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InContext / An inside look at the business of digital content

Demand path optimization: a publisher panacea

May 11, 2021 | By Eddie Lee, Head of Publisher Account Management – Nativo @nativo

Everyone seems to be focused on the “new” data strategies that publishers can deploy in a post-cookie world. The New York Times set the agenda with their news about phasing out third party data and introducing their own proprietary first-party audience segments. Vox Media and The Washington Post were fast followers in announcing their respective first-party data solutions. 

Alas, not all publishers have an army of data scientists and technical specialists to figure this out for them. But that doesn’t mean there aren’t other opportunities to capitalize on in this new era. The often overlooked strategy to consider is demand path optimization (DPO). Here are a few reasons why DPO is an optimal solution.

More ≠ More

With programmatic advertising came the promise of a democratized ecosystem. Publishers big and small would gain access to a new array of ad spend. The reality, however, was (and still is) something very different. Publishers partnered with more and more ad tech providers promising unique access to premium demand. Initially, each new partner correlated to more revenue. So, publishers found themselves hooked up to dozens of partners. But then the revenue plateaued–or in some cases decreased–because more is not always more. 

Despite the continually increasing investment in digital advertising by brands and ad agencies, it is not infinite. Enter DPO. The best way for publishers to ensure they are accessing truly unique and quality demand is to connect to it directly. This doesn’t mean doing away with the systems and efficiencies that come with programmatic advertising. It starts with assessing which partners are performing the best. 

Last year, education publisher Chegg cut out all ad resellers and trimmed its supply-side platform partners that delivered less than 5% revenue. The result: a third fewer ad tech partners and no impact on performance. Chegg was able to achieve the same level of performance with fewer partners because they focused on quality not quantity. 

Optimize the experience to optimize results

Another benefit of DPO is an improved user experience for publishers’ audiences. 

With every additional ad tech partner integrated with a publisher’s ad server comes a tax on page loads. The longer it takes a page to load, the more likely users are to leave the site. But that’s not the only side effect of increased latency: auctions can timeout, ad slots can render irregularly or even go unsold. 

Unsold ad slots became especially problematic for news sites during the last 15 months. A heightened focus on brand safety by advertisers reluctant to appear next Covid-19 and civil unrest content led to a drop off in fill rates.

While standard display ad slots may have gone unsold, there was an uptick in the adoption of integrated ad formats such as sponsored content. These formats not only offer premium, brand safe environments, since the ads render as unique editorial content, but also drive revenue. In fact, we’ve seen a 45%+ lift in revenue when publishers began using integrated ad formats such as sponsored articles. Publishers deploying integrated sponsored articles also saw an increased average in audiences’ time spent on page and reduced bounce rates. 

Context > Cookies

Digital cookies have been crumbling almost since their invention, and the effectiveness of that data is not as impressive as many advertisers believe. 

Publishers and their content have an innate value to their audiences. When advertisers don’t take that into account it not only undervalues publisher’s content, it undervalues the loyal audiences that they’ve built. Furthermore, with each degree of separation between publishers and advertisers, this innate value may not even be realized. 

At Nativo, we started putting third-party data targeting to the test as compared to contextual targeting. Consistently we’ve seen contextual targeting meet or beat engagement performance as compared to third-party data targeted campaigns. In fact, looking over sponsored content campaigns from the last 30 days, we’ve seen a more than 2X improvement of engagement performance with contextual targeting versus third-party data. 

For too long, advertisers have undervalued the importance and performance of contextual targeting.  But times are changing. 

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