In the monetization arena the publisher’s playing ground is a result of two elements, the quality and quantity of their generated traffic. Traffic is measured in several ways; there is raw data available from analytics and other traffic tracking and rating report agencies such as QuantCast and comScore. Amongst others, data can range from; Reach, Page Views, Unique Visitors, Number of Visits, average Page Views per Visit, Geo Location and Language, Browser type, Demographics, even Behavioral and ultimately, when you display advertising on your website, Ad Impressions count.
The online advertising industry grew too enable publishers to realize positive monetary financial gains by leveraging their traffic. Granted, there are other revenue generating business models such as monthly subscriptions and other pay walls, nonetheless some online publishers have opted to remain free and assimilated themselves into the embrace comforting blanketed upon them by CPM advertising.
CPM, or Cost per Mille (one thousand), is a crude traffic measuring method of market forces attempting to value eye balls. We do not know what someone is doing or thinking, perceiving or impressed with visually (or other stimuli) when a pair of eyeballs happen to cross over the sweet ad banner matrix of pixels glaring at them in their home or office.
Large publishers generate large amounts of traffic. The ad impression Quantity is an element that is more then less a dry objective observance, well mostly at least. It is as objective as per the trustworthiness of the market accepted ratings agencies and the reports they generate and distribute, usually for a fee. Quality of traffic, on the other hand, is as subjective as consensus, and is the reason for the large gaps between CPM prices quoted by advertisers and publishers alike.
More often than not, large publishers are mostly unable to sell their entire ad inventory directly. Recently a report by the Rubicon Project, an Ad Network management service, suggested that large publishers have a hard time selling directly on average more than 15% of their monthly bounty. That leaves a remainder, where the lion’s share of the catch is sold into the marketplace; this remainder is known as remnant inventory. Remnant ad impression inventory can be sold to Ad Networks or even to Ad Exchanges, the secondary market where Ad Networks trade amongst themselves.
This online advertising marketplace is like any marketplace. Different parties, selling what appears to be many units of the same products to each other. Publishers sell their traffic to Advertisers, and like all marketplaces enter the middle men; Ad Networks. Ad Networks are all traffic traders, looking to unload products onto their publishers and advertisers customers/clients. The successful Ad Networks are the ones that do the best job matching a portfolio of publishers with a portfolio of advertisers. The CPM model allows publishers to unload inventory in the crudest way, usually en mass and in bulk. A publisher that sells his entire ad impression inventory maximizes his eye balls earning potential. CPM sellout allows the publisher to return to his core business, publishing content and increasing traffic to the website.
Advertisers on the other hand have one main goal – grow sales. More often then not, since banner display advertising, although interactive (by a click), remains as a passive form, as opposed to a more intended and user initiated searched result. Advertisers, being the performance oriented bunch that they are, resist the publisher’s demands for inventory pricing based on eyeballs (CPM) and seek a model that provides as much quality elements over quantifiable ones. Performance based advertising such as Affiliate Marketing, Cost-per-Action (CPA), Cost-per-Lead (CPL) and Cost-per-Click (CPC) all rest upon qualitative performance metrics. Here the advertiser doesn’t care about how many eyeballs may (or may not) scan over a banner; they constantly try to tie the publisher deeper into their sales funnel.
Large publishers seeking to maximize their revenues should focus on their core strength, the content they publish. These publishers have a hard enough time marketing their own content across the internet and should not be lured in by performance driven advertisers seeking to lure them into marketing the advertisers brand and products as well. It should be the advertiser’s responsibility to take care of the sales funnel, not the large publisher. CPM based transactions stands as the best monetization position for large publishers, except maybe for a direct acquisition or partnership. A large publisher should stress the potential Brand Awareness his visitor audience can give the Advertiser and charge in CPM.
The Ad Networks pony up to the publishers and seek to help the advertisers in improving their sales funnel as best they can. As the Ad Networks grow larger and gain more audiences then any one publisher can amass, they begin to analyze the data that they transact with. Learning more about the audiences they serve too, they can better assist Advertisers in converting those potential eyeballs into desired actions. This relinquishes the publishers from the qualitative burdens the advertiser wishes to set upon them; the Ad Network is better positioned to handle them anyway.