Here's some old news: Advertising is going digital.
Here's more old news: The big, horizontal ad networks are making money — and lots of it.
But here's some new news: Small, niche publishers may be perfectly poised to nab a larger piece of the revenue generated from digital advertising— maybe even steal it right (back) out of the ad networks’ pockets.
Vertical ad networks are the rising stars of the online advertising world. They provide marketers with a tangible, well-defined demographic (i.e., user persona), gathered all in one "spot." In many cases, these audiences not only share common characteristics, but also a common interest or passion. Great fodder for advertising messages, right?
If you're a small publisher with access to such an audience, the ball is in your court. You can either sell your ad space through a Goliath-like horizontal ad network and watch the untargeted ads fly at your poor readers, or you can do something unique, something revolutionary: Start your own vertical ad network.
There are six legitimate reasons to jump into the ad network game:
1. You'll give birth to the best kind of ad sales team: a focused one.
Your typical ad network and online advertising salesperson has way too much on their plate to be effective. Try unloading banners and video ads across no fewer than 200 verticals. It's no wonder they're not bringing you the brands that you want, the ones that you know should be connected with your audience.
Here's an example from my experience as VP of Publisher Development at one of the big horizontal ad networks:
One of the partners in the network, WebFlyer, ran a popular site called FlyerTalk.com. It was a virtual haven for leisure and business travelers — self-professed mileage junkies — to share tips and opinions on travel-related loyalty reward programs. (Think: Up in the Air.)
We knew instinctively that this was a big opportunity, but try as I might, I couldn't get my ad sales team to focus their efforts on this vertical. There was simply no incentive to sell space on FlyerTalk; they were too small.
If, however, we had gone out and recruited other publishers with similar content or even just similar audiences — bam! A Business Traveler Vertical Ad Network would have commanded premium CPMs and sold like hotcakes to marketers looking for a mobile, affluent audience that was ready to sign up for new credit cards, hotel programs, etc.
Moral of the story? 1+1 = $. One salesperson focused on one vertical can do far more than an unfocused sales team 20 people deep.
2. Leverage your expertise.
The salespeople at my horizontal ad network didn't have the time to learn about specific verticals and fully grasp the opportunities they afforded. You, however, do. By virtue of your own knowledge of the space, you will be able to identify high quality, related content sources to complement your own — something that would be incredibly difficult for an advertiser to do.
As an expert, you can also speak intelligently about your audience and explain to potential marketers the value of putting their brand's name in front of your network's demographic.
3. Keep 100% of your sold ad revenue and increase your CPMs.
This is a no-brainer. When you sell your inventory through the big ad networks, you can lose up to 50% in commissions. Direct sales commission, on the other hand, hovers around 4-5%.
Additionally, average CPM payouts from horizontal ad networks hover between 50 cents and $1.50 net to you, maximum. Rates for vertically targeted advertisements, by comparison, usually go for $6-$12 CPM.
4. You don’t have to make trade-offs. Starting your own ad network is not an either/or situation.
Keep your relationships with the other ad networks and use them to sell whatever you want. But now you have options: If your sales team does their job and gets that premium inventory from your site (and your new partners) out to the right advertisers and they bite, you've made a huge step forward — and haven't lost anything.
5. There's a low barrier to entry.
Back in the day (aka 1998) a media company that wanted to build its own ad network had to build its own technology platform. In today's enlightened era, there are a number of great platforms that you can license for a nominal fee. In addition to basic ad serving, many of them are capable of handling campaign management, performance tracking, reporting, billing, and technical support. See a short list of ad network technology platforms.
But be careful: The technology will empower you, but don’t go in blind. Make sure you understand how to choose the right platform, the needs of your new publisher partners, and how to recruit for, manage and grow your network. Depending on your needs and your budget, you can keep all these functions in-house or consider bringing in outside help.
6. You can make new friends (not frenemies).
A small publisher can offer monetization opportunities to small, up-and-coming bloggers or news sites, bringing them into the fold while they are still small – and before they become potential competitors. There is strength in numbers, so make these sites your allies.
At the end of the day, if you've done everything right, you'll have a strong vertical network of high-value affinity sites that any advertiser in hot pursuit of your demographic will love. You will be truly capitalizing on the long tail market, creating a scalable advertising model that will put money in your pocket — for a long time to come.
Scott Swanson is the principal of 47 Media, an online media consulting firm specializing in ad network strategy, publisher relationship development, monetization strategy, and outsourced business development.
