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The Advertiser Butterfly Effect


The butterfly effect is a simple concept: a butterfly flaps its’ wings, and due to all of the subsequent events occurring because of that small change, a hurricane forms on the other side of the world. At its’ core is the idea that small changes can have large, and often unforeseen, impacts.

If we stick with the storm metaphor and turn our gaze towards the media industry, we can see this same principle in action. Way back in 2007, Rob Norman spoke these immortal words: “anything that can be programmatic will be programmatic.” Way back in 2010, the Goodhart brothers began talking to advertisers about a concept called “viewability”. Way back in 2013, Facebook bought a legacy ad serving platform in Atlas. Way back in 2014, the late great Ari Bluman sat on stage at IAB Leadership and said he wouldn’t pay for an ad that wasn’t viewed.

Those butterflies flapped their wings, and only publishers paying attention were prepared for the storm that eventually appeared. Those were the publishers who were, as Wayne Gretzky famously said, “skated to where the puck was going, not where it is”. The rest were and are, as Marc Maron says, “waiting for the punch.”

Right now, two very important butterflies are flapping their winds and the storm is already forming. And it’s not about a “pivot to video”. This is about application of policy.

Right now, Google and Facebook are actively engaged in quietly cleaning up their exchanges, purging inventory (and by extension, the publishers running their demand) from their respective exchanges. In the name of quality, in the name of cleaner ad environments, in the name of reducing fraud and waste, each of these platforms is starting to shut off access to its’ demand – both demand from advertisers and access to its’ audiences. This clean up extends BEYOND ad inventory and into CONTENT inventory – remember that neither company creates content.

Officially, some of these policies are stated in their Terms of Service. Unofficially and anecdotally, I’m hearing more and more examples of publishers seeing revenue or traffic, or both, drop to zero from these providers. The subsequent chasing down of account managers, only to receive vague information about quality, fraud, or complaints, can be a crippling exercise that compares or even eclipses past “algorithm” changes.

But rest assured that while many of these policies have existed for years, it’s the active enforcement of strict adherence to these policies that is quietly going to ripple outwards to form a storm for publishers who aren’t well prepared.

Historically, publishers have been able to skirt this policy by playing whack-a-mole with ad tech & audience arbitrage. But we are facing a massive change in how publishers can make money, so as Justin Ward at Proper Media states, “What worked for publishers yesterday is NOT going to work for them tomorrow.”

So if the policy storm is forming, and what’s worked for publishers in the past likely WON’T work for them in the future. That means it’s time for publishers to understand what they need to do in order to survive the looming policy storm.

Most importantly, publishers need to begin actively developing growth strategies in the face of fewer ads and potentially reduced ability to arbitrage traffic. Yes, 1 ad at 6 a $6 CPM is the same as 3 ads at a $2 CPM – but higher valuations of reduced supply may very well net out to no growth. Pivoting to video may help, but given challenges with monetizing mobile video, this remains more of a talking point that pillar of growth.

If yesterday was about header bidding, but growth means looking to new monetization strategies, simply moving to a server-to-server based ad stack won’t help publishers overcome the true market shift already starting to take shape.

NEW strategies must be developed and deployed. And while the old adage that “simplicity is harder than complexity” may hold true today, it certainly doesn’t mean tomorrow should be even more simple. Nor does it obviate growth strategies which in fact require complexity – specifically using business intelligence to drive growth.

Today, we are all talking about AI. But for me, BI > AI. BI for publishers means taking a much more nuanced view of their media business to isolate and address both problems and opportunities that remain latent in each business. BI allows publishers to constantly optimize numerous aspects of their platforms, not just who is in their header. BI will allow publishers to surface opportunities for growth in the face of a looming policy enforcement storm.

Finally, this policy shift means that publishers need to rethink their own relationship with their enterprise technology vendors. Much like IBM, Oracle, Salesforce, and others employ armies of consultants and certified representatives, publishers should in fact INCREASE their use of experienced technologists & experts who can act as an omsbudsman for multiple vendors addressing multiple issues. The larger the duopoly becomes, the more challenging it will be for even medium-sized publishers to speak directly with these “butterflies”. Leveraging experts who can reach multiple constituents at multiple levels of these organizations is critical in addressing challenges publishers face in the new media landscape.

The storm IS coming. The butterflies have flapped their wings, and there is no escaping this new future. Publishers need to stop looking backwards to the past to attempt to navigate this brave new world, rethink their entire approach to their monetization business, and understand that complexity isn’t a bad word.

The question each publisher should now ask themselves is: are you ready?

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