I just read Did Standards Kill the Online Ad Business by Saul Hansell on nytimes.com. It is true that standard ad sizes lowered the cost of entry for digital ad networks, but these networks would have emerged and succeeded even if standards weren’t formalized. Informal standards would have been dictated by the largest publishers or ad networks. The success of ad networks has everything to do with their business models, and nothing to do with standards. Furthermore, the online ad business is far from killed; it’s maturing. Ad networks simply makes sense, on a medium where publishers are plentiful, and not limited by bandwidth over coaxial cable, printing, or distribution costs. With the large quantity of publishers, mostly with a relatively small share of Internet reach, ad networks become necessary. Most publishers can’t afford large sales teams, and don’t have the distribution to pull in scalable deals.
I would argue, though, that many large traditional media companies have brought this tough competition on for themselves. Many of them have turned to these same ad networks to back-fill the ad inventory they were unable to sell-out with their internal sales teams. Why would a large advertiser pay a premium to buy ads on a premium site when they can pay a tiny fraction of that amount to get their ads on the same site through the ad network? These publishers can typically block specific advertisers or industries on these ad networks, but unless every major publisher issues such a block, the savvy advertisers will continue to find cheap ways to get their message out using these standard units.
Here’s how traditional media companies can beat the effect of digital ad networks on the web:
- Deliver a product people truly want to your audience. Migrating newspaper content to the Internet is simply not compelling enough to accomplish this goal. You need to differentiate yourself from an overcrowded set of publishers. And stop with the one way broadcast, already! Engage your users! Lucky for you, many advertisers still want their message on premium brands only.
- Deliver innovating ad products that really pay off for your advertisers. This is difficult, because many advertisers are still not savvy enough to go after custom solutions. Additionally, these solutions can be very costly. That said, if you can show a few success stories, you can make it happen. The bottom line is that you need to help your advertisers accomplish their goals if you want to keep them.
- Don’t be so rigid, try something new and take a chance. Go out on a limb and try something that you’ve never tried before and can’t guarantee success with. Just be sure to measure success, and have a plan in place so that you can make adjustments from what you learn. Again, differentiate yourself!
- Be and early adopter for all new media platforms, including social media. Rich Sanchez? ’nuff said.
An offshoot of #1 and #3 – put some research into HOW your customers USE your product.
The publishing industry needs to stop thinking of itself as something different from any other consumer product. There are people who use the service you provide to meet specific needs. If they can find a different product to meet those needs, or simply do without, then you lose your audience.
Publishing says “here are the things we think you should know about what’s going on in the world.” For some people, that’s the problem they need solved.
But other people are researching – there is specific information they are seeking. Some people are browsing – they have five minutes to kill and want to spend it in the most amusing way. Some people are seeking social capital – looking for information that will give them common ground with other people. These are all different use cases that traditional media has pretty much ignored, and bloggers have embraced.
Thanks, Cindy. This is dead on, and covered lightly in my previous post, “Why Good Ideas Fail” but is definitely applicable here, too. I will update!