Media Buyers Should Cut Out The Middleman And Buy Direct 

Web publishers typically only keep between 50 and 70% of every advertising dollar spent by advertisers through ad networks serving their ads on the publisher’s site. Sometimes, the overall number is even less. Most ad networks do not actually share gross revenue numbers with web publishers and how costs are allocated between them and the publisher.

This leaves media buyers with an interesting question… Should I try to cut out the “middle-man” and buy directly from the web site where my ads are showing up anyway?

From a technology perspective, it’s not that complicated to manage.

Web sites with more than 50,000 unique visitors per month usually have their own ad server (e.g. DoubleClick, OpenX, Mediaplex, etc.) to support direct advertisers.

If you, as an advertiser, have your own ad server, it becomes even easier. You don’t even have to send over any creatives to the web site. Just send over the ad serving tags for your creative and manage everything from your ad server.

To answer this question properly, you need to look at it from an economic perspective.

If ad networks are keeping anywhere from 30 to 50% of every dollar you spend, you can offer a rate that is 20% below what you pay an ad network and the web publisher still earns more money working directly with you.

Simple proposition eh? Not quite… Before you run off to secure as many direct deals as you can, ask yourself these two questions:

1. What is your actual budget?

20% savings on $1,000 per month versus 20% savings on $50,000 per month are two very different kinds of values. Ask yourself would better performing landing pages – (e.g. an increase in conversion rates of 10%) or creatives (e.g. an increase in click through rates of 10%) provide more value in the short term?

2. What are you paying for with your current ad network(s)? It should be a mix of the following:

a. Direct access to the web sites where you’re serving ads.

b. Better rates for ad inventory from other ad networks and web sites than what you can negotiate for yourself because of volume and technology.

c. Capabilities for targeting and quality assurance (a polite way of saying “fraud detection” and “content filtering”) that you don’t have in-house.

d. Account management of web sites where you’re serving ads – i.e. making contact with a web publisher, agreeing on terms, scheduling the campaign and managing payments to the publisher.

Buying directly from web sites is a long term strategy to remove your dependence on third parties for your traffic and increase the effectiveness of your media buys.

And it’s kind of like that old problem of having a really bad tooth ache and needing to find a new job as soon as possible. Which problem do you solve first? The tooth ache because it’s a lot harder to find a new job when you’re in pain from a tooth ache.

On a more tactical level when trying to answer this question, the less you can project additional value from optimizing your creative and landing pages and the more you feel like you’re paying your ad networks for services like 2a. and 2d. from the questions above – as opposed to items 2b. and 2c. – the more you should consider buying directly.