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Publishers, Network, and Advertiser. These are the essential building blocks of the performance marketing ecosystem. Publishers work with networks; networks recruit and work with advertisers. Each affects the other. The types of publishers impact the network’s ability to sell, and the the advertisers impact the type of publishers that a network gets. If a network keeps finding one type that doesn’t work for the other type, it will have a hard time surviving. Then again, the recruitment of both parties is far from an exact science. Sometimes, a network will find a publisher that might need advertisers it doesn’t have; or, it will find an advertiser with such promise that it demands finding publishers with whom they have no existing relationship. The successful network is almost invisible. They may stand in between the two parties, but their job is not gatekeeper but friction reducer.
Whether intended or not, in the Publisher, Network, Advertiser ecosystem, specialization ultimately takes place. It’s amazing how two companies with the same components can have widely differing perspectives. No experienced person would confuse Commission Junction with Epic Advertising. But, they might not predict that a top publisher from the latter would get rejected by the former. No CPA network would end up rejecting one of their competitor’s clients. Yet this is not an uncommon occurrence within the relatively small universe of performance marketing. This type of fundamental difference would be more understandable were they to take place between a cpa network and a display network. The challenge with specialization is the very thing that enables companies who specialize to be good in the first place. It can create a myopic view of the world.
Performance marketing networks have an archetypal client – the arbitrager. With current arbitrage opportunities seeing pressure, it leaves the networks with a choice – hunt down new advertisers or find a different set of advertisers. So often, the knee-jerk says new advertisers. The publishers are sacred, and if they can’t make as much doing arbitrage it’s not them; it’s the advertisers or the inventory sources. It’s not an incorrect view, but it too might be a myopic one. Perhaps an alternative answer is to focus on the other pieces – the publisher or the inventory source. If there is one thing that holds back the cpa networks, it’s inventory. Outside of the few networks with their own email lists, networks don’t make their own markets. In many ways, though, they have the pieces – they have the ads and the arbitragers as well as a hungry sales team to grow the list of new publishers.
If there is one premise we have about the net, it is that there is no such thing as no places left to run ads. For traditional banner ads, there might be a notion of sold out, but that’s looking at inventory the wrong way. The best places where arbitragers spend to date is inventory that didn’t exist years ago. There hasn’t always been Google, or MySpace, or now Facebook. And more importantly, for those properties who have a notion of a third-party network, like AdSense, those publishers didn’t always have AdSense, AdSonar, or Pulse360. Even when they had one, they often made room for another. The hypothesis has always been that sites are set in their ways. Yet, we know this can’t be true. All those Facebook like widgets and twitter feeds on third-party sites including some of the best known Tier 1 properties weren’t there before. What’s more, many publishers have given up prime real estate for non-revenue producing widgets. Let’s not also forget companies like Vibrant media who have proven that publishers and advertiser will pay for content to become ads – their double green lines.
When we think of where the arbitragers are playing that isn’t the standard marketplaces, we think of a company like Adside or Yabuka. These are companies showing that it doesn’t take much to create a slightly new product.
In reality though, they have lots of ad units that appear as layers on the far right hand side of the screen like this one:
Yakuba’s ads will also look familiar.
Adside and Yabuka help illustrate that the idea of new inventory is not that far away by thinking just slightly out of the box. For networks, they should acquire or invest in one of these networks if they don’t feel the tech dna is in-house. Another option is to look at the ad model differently. It’s less an arbitrage approach and more a blue ocean, value-add approach. This approach says in essence, what problems exist today that I can fix, and in doing so create ad inventory. One of our favorites is a company called NuCaptcha. We all know Captcha’s. We have one at the bottom of all our articles that users must complete before comments get posted. It’s a piece of inventory that gets displayed billions of times monthly. Despite its prominence, it’s far from perfect. There is a surprisingly large amount of user abandonment, and while it might seem like there is heavy innovation, what’s really being created are more complex Captcha’s that only increase that abandonment. Why not then try to create a better user experience, an equally effective (if not more so) spam fighting tool, as well as a brand new ad unit?
None of these businesses are easy; none are without their sales challenges; and, many, are departures from the traditional cpa network. It’s less about saying these are the types of businesses that a cpa network must create. They are really examples of businesses that challenge a traditional way of thinking. In the first two, they do so servicing two of the three constituents that form cpa networks today. The last example is the furthest on the spectrum of innovation, but the problem being solved wasn’t one that tried to change user behavior. It’s an ad business through and through, not a twitter or other user-first, monetization later approach. Innovation and ad dollars going hand in hand. Not a bad place to be. These are uphill battles worth fighting instead of new ways to cloak for Facebook.
