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Go your own way: why publishers are leaving advertising networks

What in the media buying landscape has changed to reprioritize publishers’ own ad sales?

Publisher ad networks used to be seen as the opportunity for publishers to compete with the duopoly at shared scale. Following the closure of some of the great hopes of the network world over the past two years, what has changed so that publishers feel emboldened to strike out on their own again?

Back in 2018 the perception was that there was safety in numbers for publishers looking to grow digital advertising revenue. The duopoly of Google and Facebook provided pressure that led to many publishers – national and regional – to bundle together into ad networks or exclusive private marketplaces (PMPs) to counter the threat.

The reasons appeared sound: the undifferentiated nature of digital advertising does not adequately reward premium publishers for their inventory and valuable audiences. At the same time, no individual publisher could offer advertisers the ease of buying at scale that the search and social platforms were offering.

The obvious solution was to create exclusive, invite-only marketplaces with other quality publishers. That created a new path to purchase quality audiences, at scale, in a way that cut out much of the leakage in ad spend and rewarded the publishers adequately. That led to the launch of PMPs and networks at international, regional and local level – each with its own USP and revenue share model.

Some never quite made it off the ground. Project Juno suffered an early blow when DMG Media pulled out of discussions to explore its own commercial propositions. But many were launched with great fanfare and to great celebration to an industry that seemingly had an effective weapon in its arsenal to defend against the duopoly.

Over the course of the past two years, however, some of those most celebrated ad networks have either been wound down or have very publicly fallen apart. So in 2021 which networks remain – and why have so many publishers abandoned strength in numbers to go it alone?

A return to publisher primacy

In August 2019, the New Zealand-based network KPEX announced it was shutting up shop as a result of one of its key members pulling out – with the official line being it would be closing due to “changing market demands and shareholder priorities.”

MediaWorks, Stuff, NZME and TVNZ formed the publisher co-op in 2015 as equal shareholders – but dissolved it following Stuff’s decision to pull out. A spokesperson for Stuff told The Drum that “in recent times, our advertising partners have told us they want a closer relationship with us as a publisher, regardless of whether they book advertising programmatically or through traditional methods.”

Meanwhile, the expansion of premium marketplace Buymedia.be into the Netherlands faltered after less than a year – despite having some of the biggest publishers in the country on board initially – citing “insufficient traction.” In Singapore, too, the SMX exchange was mired by issues of lack of vision about how best to compete with a changing market.

Perhaps the most notable of the PMPs was the Pangaea Alliance, the international network of CNN, The Guardian, Reuters, Dennis Publishing and Mansueto Ventures, which quietly announced its closure last year citing the pandemic: “The Pangaea Alliance has ceased to operate as the Alliance partners focus on their distinct offerings following the significant impact of Covid-19 in 2020 on the Alliance’s ability to operate with its unique offering. The Alliance partners thank the team who have worked on the project over the years and the agencies and brands who have worked with us during that time.”

A source familiar with the closure told The Drum: “Pangaea’s revenue focus was primarily on premium programmatic sales, which was one of the parts of the digital advertising sector that was most exposed to changes in media buying as a result of the pandemic.”

What all those closures and problems have in common is that they occurred against the backdrop of the ongoing shift back to first-party data and a push for subscriptions that has diversified publisher revenue streams.

Despite the delay on Google’s retirement of the third-party cookie, publishers are in the midst of a transition to using their own first-party data as a selling point when talking to advertisers. The ability to create contextual advertising opportunities on their owned-and-operated platforms is back in vogue, and by doing so using its own networks – as Stuff is attempting – publishers can avoid the tricky issues of revenue share and unequal data wealth.

Part of the world

Despite that, there are a number of extant marketplaces and networks, particularly among local and regional publishers. Scott Gill is managing director of 1XL, which acts as a publishing co-operative on behalf of 26 UK publishers including Archant, DC Thompson and Johnston Press. He believes its longevity and relevance is due to how endemic the network is – which allows it to offer that ease of buying at scale that the best PMPs promise. “I would like to think it’s testament to the decent job that we’ve done for publishers over time and the bang for buck that we’ve generated for them, because we just care so passionately about the local, regional and national newspapers.

“There’s been no get-rich-quick scheme ... a lot of network businesses historically have been characterized by that approach to business. We’ve been around for 36 years ... and we try to be part of the publishers’ business model.”

Gill believes the fact that 1XL acts as an advocacy group for its members in addition to being a network also allows it to retain its purpose. He notes that after a period of the conversation having lain fallow over the pandemic, 1XL is now acting as pointman for its members’ conversations with Google.

This allows it to continue to deliver upon one of the main selling points of the ad networks when they came into vogue. “We have quite a senior level relationship with Google that I just don’t think would exist if it wasn’t for the creation of the cooperative among the publishers. We’ve been putting pressure on Google for more than two years now to introduce what we call a tight marking system, which [we] effectively designed.

“Not all programmatic impressions should be seen as equal by the buy side, and that Google has a duty of care to the news media ecosystem to pass the signal ... from premium investors in content that basically demarcated it as a premium investment news media environment.”

The underlying issues that initially made publisher ad networks so attractive remain – particularly the need to compete with Google, Facebook and now Amazon. What has changed is a growing awareness among publishers of the value of their own first-party data and the direct relationship they have with brands – and publishers have been emboldened to strike off in search of those new opportunities on their own.

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