When ecosystems get disrupted, there is often a flight to quality and scale. So with massive changes coming to the programmatic ad ecosystem in 2022, publisher advertising alliances are getting a fresh look.
The Ozone Project, a U.K.-based consortium that includes publishers ranging from the Guardian to Stylist Group, added several new sources of demand in 2020, including Time Out and ESI Media, and has a line of new publishers lined up to add this year, CEO Damon Reeve said. TrustX, a video advertising alliance that sells inventory belonging to Digital Content Next members, said its daily revenues have already doubled through the first three months of this year.
“2021 has been like a rocketship,” said David Kohl, TrustX’s CEO. TrustX is projecting revenues to grow 60-70% this year, after finishing 2020 slightly up from 2019.
In theory, advertiser alliances confer lots of advantages to members, particularly on the verge of a massive change to the digital ad market. An alliance’s combined scale makes it more attractive to advertisers, which makes their technology, whether it’s a wrapper or a single sign-on, more worthwhile to use. From the buy-side, the alliance offers something close to one-stop shopping, an attractive prospect in an era where third-party targeting will no longer be possible.
In practice, alliances still have challenges though. They still have to get advertisers to compare the performance of cookie-based segments to segments built using disparate publishers’ data. They also have to convince buyers that second-party data partnerships are worth the time and effort. And while a publisher consortium might be able to accumulate more authenticated users than an individual publisher, there are still problems of scale; most publishers have only managed to get small percentages of their readers to give up their email addresses.
They also have to ensure they are delivering value more than confusion.
“The tech’s made it easier to activate [as part of an alliance],” said Scott Bender, partner and head of publisher partnerships for Prohaska Consulting. “But it’s never been the tech that’s been the challenge. It’s been the business rules, the rules of engagement … the biggest thing is, ‘How do we not bump into each other?’”
Advertising alliances have piqued publisher interest before, notably when programmatic advertising began to take off about a decade ago. But they have a spotty track record of success. quadrantONE, which news publishers including Gannett and The New York Times built to pool their programmatic inventory, shut down in 2013 amid participant in-fighting; Symmachia, a U.K.-focused effort from the Association of Online Publishers, couldn’t even manage to launch before the trade group sold it off in 2015; in Portugal, an alliance called Project Nonio featuring the country’s largest media companies was still having trouble getting substantial numbers of readers to sign in two years after its announcement.
“[These alliances] required a lot of time and effort from each publisher to participate,” said Fran Wills, the CEO of the Local Media Consortium.
Worse than that: A lot of them left publishers feeling like they were leaving money on the table. “[Participants] had to reserve inventory and some of that inventory didn’t end up getting filled,” Wills added.
But with the old ways of doing business being turned upside down, many ad buyers are looking at alliances with fresh eyes.
“This inflection point we have right now in the ecosystem is causing everybody, advertisers and publishers alike, to reevaluate the way that it works for them,” Wills said.
This Chrome-induced momentum did not start building right away. Even though Google announced its cookie changes at the beginning of 2020, many publishers had bigger fish to fry for most of last year. The Pangaea Alliance, a five year old advertising alliance that most recently included CNN, Reuters, Dennis Publishing and Mansueto Ventures, formally unwound in 2020, citing its members’ challenges with COVID-19.
But with less than nine months to go, advertiser experimentation has begun to pick up.
“A lot of it is pent-up demand that wasn’t able to do the kinds of experiments and the kinds of trying new things you do in a healthier economy,” Kohl said.
Historically, these alliances focused on mostly being able to act like ad networks. But with several technical changes looming, some have leaned more into the opportunity to act like technology providers, doing things like designing sign-on solutions.
“We do a lot more operational support and R&D on behalf of our members,” said The Ozone Project’s Reeve. “We have ten publishers in our main products, but there’s another five or six that are not visible that we provide data or technology to.”
It is still too early to tell which direction the digital ad ecosystem will move in, but Reeve said it’s possible the Ozone Project could wind up offering its data and tools to bigger swaths of the ecosystem.
Let the right ones in
Reeve may be open to that possibility partly because it spares him and members the challenge of turning potential alliance members away because they’re not premium enough. Historically, many of these alliances have used the high quality of their members as a selling point.
“We’ve been super cautious, to retain that super-premium branding, Kohl said.
But as interest has picked up, particularly in the past few months, TrustX has begun weighing applications from non-DCN publications.
While the coming changes to the programmatic ecosystem have put alliances in an advantageous position again, they will have to make sure they balance the possible with the pragmatic. “I see the single sign-on collaborations as possibly not as long-term effective as something that’s based on a more collaborative approach in business objectives,” said Charles Ping, managing director of EMEA for Winterberry Group, which has been analyzing how the coming cookie changes may affect the digital identity ecosystem.
“If you’re sharing inventory, you’re sharing objectives toward a common goal. I’m not sure that trying to create scale when, in the consumers’ eyes there’s no shared end goal, [makes as much sense].”
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