This article appeared first on inma.org
Let’s start with a simple definition - direct ad sales refer to a method in advertising where publishers sell ad spaces directly to advertisers, without the involvement of intermediaries or third-party networks. From the perspective of publishers, this approach offers several advantages. Firstly, it allows for greater control over the advertising content that appears on their platforms, ensuring it aligns with their audience and brand values. Secondly, publishers can negotiate terms directly with advertisers, often leading to more favorable pricing and long-term partnerships. Additionally, direct ad sales typically result in higher revenues for publishers, as they avoid the fees usually associated with third-party networks. However, this approach requires more effort in terms of sales and management, as publishers must handle the entire advertising process, from securing advertisers to managing the ad placements and tracking and reporting performance. Despite these challenges, many publishers find this strategy effective for maximizing their advertising revenue while maintaining a high-quality user experience.
Digital Advertising Shift: A Change in User Preferences
The last decade has marked a significant shift in the landscape of digital advertising. The persistent tracking of users' online activities, exemplified by the relentless following of ads like the proverbial red shoe viewed once a month ago, has led to a growing discomfort among internet users. This invasive approach to advertising has driven many users to install ad blockers at unprecedented rates, compelling publishers to pivot towards subscription models as their primary revenue source in an increasingly ad-averse online environment. Tech giants like Google have been waging a war on ad blockers for quite a while, in an attempt to save their advertising revenues.
This illustrates that the digital space has reached a stage of maturity. Regulations have been implemented, and infrastructure providers, including browser manufacturers, have started to limit the use of invasive tactics like third-party cookies. However, this doesn't represent a blanket rejection of advertisements by users. The data and user interviews suggest that the issue isn't with the ads per se, but rather with the intrusive nature of certain ad types, particularly those low-quality third-party ads promoting get-rich-quick schemes, online games, and weight loss tricks – content that would never have been considered for print publication.
In contrast, there remains a clear acceptance, even a preference, for high-quality, well-targeted ads. These are typically the result of direct sales to advertisers, as opposed to the less discerning, algorithm-driven programmatic sales. The concepts of "exclusivity" and "premium" are not just applicable to content but to advertising as well.
Interestingly, readers of paid print publications not only tolerate but often appreciate well-curated advertisements. Particularly in regional newspapers, these ads are seen as valuable "Lesestoff" (reading material), sometimes holding as much importance as the premium regional content surrounding them. This suggests that the future of digital advertising lies not in its elimination, but in its evolution towards more respectful, relevant, and high-quality formats that align with user preferences and expectations.
Direct Ad Sales Challenges for SMBs
In the realm of online advertising, there's a strong contrast in revenue sources compared to print media. The share of revenues generated online from regional direct sales to small and medium-sized businesses (SMBs) versus large multinational programmatic campaigns is typically below 10%. In print, however, this figure was over 50%. This discrepancy raises a question: why does such disparity exist given that readers show a clear demand for regional information and advertisers are willing to pay for targeted audiences?
Moreover, integrating exclusive ads post-paywall can significantly enhance the 'revenue per user' by combining subscription and advertising revenues, especially when considering the higher cost per thousand impressions (CPMs) these campaigns require. However, several challenges hinder the growth of direct sales SMB campaigns online:
- Lack of Scale in Direct Sales SMB Campaigns: There's a noticeable absence of these campaigns at a large scale compared to their print counterparts.
- Quality Concerns: Many SMB advertising campaigns fail to meet the 'premium' standard, often looking subpar compared to larger, more polished campaigns.
- Ineffective Focus on Metrics: SMBs focusing solely on click-through rates (CTR), cost per click (CPC), and CPM find limited success, as these metrics don't necessarily translate into quality or effective advertising.
An interesting case study is illustrated by the INMA member "Kölner Stadtanzeiger Medien" from Cologne, Germany. They managed to significantly scale direct ad sales to their long tail of SMB advertisers, adding several hundred new local display ads per month. Their success revealed four key strategies:
- Recognizing the need for 'premium content' to drive subscriptions.
- Understanding the importance of 'premium ads' from local advertisers.
- Ensuring that both content and ads are aligned in quality and audience relevance.
- Leveraging local insights to create more targeted and effective advertising campaigns.
These strategies highlight the need for a balanced approach in digital advertising, where the focus is not just on revenue generation but also on maintaining quality and relevance, both in content and advertising.
Strategies for Effective Direct Ad Sales in Local Advertising
Maintaining Quality Control in Advertising
Local advertisers should not be responsible for creating "premium ads" or directing clicks to their websites. Often, their ads and homepages may not meet the high standards expected by users. As a publisher, it's crucial to maintain control over both the banner and the landing page. This approach ensures that every advertisement and user click is associated with a high-quality product. In the long term, this strategy can also enhance click-through rates (CTR), as users come to expect and receive the quality they anticipate from each ad.
Selling Exclusivity over Standard Ad Placements
Instead of offering standard "run of site" placements like in programmatic campaigns, focus on selling exclusivity. Provide local advertisers with a unique spot on the regional homepage, such as in a banderol, where they are not competing with national and multinational campaigns. This exclusivity not only makes the ad more noticeable but also adds a sense of prestige and importance to local advertisers.
Leveraging User-Targeting for Exclusive Ad Placement
With the decline in cookie-based targeting, publishers need to find alternative ways to target users effectively. One method is to use the information known about subscribers. When a paid user logs in, ads that match their local reading habits can be served. This strategy ensures that the user sees relevant local information, and the advertiser gains access to an exclusive audience that they couldn't reach elsewhere.
Shifting Focus from Click Metrics to User Engagement
Move away from selling based on clicks, click rates, or cost per click (CPC) and cost per thousand impressions (CPM). These metrics can be challenging for local sales reps and advertisers to grasp. Instead, focus on the concept of attention: how much attention an offer receives for a specific price. For example, Kölner Stadtanzeiger Medien offered a bundled package at a fixed price, including both the banner and the landing page. This approach simplifies the decision-making process for local advertisers. Once they opt in, the banner and landing page are created for them. With the landing page under the publisher's control, sales reps can report on more meaningful engagement metrics like "time spent on the landing page" and "buttons clicked on the landing page," providing a more comprehensive understanding of user engagement.
With a much more compelling story to advertisers, direct sales to SMBs grew so substantially that Kölner Stadtanzeiger switched the model from an upsell to an automatic bundle with every print ad last year (which also earned them a nomination at this year’s “Global News Media Awards”: https://www.inma.org/practice-detail.cfm?zyear=2022&id=CF90C095-3568-447B-A89B-250DF986F4AF). Please reach out if you want to see the entire business case, the ads and the landing pages, the sales materials and everything involved with this successful case.
In short, the landscape of digital advertising is undergoing a significant transformation, driven by changing user preferences and the need for more meaningful and relevant ad content. Direct ad sales emerge as a potent strategy for publishers, offering a way to align advertising with audience expectations while maintaining control over content quality and brand alignment. This approach not only enhances the user experience, but also promises higher revenue potential for publishers, especially when compared to the diminishing returns of invasive, third-party ad networks. To learn more about how we help publishers build a profitable relationship with SMB advertisers, check out our best-selling Smart Ads product.