Online publishing has evolved dramatically in recent years.
While the internet has opened up opportunities for publishers to reach people globally, it's also brought in new problems, especially when it comes to making money. The old way of relying just on ads isn't working as well anymore.
Ad prices continue to fall due to factors such as increased competition and the growing adoption of ad blockers, which prevent ads from being displayed. In addition, stricter privacy regulations such as GDPR and CCPA have limited publishers' ability to collect and use user data for targeted advertising, further impacting ad revenues.
To make matters worse, tech giants like Google and Facebook dominate the ad market, leaving smaller publishers with a shrinking share of the revenue pie. These platforms often dictate terms and take a significant cut of ad revenue, leaving publishers with even less to work with.
But publishers aren't giving up. They're finding smart new ways to make money. Let’s discuss the biggest challenges they're facing and the new solutions they're coming up with.
Web publishers are always looking for new streams to generate ad revenue.
The challenges from various factors contribute to an environment that demands proactive solutions. An assortment of factors contribute to this difficulty, creating a challenging environment that demands proactive engagement and innovative solutions.
The online advertising market has become increasingly competitive, with publishers contending over a limited pool of budget. Declining ad rates plague the industry. This intense competition drives down the cost per thousand impressions (CPMs), making it difficult for publishers to generate substantial revenue from their ads.
While U.S. internet ad revenues reached an all-time high, growing 7.3% to a whopping $225 billion, seasonal and year-over-year fluctuations pose a challenge to long-term revenue planning.
Source: IAB/PwC Internet Advertising Revenue Report: Full Year 2023
Additionally, industry overturns have a significant impact. For example, the newest update to Google’s Search Generative Experience (now known as AI Overview) decreased organic search traffic by 60% in some cases, with an estimated $2 billion ad revenue loss.
Ad blockers and stringent data privacy regulations, such as GDPR and CCPA, have hindered publishers' ability to collect and use user data for targeted ads, reducing overall ad effectiveness and further lowering CPMs.
Programmatic advertising, particularly in the open market, is struggling.
While it initially promised efficiency and scale through automated ad buying and selling, publishers are now experiencing diminishing returns. The open market, with real-time bidding and a vast inventory, often leads to lower ad space prices due to increased competition and a lack of transparency. Lower ad space prices mean less revenue for advertisers.
Advertisers are also increasingly opting for more controlled environments like private marketplaces or direct deals, where they have a greater say over ad placement. This shift away from the open market is putting further pressure on publishers' programmatic revenue.
In response to these challenges, publishers are exploring other programmatic strategies like private marketplaces and programmatic guaranteed deals. These offer more predictable revenue and help mitigate the risks associated with the open market.
There has been a growing emphasis on brand safety and suitability. While they have become critical concerns for advertisers, they present a new challenge for publishers.
With the rise of fake news and controversial content, advertisers have become increasingly cautious about where their ads appear. This heightened awareness has led many advertisers to favor direct relationships with larger publishers who can assure a safe and aligned environment for their brands. As a result, smaller publishers are struggling to secure premium ad placements and partnerships.
Data privacy regulations, such as GDPR and CCPA, impose stricter rules on data collection and usage. Personalizing ads becomes more challenging, and publishers are unable to optimize their revenue generation strategies. Non-compliance with these regulations can result in hefty fines and legal repercussions, adding another layer of complexity to the monetization puzzle.
Finally, the dominance of major platforms like Google and Facebook poses a significant obstacle for publishers. These tech giants take away a substantial share of the online advertising market (we’re talking 20-30% or more), shrinking the revenue available to smaller publishers. Large platforms often operate with non-negotiable terms and standardized contracts.
Their sheer size and market power allow them to dictate terms, and publishers have little choice but to accept these terms if they want access to their vast advertiser base. Smaller ad tech providers are often more open to negotiation and offer publishers the opportunity to secure lower commission rates, sometimes as low as 8-10%. The decision-making process is also less bureaucratic, allowing for faster and more tailored solutions.
This power imbalance makes it difficult for publishers to compete effectively and negotiate favorable terms with monetization partners, hindering their ability to maximize their ad revenue potential.
Challenges often require innovation. A multifaceted approach to monetization, diverse revenue streams, and cutting-edge strategies may be what publishers need to thrive in the evolving advertising scene.
Recognizing the limitations of relying solely on advertising, publishers are exploring diverse revenue streams to create a more sustainable business model.
Inspired by successful publications like The New York Times, many publishers are turning to subscription and membership models. Offering exclusive content, premium features, and ad-free experiences can cultivate a loyal audience willing to pay for high-quality journalism and information. This provides a stable and predictable revenue source that is less susceptible to the fluctuations of the advertising market.
Publishers also leverage their influence and audience reach to partner with brands and promote products through affiliate marketing. A good example of this strategy would be a website providing coupons and promo codes for various products and companies. UFC, a media company, has built a significant e-commerce presence selling merchandise. Similarly, well-known publishers, like the BBC, diversify their revenue streams by converting their existing media into podcasts.
Another effective way of diversification is creating a blog or website with product reviews, optimized for search engines. By further integrating e-commerce functionalities into these blogs and websites, publishers can earn commissions on sales generated through their recommendations. This strategy not only optimizes revenue streams but also strengthens the relationship between publishers and their audiences by providing valuable product recommendations.
Another strategy for generating revenue is partnering with brands to create sponsored content or native advertising. By seamlessly integrating brand messages into their content, publishers can offer exposure while maintaining the trust and engagement of their audience. However, it is crucial that publishers prioritize transparency and disclose any sponsored content to maintain ethical standards.
Google may have abandoned the idea of third-party cookie deprecation but this won’t prevent it from challenging publishers in the future. In this era of heightened privacy concerns and regulations, publishers are recognizing the value of first-party data. Collecting and using user data directly allows them to gain valuable insights into their audience's preferences and behaviors. This data can be used to enhance targeted ads and personalizations without violating privacy regulations.
Publishers are also incentivizing user registration by offering exclusive content, personalized experiences, or unlimited access in exchange for valuable first-party data.
This empowers publishers to gain insights into the audience’s likes and tailor content or experiences to individual preferences. Heavier personalization fosters loyalty and a stronger connection between publisher and user so that consumers feel valued and understood. Users are more likely to stay loyal to the brand and continue engaging with its content, driving revenue growth.
Moreover, first-party data plays a crucial role in the privacy-first future. Publishers who amassed a wealth of first-party data will be well-positioned to maintain effective ad targeting and personalization. They can utilize this data to create audience segments, tailor content recommendations, and deliver relevant advertising experiences without relying on third-party tracking mechanisms.
To overcome the limitations of programmatic advertising, publishers are increasingly seeking direct deals with advertisers. This approach allows them to bypass intermediaries, negotiate premium rates, and maintain greater control over ad placements and formats. By offering tailored inventory packages that cater to specific advertiser needs, publishers can command higher CPMs and forge stronger partnerships.
To effectively manage these direct deals and optimize their benefits, publishers can leverage tools like Google Ad Manager (GAM).
Publishers that utilize GAM as their ad server can identify advertisers by following a couple of easy steps:
GAM reporting allows for the review of buyer accounts, like Display & Video 360 or Google Authorized Buyers, that are already purchasing inventory.
And that’s really easy to do. In Ad Manager 360 for your property, select Reports section. There you can create a report with specific settings. First, select the Date Range for your report.
Next, scroll down to the Dimensions section, and select Bidder, Advertiser, and Buyer network.
Now, scroll down to the Metrics section. Here you can select metrics for comparison according to previously selected Dimensions. For example, Total impressions, and Total CPM and CPC revenue.
When preparations are done, click Run to create a report. You can then export it in the desired format to analyze the results.
Additionally, the report can be broken down by the list of specific advertisers that ran campaigns on a website, providing publishers with valuable insights.
For example, more often than not, a website attracts similar advertisers and agencies. Publishers can leverage this information to reach a particular type of brand or product directly, omitting the mediator. The best part about direct deals for publishers is the transparency and predictability of revenue streams, while advertisers have full control over their campaigns. This in return maximizes the impact and monetization potential.
Innovation is key to staying competitive in any evolving environment.
Publishers are experimenting with new ad formats that yield higher CPMs due to their immersive nature. In-article and native ads, sticky, video, and all kinds of non-invasive ad formats have predictable performance. Interactive ads, however, offer involvement like games or quizzes, boost engagement, and expand brand awareness.
For example, a virtual test drive of a newly released car or a virtual tour through a shop. These ads provide personalized experiences that are both convenient and accessible to everyone.
These ad formats improve user activity and enhance participation in campaigns. This heightened engagement proportionally translates into increased user activity, prolonged dwell times, and higher participation rates, driving brand awareness, purchase consideration, and a stronger return on investment for advertisers.
Source: Nexposai showcase
Source: BMW virtual test drive
Another unconventional ad type is in-image ads that seamlessly integrate into images inside the content. They provide a contextual and non-intrusive experience for users. In-image ads are particularly well suited for graphics, lifestyle, travel, and fashion content.
Source: Vox showcase
Experimental ad formats, such as virtual reality (VR) and augmented reality (AR), are a great way to drive engagement and test the limits of advertising creativity. Google's AR game, Space Invaders, showcased the potential of this technology for developers and brands. Similarly, Hyundai’s AR campaign in Australia created a 12.5-point increase in standard ad recall.
Due to their interactive nature, these formats often yield higher CPMs and are usually measured on key performance metrics like number of interactions, shareability, and time spent. However, they lack predictability and wide audience reach, which emphasizes the need for stronger use of data and technology to maximize the performance of innovative ad formats.
Additionally, publishers are leveraging new technologies like artificial intelligence (AI) and machine learning (ML) to optimize ad placements, targeting, and performance. For instance, AI has great potential to supplement programmatic advertising, especially header bidding, which allows publishers to offer their website inventory to multiple ad exchanges concurrently.
AI-powered header bidding platforms further analyze ad requests, bids, and first-party data to decide the optimal ad exchange for each request. Based on internal studies and Admixer’s clients, enabling dynamic optimization maximizes revenue by 25-55%, because publishers always receive the highest bids for their inventory. An AI-driven process will also minimize latency and provide a seamless user experience.
It's no secret that making money from online publishing is tougher than ever. Lower ad prices, problems with programmatic advertising, worries about brand safety, stricter data rules, and the power of big tech companies are all part of the challenge. But amid all this, there's also a lot of opportunity.
Publishers are finding new ways to survive and even thrive. They're trying out different strategies like subscriptions and working directly with advertisers and using what they know about their readers to make ads better. They're even trying out new types of technology which in turn is giving rise to new ad formats.
The key to success in this industry is being able to change and come up with new ideas, and being willing to try new things. Publishers who focus on what their customers want, build strong relationships with advertisers, and keep up with the latest trends will continue to thrive. The future of online publishing might be uncertain, but for those willing to innovate and change, it's full of possibilities.
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Edited by Sinchana Mistry
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