Whew! We made it!! We’re in 2016. Happy New Year indeed.
If you’re reading this, it means you are a valued Hashtag Labs client as our Happy New Year email most likely directed you here – which, please allow me to reiterate: Thank_you!! It’s great to work with the best independent publishing companies on the web and we obviously couldn’t do that without you. Through 2015, HTL has grown to service a select group of websites that I am confident represents the very best of high-quality, editorially-driven digital publishing operations. It’s an honor and privilege to work with you.
As I mentioned in the email, I want to use this post to talk about our goals for continuing to provide you with the best digital operations and advertising services possible in the upcoming year, describe what I see as the current online advertising landscape, share a few of the most important insights we’ve learned in 2015, and present a few ideas about how to execute against those insights for enhanced performance in 2016.
Hashtag Labs Goals in 2016
- Continue to be the most cost-effective and capable operations solution for our clients.
- Engineer industry-leading technical implementations of programmatic/automated ad sources in order to maximize revenue.
- Provide superior customer service, media planning, and advertising implementation, production and reporting capabilities for direct ad deals.
Current Online Advertising Landscape
The history of advertising’s role in online publishing is a storied one covered in detail (for better or worse) by the industry trade publications, so I will try to keep this as short as possible.
The Premium Networks Disappear
Prior to the past couple of years, the independent publishing companies born of the web were supported by revenues mostly generated by venture-capital funded agencies like Federated Media, Say Media, Martini Media and other similar companies. This agency business model, from my position, seems to be extinct today. The high-end rep firm is no longer around – their costs to operate exceeded their ability to earn profits.
Programmatic Advertising and The Implications of Its Technical Barrier To Entry
Meanwhile the less labor intensive methodology for transacting online advertising, now known as programmatic advertising, has continued its march forward. One of the major rubs of this situation is that where the premium ad networks and agencies worked well, the programmatic advertising companies have failed – that is to say where the premium ad networks/agencies provided (somewhat) easy-to-implement advertising, working with the major programmatic ad companies (Google, Rubicon, AppNexus) comes with decent technical and business development barriers to entry. Ad operations professionals who have experience within this realm and traditional web development/engineering talent are needed in order to fully take advantage of the programmatic landscape. Additionally, an unwanted consequence due to the rise of programmatic is that we’ve seen ad quality deteriorate (the actual ad creative) from a technical perspective – ad creatives today are often massively bloated causing publisher webpages to load slowly.
Because of the niche technical and biz dev expertise needed to operate within programmatic advertising, we’ve seen the rise of a new type of player in online advertising – the “arbitrage middleman”. The “arbitrage middleman” is a technically advanced player in online advertising who isn’t a publisher and knows how to work across the programmatic platforms in order to extract value for themselves – this sort of player most often manifests itself as one of the myriad of ad networks or buyers that are constantly pinging your generic Advertise@YourSite.com email. In general, I find these companies are simply taking ads from one programmatic platform, applying some technical tricks, and then running them on your site and keeping a large portion of the revenue.
The Big File Size/Heavy Ad Creative Problem
While less than ideal, the margin the “arbitrage middleman” keeps isn’t the biggest problem – the biggest problem with the ads provided by this class of player is that the load size of the ads is HUGE and the ads ping multiple servers slowing down page load due the “technical tricks” the arbitrage middleman is using. The ad creative load here is multiple megabytes – an ad this size that’s constantly and automatically making calls to other servers in search of an ad to show your reader will slow your page down to the detriment of the reader-experience. Either which way, I don’t believe that these games currently being played are long for our world or in the best interest of high-quality, editorially-driven publishing companies with real audiences.
Given this somewhat gnarly situation – what strategy should an independent publisher employ?
Hashtag Labs 2016 Publisher Strategy
We want to help our publisher clients make the most money possible while keeping their operation lean. I believe we can do this by executing against the following three tiers of revenue:
Tier Three – Programmatic
This tier of revenue is (somewhat) automated and can be managed by a small, experienced and technically capable team. Hashtag Labs has learned a ton here in the past year and we’re now deploying an original/proprietary solution for dealing with the normally unwieldy passback impression. Our solution increases prices paid for passback impressions by making sure that important information about the impression isn’t lost as the impression is passed along to different ad providers.
HTL is also a leader in bringing to the table and implementing header bidding for publishers. Additionally, we’re starting to drive incremental revenue via private marketplaces and preferred deals on the major programmatic platforms.
Tier Two – Managed Networks and Business Development Opportunities
While the premium networks of yesterday are gone, there are still a few revenue-generating business development partnerships to be had within the industry – developing and servicing these is something we’ll continue to work on for our clients in 2016. Examples of these partnerships include working with other premium publishers who need audience extension capabilities, setting up header bidding relationships with the major platforms and getting preferred rev share deals with content recommendation companies.
Tier One – Direct Sales
This subject is the one that’s been conspicuously missing from the discussion thus far. On the upside, direct sales can be the biggest driver of revenue for an independent publisher. On the downside, earning direct sales can be cost-prohibitive by often needing dedicated employees and requiring custom production (sponsored videos, editorial, etc) to deliver on what’s sold. It’s a complex mitigation that varies on each publisher’s individual situation.
In considering this tier, Hashtag Labs is cognizant of the fact that our publisher clients vary in their capability to generate direct sales (said differently: some clients have direct sales teams and other’s don’t). Given this, HTL can help a publisher in one of two ways:
- Continue providing superior pre- and post-sales services (media planning direction, ad trafficking and reporting) to any publishing client who brings in a direct deal.
- HTL is and always will be an operations first shop, but HTL clients without a direct sales team should be able to earn direct dollars too. In 2016, HTL would like to explore helping its publishing clients earn direct deals – this is something that we’ll be in touch with each publisher individually to discuss before moving forward since it is something we know that needs to be treated carefully and on a case-by-case basis.
I think that a key to success in working with direct advertisers in 2016 will be innovating in creative formats. That is to say, right now, the bad ads that come over the programmatic platforms are bad because their real estate is small and they don’t load fast. When working with the sorts of advertisers we want to work with, we should be prepared to help advertisers produce beautiful ads – ads that are technically advanced, large (think 970×250 and 300×600 on desktop, and various executions on mobile) and fast. The most advanced ads I’ve found are developed in HTML5, work seamlessly across all devices and platforms and load quickly. Hashtag Labs is ready and able to help in this department. Let’s help push advertising to where it should be on the web – big, beautiful, fast and most-importantly: advertising that does not detract from a reader’s experience.
2015 was a change-filled year for the online advertising and publishing industry. Hashtag Labs is confident we can continue to surf these ever-changing dynamics successfully and build on the industry-leading digital operations foundation we established last year.
- Optimize programmatic ad stacks/maximize programmatic revenue by minimizing partners, employing HTL’s proprietary passback methodology, and continuing to push forward into the header bidding, private marketplace and preferred deal realms as they continue to evolve.
- Improve our revenue reporting software, Hashtag Executive, so publishers have daily updated revenue numbers in one easy to access place.
- Continue to bring revenue-generating business development deals to the table.
- Provide best-in-class ad trafficking services.
- Work with individual publishers to make sure direct sales capabilities are being built out according to their vision and resources.
- Help produce the best digital ad creative possible.
All this while maintaining a steadfast commitment to the original core values that makes HTL stand out:
- Extraordinarily prompt and professional custom-service provided to our clients and our clients’ clients. We know (for better or worse) advertising doesn’t sleep.
- Transparency: The industry has traditionally operated with obfuscated margins and HTL does not.
- Staying up to date on the latest industry and technical developments – HTL scours the web for the latest in news, research, and trends and then shares and executes on that information with our clients.
- Our priorities are our client’s priorities – we do not have to answer to anyone except our clients and this is a clear differentiator from eras past and other companies. Your success and satisfaction is our success and satisfaction.
It’s hard to imagine, but this post is not exhaustive in its list of action items – we could include bullets on first party data management, viewability, audience acquisition and a myriad of other topics, and while those topics are certainly not off the table, I do think this post expresses our strategy for 2016 as efficiently as possible. Put more succinctly we want to maximize revenue for our clients while staying on top of industry trends. As this post is not exhaustive, and HTL always wants to tailor its service to its client exact needs, obviously please do not hesitate to reach out with any questions or direct asks.
We look forward to an awesome 2016 and THANK YOU AGAIN for your partnership!!!