I have been working on more provocative blog titles. Rawr.
I was reading AdExchanger’s interview with Eric Wheeler and I suddenly realized a few things:
- Eric is awesome. Great company name story. As well-connected, awesome, and likely to be successful a guy as any that you will meet. Would LOVE to work with him one day.
- Despite all this, I think the idea is a bad idea. I have documented this a ton and continue to be concerned. And remember, I have every reason for it to be in my best interest to be wrong about this. Straighten me out somebody!
- Premium inventory are to RTB/Exchange concepts as oil is to water.
Specifically what got me thinking was Eric’s comment: “Using 33Across, marketers can use our Social Proximity segments to target users across the web via exchanges, not just within social media.”
Well, you could. But….
Premium inventory typically costs a lot. If you are targeting a behavior and OK with social media inventory, you probably aren’t valuing the brand association that comes with premium content. If you can buy UGC inventory for $1.00 or ESPN for $15.00, is it worth it for a media planner to go get ESPN?
The behavioral data provider doesn’t really care. He layers on one or two or three dollars in value either way. But to the media planner, two impressions that had similar value for their behavioral data cost a lot more to buy from the publisher. Tough.
Also, premium publishers are moving much more slowly to the RTB/Exchange model – and with good reason. The risk they have of channel conflict is dramatically hire than a social network. Social networks are monetizing inventory in the $1 – $5 range. ESPN’s sales force is selling theirs for $15 – $35. The opportunity cost of liquidating unreserved inventory in a fashion that might lead a marketer to buy using RTB tools rather than premium direct reservation is quite a bit higher. The sell-through rate for premium content is typically higher than UGC social networks as well. The result is that the potential percentage of revenue for a social network is a lot higher.
I ran some numbers:
|Social Network Site|
|Premium Content Site|
So you see here that for a social networking site, remnant inventory could easily be more than 25% of their revenue, whereas a premium content site is probably looking at more like 3%. You could squish the numbers around a bit, but you see the concept: This unreserved stuff doesn’t really move the needle for content guys, but social networks stand to reap huge benefits. The result is that people like Yahoo, Google, and MySpace: people who could never hope to sell all their impressions, are the first to jump on the RTB bandwagon. The really good brand inventory is going to take longer to get there.
Also, these numbers highlight that you probably need order of magnitude changes in value to really move the market for these kinds of publishers.