coming months and will share the results with you. In the meantime; we encourage publishers to closely examine how they’re managing defaults and consider automating the process with PubMatic.
The New York Times published an article today that discusses how the economic slowdown is impacting online advertising. The article cites the Ad Price Index, recent earnings reports and several industry insiders.
The New York Times articles mentions that large portals are finding it harder to make money from display advertising. But publishers should remain optimistic because instability can force marketers to rethink their ad-buying strategies and look to place ads wherever they can find targeted traffic.
I agree with Jeffrey Lindsay, a senior analyst at Sanford C. Bernstein & Company, who said:
“In a moderate or even quite severe downturn, online advertising actually improves, because people switch their advertising budgets out of traditional advertising formats — TV, radio and print — and move more online because it’s got higher performance, it’s cheaper and it’s more measurable.”
We have no way of knowing exactly what the future holds for online advertising, but we do know that more ad dollars will flow from offline media to online media. There are still plenty of very large advertisers that haven’t adapted their marketing plans to include a substantial online advertise budget.
As I mentioned last week, it’s very important for publishers to optimize their ad inventories, even if they’re seeing growth. We’ll be releasing more data in the coming days that shows many publishers are letting significant chunks of their ad inventory go to waste.
Take a few minutes to read the NY Times article when you get a chance. It’s good reading and very thorough.
We had our first Palo Alto team outing today, which was a blast. We braved 100 degree heat to get outside as a team and have some fun. We went to Malibu Grand Prix for some competitive miniature golf, bumper boats, and go-kart racing.
First was the mini-golf competition. The winner was Rajeev “Did I used to own a golf company?” Goel. Coming in a close second was Jag “I never played mini golf before” Misra.
Kevin sinks one with this stylish shot.
We then moved on to some indoor arcade games, where the talk of the day was the drubbing that Jon “Did I make you bleed again?” Burke gave to Kevin.
We headed out to the track for go-kart racing, battling it out at up to 30 miles per hour for fastest track time. Kevin “I just bought a BMW M5″ Weatherman took first place with Tabi “I need new shoes for the go-kart” Ansari making a strong showing as well.
Kevin Sure Knows How to Take Those Turns!
Tabi in Racer Red
Last but not least, Laura “I’ve never driven over 20 miles per hour because I live in Los Angeles” James seemed most at home hosing down the team during bumper boats.
Advertising trade pubs ClickZ and Adotas had their say about our findings as well. Even the Wall Street Journal chimed in with this article, which is about Microsoft’s challenge of competing against Google without Yahoo! The full article is only accessible to WSJ subscribers, but the reference to PubMatic is here:
Compounding Microsoft’s challenge is a softening online ad market. In March, researcher eMarketer cut its forecast for 2008 online-ad spending in the U.S. to $25.9 billion from a previous forecast of $27.5 billion. While that is still 23% growth over 2007, PubMatic, an online-ad company that measures ad pricing, found this past week that the average price Web sites garner from ads dropped to 38 cents in April from 49 cents the prior month. The Palo Alto, Calif., company concluded that “the economic slowdown in the U.S. is starting to impact the online advertising industry.”
Thanks to all the reporters, bloggers and partners that have shown so much interest in the Ad Price Index. We’re already hard at work collecting statistics for the June edition. If you’re interested in subscribing to Ad Price Index updates, click here and leave your email address.
Toady we’re sharing an updated PubMatic AdPrice Index, which shows the slowing U.S. economy is negatively impacting the monetization rates of many Web publishers. Ad network payouts are falling, but many publishers are bucking the trend and increasing their eCPMs through the adoption of specific techniques.
According to the May edition of the PubMatic AdPrice Index, publisher monetization across the board has dropped by 23 percent during the past month. The index shows large Web sites (more than 100 million page views per month) dropped 52 percent, from an average of 38 cents eCPM in March to 18 cents in April. Medium Web sites (1 million to 100 million page views per month) were nearly flat, with monetization dropping from 34 cents in March to 33 cents in April. Smaller Web sites (less than 1 million page views per month) increased their eCPMs from an average of $1.17 in March to $1.29 in April.
Click here to see the full PubMatic AdPrice Index details and findings.
While this downturn is unwelcome, there are several things publishers can do to make the most out of their ad inventory. Many of our top performing publishers are increasing their overall revenues and eCPMs month over month by focusing on the following three key strategies:
Diversification: Expand the number of ad networks you’re affiliated with. Our top performing publishers work with five to seven ad networks.
Segmentation: Segment your Web site into distinct channels, each with its own ad tags to help ad networks target the most relevant inventory. This increases ad performance by optimizing ad targeting.
Globalization: U.S. based Web-sites have an average of 30% international traffic, but most publishers don’t properly monetize this traffic. Analyze where your international visitors are coming from and work with ad networks that are strong in those countries. Capitalize on favorable exchange rates and stronger international economies.
Consider making changes even if you’re one of the lucky publishers that is seeing gains while others are faltering. Online advertising isn’t recession proof, but there are still incredible opportunities to make more money from your Web sites.
We’re interested in hearing about how your Web sites are performing and what you’re doing to optimize your ads. Please leave a comment below and we look forward to sharing an updated PubMatic AdPrice Index with you next month.
We’ve signed on some pretty big publishers (and lots of small and mid-sized ones) since ad:tech San Francisco. As a result, we’re we’re serving more ad impressions than ever and we’re very excited about how quickly publishers are adopting our ad optimization services.
We set new records every day last week in terms of number of impressions optimized and served. Yesterday we optimized twice as many ads as we did a week ago. We effectively doubled our traffic and reach in less than a month. I can’t share exact numbers publicly, but our growth rate looks like a hockey stick right now.
This is amazing by any measure and I wanted to thank all of our new publishers for giving us a shot at improving their eCPM’s. Our team has worked around the clock launching new features and making sure our publishers are happy.
While we’re seeing great success in adding new publishers, we’re also adding more and more ad networks, which means better fill rates and monetization for publishers. We added three more ad networks last week and are adding three more in the next two weeks.
Thanks again to everyone and we look forward to telling you more about some of the new capabilities shortly.
Ad:tech San Francisco was a tremendous event for our team. We had roughly 10 people on site, from business development to marketing to account managers, all focused on connecting in person with many of the people that we talk to over the phone with on a daily basis.
We connected with over 30 publishers and 50 ad networks while at ad:tech, along with numerous technology vendors and potential vendors. The highlight of the event was the cocktail party we hosted at Bong Su, one of San Francisco’s top Asia-themed lounges, on Wednesday night.
A big thank you to everyone that came to our party. We had an awesome time hanging out with some of our most-valued partners and customers, including publishers and ad networks. Our party was packed with leaders from some of the biggest Web sites and Ad Networks in the world, and all had great feedback on our services.
One of the highlights of the night was giving away a MacBook Air as a door prize. There were over 300 business cards stuffed in the fish bowl and I couldn’t have picked a more deserving winner. Max Gideon, who runs ad operations for Technorati, is a big Apple fan and I’m sure he’ll put it to good use.
Rajeev Goel with MacBook Air winner Max Gideonof Technorati
He emailed us to thank us for the prize and said: ”I don’t think it actually hit me until I opened the box and took it [brand new MacBook Air] out. Thank you so much for a great computer, party and overall service.” Thank you Max – we’re looking forward to continuing to work closely with you.
For those of you on the East Coast who we may have missed, we look forward to seeing you at OMMA Publish in New York on June 17th or ad:tech New York in the Fall.
Rajeev is responsible for PubMatic's business strategy and execution, leading product management, marketing, and operations. Rajeev has over ten years of experience in building and scaling products and companies, from startups like Chipshot.com to large organizations such as SAP. Rajeev lives in Menlo Park, CA.
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