I’m sure you’ve done your research. You’ve struggled through a lot of the jargon. Maximum revenues, ad delivery in milliseconds, optimal ad operations, sophisticated algorithms, RPM performance: what does it all sum up to? What is Admeld, Pubmatic, Rubicon Project, etc trying to say? They have the best technology that compiles many ad networks together to automatically choose the highest paying ad network for each ad impression. Therefore, you as the publisher is earning the highest possible dollar on every impression. Sounds great right?
What is the difference between all these automatic yield optimizers? There are tiny feature differences between any of these. The foundation and strategy of their technology are the same. Maximize the yield of each impression and automate to a point of limitless scalability. It’s a great business model and many companies have done very well. However, these companies are not yielding the highest possible RPMs for their publishers. Publishers are continually giving feedback of underwhelming results. There are two fundamental flaws to the automatic yield optimizers business models.
It is rare for ad networks to send their premium inventory to these automatic yield optimizers. Frequently the automatic yield optimizers are treated as “remnant, remnant” ad networks. Ad networks seek direct relationships with the publishers because there is much more transparency in this relationship. It is important for an ad network to have a deeper insight into a publisher ad inventory for content quality assurance. When an ad network serves through an automatic yield optimizer they almost serve blindly which is a scary thing from the advertisers’ perspective. It is in the best interests of the ad network to protect its advertisers’ interest. These are the interests of the premium advertiser that pays the high CPMs and demands high quality and relevant content to a specific audience. There are advertisers that are interested in running through automatic yield optimizers though. These are the lower tier advertisers that look for low CPM and high volume traffic. Sometimes they only pay per click or conversion which tends to yield low CPMs.
These are the advertisers that tend to serve through your automatic yield optimizers. Now, the automatic yield optimizers run all these ad networks that are only sending lower-tier advertisers that only pay lower CPMs. Therefore, there is a glass ceiling on the RPM a publisher can make through an automatic yield optimizer. The technology might always choose the highest paying ad network very efficiently but they don’t have access to the best RPMs in the market so it doesn’t really matter. The publishers then get these underwhelming results and start serving the automatic yield optimizers as a “remnant, remnant” ad network rather than serving them exclusively throughout the whole site as the automatic yield optimizers originally attended. The advertisers see these terrible stats from the automatic yield optimizer publishers because they are getting the worse ad inventory and pay even lower CPMs as a result. All of a sudden you have a negative spiral of an RPM ceiling and low-quality content from publishers.
The second flaw involves the automatic yield optimizer’s lack of flexibility outside of display advertising. There is a bigger online advertising market outside of RPM display advertising. The automatic yield optimizers do utilize:
- Affiliate networks
- Pre and post-roll video advertising
- XML feed advertising
- RSS feed advertising
- Map interface advertising
- Captcha advertising
The automatic yield optimizers do not offer a comprehensive monetization solution. In order for you to realize your full ad revenue potential, you have to utilize all the above revenue streams. Otherwise, you are leaving a large sum of money on the table.
As a business model, the automatic yield optimizers make sense. They are incredibly scalable and have very high-profit margins. However, as a publisher, you would be giving up a huge amount of ad revenue potential to exclusively work with an automatic yield optimizer.