Downward pressure

ESPN’s chucking out its remnant ad networks is a provocative move – and not likely to be revenue neutral. But as for which way revenue will go – I haven’t a clue. It really depends on the amount of downward pressure the remnant advertising was exerting on the premium pricing. If ESPN was seeing premium customers leave, only to buy inventory through their remnant ad networks, that’s an issue. If the remnant ad networks were pitching ESPN’s premium advertisers on remnant buys, and convincing them that they could get the same advertising inventory for much less, that’s an issue. By ditching their remnant networks, they can solve both of these problems and get rid of the downward pressure on their premium pricing. But let’s be clear about this – if there’s downward pressure on their premium pricing, it’s not the ad networks’ fault, it’s CNET‘s.

There’s a right way to combine ad networks with direct sales, and there’s a wrong way. Selling as many impressions as possible in advance, and then punting all the rest to remnant networks – that’s the wrong way. There’s no differentiation between the pools – the last direct sales impression and the first ad network impression are identical, but the latter sells for a fraction of the price of the former. In such a situation, it’s entirely rational for advertisers to prefer remnant to premium, and you shouldn’t be surprised when they do. Instead, you’ve got to separate out the pools of inventory, using things like geotargeting, demographics, and above all frequency capping. Don’t sell your most valuable demographic to remnant networks. Don’t sell your core American audience to remnant networks. Don’t sell the first few times a unique user is on your site to remnant networks. If you can’t sell the best inventory out yourself, leave it blank, or put in a PSA. The same goes the other way. If you shove too much crap down your premium advertisers’ throats, just because your salesforce is cranking and you can, this will be noticed and premium prices as a whole will eventually drop. If you want to sell premium and remnant simultaneously, you need to keep your premium inventory special. Keep ‘em separated.