One big thing
I didn’t really comment on the revenue sharing piece a few weeks back. Wanted to mull on it for a bit as I felt too much nuance was left out of the conversation. To recap, PWC after completing a two-year study found;
“Publishers receive just half the money spent on their digital ads by premium brands such as Unilever and Nestlé, according to research which lays bare the fees taken by ad tech companies and untraceable middlemen.“
It goes on to break it out per pound, “From every £1 spent by an advertiser, about half goes to a publisher, roughly 16p to advertising platforms, 11p to other technology companies and 7 per cent to agencies.“
To read more, Ari Paparo did a good thread on it. The friction is around the level of ‘ad tech tax’ for backfill inventory. And that ~15% seemed unaccounted for.
But it’s just not a simple calculation as that, it’s hard, as where does the cost/revenue gain start/stop? Does hiring two less salespeople, so all your sales team are at capacity get reflected in that overall benefit? Does the fact you don’t have to pay for the servers to run those ads, the bandwidth, the creative management, the quality control, the actual running of the real-time bidding in a fair way, all get calculated? Note, they don’t.
A nice analogy I saw via the Sparrow One newsletter was the percentage of revenue a home seller receives from a buyer. For the buyer it’s not just the asking price, it’s the cash today and 30 years of interest. Home sellers could finance the deal themselves and collect that income. But they’d rather take the simple transaction right now.
It’s not a bad analogy, as a publisher, I have an ad impression to sell right now, can you as a third party go and scour thousands of advertisers and request a bid from them all and get me the best bid, in an instant. Sure I could give that ad opportunity away and go do it myself – not monetizing in the meantime. We all know pub sales teams take a peek at what brands are buying indirectly and go strike up a conversation direct.
The revenue share is coming in for the inventory that couldn’t be sold via primary efforts.
For the advertiser, they can only buy impressions which suit their criteria. If they want to do blanket buys, they can go direct. They know that.
Granted, there should be more accountability, I just think a wider view is necessary here to evaluate it before cutting nose off to spite your face.
Notable stories this week
- Future of native editorial: ’Some clients want more content than ever before’.
- This is good from Lara, how Danish newspaper Information is increasing circulation and profit.
- Google Discovery Ads now available globally.
- Instagram introduces IGTV ads.
- Facebook feel-good ad from Facebook boasts a coronavirus group but it’s not quite what it seems.
- Apple looking to buy exclusive original podcasts. And Amazon is looking at local podcasts too.
- Apple promotes Apples TV+ for kids.
- Conviva launches TikTok Analytics.
- HBOMax launched this week.
- The next media opportunity: talent, reputation and lessons from record labels.
- Google to make quality of "page experience" a ranking factor in Search results
- Zuckerburg gave his first interview in a while on CNBC.
- Branded content is STILL a big player in the future of advertising … even during a pandemic.
- The rise of the GIF.
- DraftKings is exploring an acquisition of Bleacher Report from Turner Sports.
- ContentSquare raises $190m from private equity.
- Publisher affiliate partner Skimlinks acquired by Connexity.
Campaign of the week
- CNN International PR’s Travel Tomorrow for the UNWTO.
- Bluetooth or wifi? A jargon-free guide to connecting your audio to your smart devices by Spotify and The Guardian.
- Submit your own and view the best campaigns of 2020.
- “The unit economics of newsletters is fascinating… I wouldn't be surprised to see M&A and consolidation ramp up for some… Consider this format: An infrastructure-lite, highly profitable, seven figure ARR for networked publishers is going to be the norm. That's 1-4 publishers.” –Web Smith, Founder, 2pm
Datapoints of note
See all our Covid-19 data here.
- 22% of influencers have lowered their rates.
- For advertising sales folk, Keith from LaunchAgile is doing a free version of their sales training programs on account planning.
This is a new section, where we shout out newsletters we like or readers enjoy. Just hit reply to send us any you rate.