Federated Advertising Platforms

In a recent post I’d said “media will come to recognize that they are as much in the advertising assembly business as they are in the ad delivery and content businesses”

Seems Time Inc. already recognizes which led to an interesting post at Publishing 2.0 comparing Ad Platforms and Ad Networks. The core distinction is who controls the relationship with the advertiser. I’d go a bit further suggesting there three big areas of  difference:

– who controls the relationship to the advertiser
– how member sites are qualified
– how is site readership related to advertisers target demographics

Ad Networks, such as Google, develop vast relationships with both advertisers and sites matching ads to sites algorithmically. It’s efficient and highly lucrative for the network owner because the most of the value lies in securing the advertiser and linking ads to sites.

The down side is that sites and ads are interchangeable, at least to the extent the algorithm allows. While this is true to an extent for almost all ad mediums what’s different is how the matching occurs. Advertisers can buy placement only according to indicators the algorithm tracks. Sites are selected the same way. Differences in site selection have to show up in the algorithm or they can’t be used for placement.

A problem arises because matching traditional advertiser metrics to the algorithm depends on an inferred relationship.  Characteristics like traffic, links in & out, metadata, keywords, location etc. need to be aligned with typical brand metrics like ages, sex, income religion or more sophisticated  psychographic and aspiration indicators. The alignment is imprecise, which may count for the struggle advertisers have moving online – and the growth in services like Search Engine Optimization which need to continually refine the relationship between ad placement criteria to match target market behavior.

The alternative approach is the Ad Platform which does some of the same things Ad Networks do (algorithmically based ad placement) except they layer on an ability for a more direct relationship between the advertiser and the site – which opens the probability of site selection based on traditional advertiser metrics – because site owners need to understand this as it also drives content choices.

It is here that traditional media can build a new value. First the cost of building the relationship with the advertiser is expensive which opens opportunities to profit on the delta between advertiser’s costs and what sites receive per placement. An added value is that sales costs can be amortized across more sites increasing margins.

The skills required to build advertiser relationship are also very similar to those used to qualify sites for advertiser suitability. And this qualification increases the range of properties a platform can offer an advertiser – while still delivering site metrics that are of use to advertisers. 

By extending their Ad Platforms into sites outside their direct family traditional media grow revenue and reach – while maintaining two differentiators that are core to their current and long term value – their relationship to the advertiser and their ability to relate content to market characteristics advertisers understand.