Challenges of Data-Targeted Advertising: The Publisher’s Perspective

For ad buyers the promise of datatargeted advertising is excitingamp160 More than 100 years ago John Wanamaker said amp8220Half of what I spend on advertising is wasted the trouble is I donamp8217t know which halfamp8221amp160 Buyers believe that with datadriven targeting they can finally know which half and spend more efficientlyBut what about the people who sell advertisingamp160 If buyers could really spend half as much and get the same results amp8230 thatamp8217s not necessarily good for publishersThe answer I hear to this predicament is always priceamp160 Being able to hit a target with no waste should be worth more In the Wanamaker amp8220half is wastedamp8221 example if the price or CPM doubled on the right half then even if Wannamaker only bought that half publishersamp8217 revenues would remain intactHow realistic is this Do we think advertisers will agree to increase price at the same rate as any gains in efficiency they achieve through targetingI am not so sure they will More importantly though the extent to which they are willing to pay that premium is going to vary across publishers It will depend on how high a publisheramp8217s CPMs are today and the supply constraints on that publisheramp8217s inventory Even with targeting there is a ceiling as to how much an advertiser is willing to payThe next comeback I hear to this point that there are limits to price increases amp8211 is that again using the Wanamaker example CPMs need to go up but they donamp8217t need to actually double because the publisher still has the remaining half to sell But what is that leftover inventory worth It could be that the leftovers are people of lesser value to buyers because of their age or income Or perhaps they are very valuable but we donamp8217t know that because they clear their cookies are on an unmeasured platform or their device ID or identity isnamp8217t available or is not being sharedEither way from the publisheramp8217s perspective who is going to buy that leftover inventory if your existing client base is buying on a targeted basis And how much will they be willing to pay for itFor a seller like Google or Facebook awash in supply data targeting is a nobrainer Both companies may be growing rapidly but they still donamp8217t come close to selling all of their inventory and there is a big spread between the price they command versus the top of the market With data targeting they have nothing to lose and it is probably convenient for them that data targeting commoditizes content while placing a premium on the rich data assets both control Meantime for a premium publisher with high CPMs and sell through the math is differentAt ABC we call this the liftversusdrag challenge The idea is Will the lift or premium a publisher gets on datatargeted buys exceed the drag or discount a publisher has to offer on the inventory thatamp8217s left over after advertisers have cherry picked their targeted audiences An inconvenient truth is that a lot of advertisers are chasing the same niche of highvalue consumersIn fairness I donamp8217t know the answer to the liftdrag challenge But it is an important question and one that any capacity constrained video publisher needs to exploreOf course all of this assumes datatargeted advertising is more effective for the advertiser amp8211 that it unequivocally drives more salesamp160 But does it Again the answer probably variesRecently two marketing giants made surprising changes to their strategies I will discuss these changes and our independent research at ABC in a column next week when we tackle some key challenges of datatargeted advertising from the marketer perspectiveClick the social buttons above or below to share this content with your friends and colleaguesThe opinions and points of view expressed in this article are exclusively the views of the author andor subjects and do not necessarily represent the views of MediaVillagecomMyersBizNet Inc management or associated bloggersamp160

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Challenges of Data-Targeted Advertising: The Publisher’s Perspective

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Pooja Midha

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