“The more that bloggers make from your ads, the more space for ads you’ll have available as bloggers tell their friends which ad network to use. The more ad space you have, the more ads you’ll get…
In the summer of 2008 – some nine months after Addiply had made its conceptual debut at his NewsInnovation gig at CUNY – I read a piece on Jeff Jarvis’ BuzzMachine blog about how much ad networks should return to the publisher in order to deliver both value to the publisher and scale to the network.
The piece is here.
And it stands the test of time well given that most ad networks and their endless mates now rake in some 70% of the revenue originally intended to reach the hands of a publisher. See above.
Or, indeed, Hamish Nicklin’s increasingly infamous admission from October, 2016, that The Guardian was indeed leaking 70% of its ad revenue to third parties; that only 30 cents of every ad dollar actually made it to their coffers once the world and his sticky-mitted wife had taken their slice.
For doing fuck-knows-what en route.
Something that the paper’s lawyers are now poring over, no doubt, as they chase The Rubicon Project through the courts.
Jeff quoted the thoughts of former Microsoft executive Tom Evslin at length as he pondered how anyone would build an ad network that satisfied all parties – namely publishers seeking a decent return for their content efforts, investors seeking a worthwhile return on their funding and, of course, the ad network itself as it chased scale.
From which came volume. Out of which came value.
Whether either of them actually gave Evslin’s thoughts a title I can’t recall, but I like to think of it as ‘Evslin’s Law of Ad Networks’.
One that Addiply has stuck to all these years and has enacted again this week with 85% of the £150-odd a month Norwich Cathedral agreed to pay MyFootballWriter for an advert being duly returned to the publisher.
Addiply then takes that 15% cut. Of which another 3-4% will end up in PayPal’s coffers for automating the payment process.
Jeff – back in the day – was sticking with BlogAds ‘which only take 20%’.
Fair enough. But Addiply only takes 15%. So f*ck you…
“Companies that build large networks on the web don’t charge users what the market would bear; they charge as little as they could bear. That is how they maximize growth and value for everyone in the network…,” Jeff noted.
Which is wholly counter-intuitive to what AdLand’s Wall Street funders would demand – that you screw the publisher for every last dime in order to maximise their (Wall Street) profits.
In the shortest possible time, too.
Let that theory run its course as everyone in the ‘value’ [sic] chain follows Wall Street’s bidding and you end up with people like Nicklin and The Guardian questioning the whole value of the ecosystem to which they have become enslaved.
Take as little as you can afford for as long as you can afford, however, and the picture changes.
For someone to out-market me, they will have to offer MyFootballWriter an 86% return – best of luck on that.
Now, nascent network built, you bang on the door of, say, CVS Vets in the belief that they might have vets businesses to promote in Norwich, Lichfield and Altrincham.
“If you run a network that depends on scale, such as an ad network, then the more pages you have to sell, the bigger and better advertisers you can attract and the more you can charge,” Jeff continues.
“So if you take a smaller commission for each ad in the network, more sites will join it with more pages, which can now be sold at a higher value…”
Or as Evslin himself notes: “If you simply solve for maximizing revenue, you can end up with little growth – and little future revenue opportunity…”
And again: “…charging more than you have to, even if you can for a while, is a mistake.
“Charging too much stunts growth so you’ll have fewer units to charge for in the future. Charging too much opens the door to competition.”
So how can Addiply ever afford to give away 85% of the revenue streaming – OK, dripping – through it’s platform?
That way I’m not paying $000,000s to banks and banks of wonks and quants to build me a world-beating algorithm.
Instead, whatever investment we attract over the next few months will go into building a world-class user interface that makes the act of placing an ad on a local-facing website as easy as placing a postcard in the window of your local Post Office.
As the US Constitution is now discovering, with opacity, complexity and grubby Wall Street morality all embedded in the online advertising mix, democracy comes under threat.
You let Putin and his pals in.
Take the incentive out of winning an online auction by instituting simple, fixed price deals at the heart of your platform and – coupled to the demand that publishers approve every ad before it is ever served to their audience – the problem goes away.
“With such speed and complexity also comes opacity – the ability to wrap up any old dog shit advert into an a near-instant bid transaction and leave ‘the winner’ there for a hapless publisher to swallow…” I wrote last December.
Before one dark ad story had been written; before Google and Facebook had ever had their sorry asses hauled before a Congressional committee.
True value comes to be realized through true simplicity.
That and saying ‘Amen…’ after every mention of Evslin’s Law.