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More Major Mags Sour On Remnant Ad Nets; Time Inc. Considers The Vertical Route

The backlash against remnant ad networks appears to be gaining, as Time Inc. is considering whether to move towards the model offered by premium vertical nets like fashion-focused Glam Media, Mediaweek reports. The piece also profiles Rodale’s migration away from reliance on using third party ad nets to handle unsold inventory to focus on premium placement and verticals. Rodale says its network of health and lifestyle mag sites now have ads that mirror their content, as opposed to the usual horror stories associated with remnant ad nets, such as the time an ad for one carmaker appeared on a site where Rodale had more expensive direct ad sales for a rival auto marketer. More after the jump.

Saying no to remnant’s special sauce: Last week, I spoke to Jim Spanfeller, president and CEO of Forbes.com, which has become something of a model for other mag publishers looking to navigate the remnant vs. vertical ad net divide. Forbes.com formed its 400-plus member Business and Financial Blog Network last spring. Spanfeller described the remnant business as “boiling everything down is arbitrage. They buy low and sell higher, presumably, after adding some secret technology special sauce. Since there are tons of these companies right now and they are all offering pretty much the same value proposition, the only real lever that they have to compete on is cost. And here the cost is totally defined in [direct response] metrics; cost-per-click, cost-per-action, cost-per-application and so on.”

So what’s the problem with those formats? Spanfeller: “Basic free market theory suggests that this will be a run to the bottom. Each turn of the wheel will net lower and lower gross costs to the network and net costs to the publisher. What is more, this model totally focuses the agency — and eventually the client — on DR metrics with no attention paid to the brand. Given some of the placements that these networks produce, campaigns that run through them can often actually devalue the marketer brand. But since the focus in not on that end of the paradigm, no one is paying attention to it.”

5 Responses to “More Major Mags Sour On Remnant Ad Nets; Time Inc. Considers The Vertical Route”

  1. Joseph — I think you're in basic agreement with Spanfeller, he's describing a race to the bottom margin-wise for the ad networks, not for the publishers. In my opinion, it's his second point that is the more salient: in the process of over-emphasizing DR, brand messaging and value can be lost.

  2. I don't really understand what Spanfeller is getting at when he talks about 'free market theory'. Theory doesn't suggest that the supplier of ad inventory will see their value spiral downward — rather it predicts that in an efficient market, there'd be little role or value for middleman (aka the ad networks themselves). Unless I'm missing his point.

  3. Basic free market theory suggests that a buyer and seller trade goods or services. Ever try to apply this to the future of online content? The buyer, Mercedes-Benz, buys space on Forbes.com, the seller. However, in order to complete the transaction they completely rely on a third party that doesn't give a Salvation Army about their deal. I call this third party the free loader.

    The free loader is assumed to give their attention to the Mercedes-Benz ads. But without direct response, no one can prove that happens unless you use attention for content ad models. So they throw more ads at them making the experience worse for the very people they try to attract. D'oh! Race to the bottom alright. I'm on my sled right now trying to avoid VCs who invested in eyeballs with no revenue model climbing back up the hill. Move out of the way! …just took out another one.

    The Critical Advertiser

  4. David Kaplan

    The point of the article was not to single out particular remnant ad networks, but rather to highlight why major publishers who have a growing distaste for them in general.

  5. digital bear

    Who are the major ad networks you are referring to and are they at all differentiated? Can you give us a bit more in terms of facts & names to support the claims?