The Simple Solution to the Online Ad Disaster

Read any mainstream article about what’s wrong with digital media and you’ll note a starring villain: publishers.

WTF!?

The real cancer in digital media is the advertisers. Here’s why…

This is how the digital media world really works…

Advertisers have Abdicated Their Jobs

At some point in time, advertisers discovered an awesome business trick:

Like grocery stores pushing the cost of check outs to consumers via self-check out stations, advertisers pushed the cost of creating good ads to publishers.

I say “good” ads because publishers do receive plenty of shitty (or worse) ads from advertisers. So much so, New York Magazine is finally having a Howard Beale moment and telling data hogging advertisers, “We are mad as hell and won’t guarantee viewability if you can’t guarantee the lightening fast and high quality ad experience readers demand.”

Ron Stokes says, “We are not going to take this anymore!” Go Ron!

In plain English:

“You can’t have 10 tracking pixels attached to an ad, and an ad that’s twice the file size of a standard ad, and also expect 100 percent viewability. That’s an oxymoron,” said @jason_k Jason Kint, CEO of Digital Content Next, an industry trade group. (Digiday)

Thank you, Ron Stokes and New York Magazine! Let’s get this movement started!

Why Can’t Publishers Fix the Ad Problem?

Publishers cannot fix the ad problem because…drum roll…wait for it…publishers are not in the business of making ads!

Publishers already have a challenging business model. We have to achieve product-market fit with two markets: readers/viewers and advertisers. The challenge is taken to an absurd level because the reader/viewer cohort of customers only wants to consume the media that fit their demand, while the advertiser cohort only wants to interrupt the reader/viewer user experience (UX) with a message the reader/viewer did not intend to consume.

I kid you not. Absurd, right?

Now, not only do publishers have to succeed at this fucked up paradoxical magic trick, we also have to be at least a little flexible with the advertisers because they pay the bills.

Academics, journalism grads and intellectual readers expend a ton of hot air explaining their entitlement to high-quality media, but that crowd is completely ignorant about who pays the creators so they get their precious high-quality media. Somehow, these people think their single monthly subscription to the New York Times or Wall Street Journal actually fulfills the complete cost structure of producing, editing, and distributing amazing media. What a joke.

So, if readers/viewers don’t want to pay what’s required to support a sustainable media business outputting awesome media, publishers are forced to subsidize the system with welfare from our friends who are willing to support a sustainable media business by paying to piggyback their message onto the media.

“Wait, Damien. This is getting complicated. Why can’t publishers fix the ad problem?” (Yes, this is complicated!)

Let’s focus on the cancer, not the side-effects.

Publishers already struggle to build sustainable businesses simply on the operating model of creating media for readers/viewers. We cannot, I repeat, we cannot also be responsible for the cost of creating good ads. That’s the job of advertisers!

The Bottom Line: What’s the Solution to the Ad Problem?

The solution is simple:

Advertisers must be responsible for creating ads consumers want.

That means advertisers must be responsible for creating ads that are:

1. Informative: actually informative and not as interruptive as flashing neon signs in Times Square;
2. Fast: not harmful to page load times (my site Cheat Sheet loads in 1 second without ads and almost 10 seconds with ads);
3. Safe: don’t take more than a few minor data points about the reader/viewer; and,
4. Fair Trade: pay the publisher enough money per ad unit so we need only the smallest possible number of ad units per page to make the advertising-supported publishing business sustainable.

In short, advertisers must make informative ads that load in a fraction of a second without compromising reader/viewer privacy while paying a fair and sustainable rental fee for the publishers’ real estate.

People who represent the advertising industry deflect blame onto publishers by saying we are the ones who add too many units per page or flood the Internet with our supply of content. Well, those problems are simple to fix too:

1. Pay publishers a fair and sustainable rental fee for our real estate, and we will need only 1–3 ad units to get the revenue per thousand page views (RPM) we need to have a sustainable business model; and,
2. Stop using Google AdSense and other spray-and-pray ad servers to vomit ads onto such a large supply of websites where 90% of these websites are filled with total garbage content or worse, fraudulent content gaming the spray-and-pray ad strategy.

In other words, if advertisers immediately stopped serving their ads to garbage and fraudulent websites, they’d be able to pay much more money per ad unit on legitimate and quality websites. (The 90% less slices of the ad-budget-pie thing will really work. I promise.)

In turn, CPMs will immediately rise to the proper market price where publishers will need only 1–3 ad units to yield a RPM to have a sustainable business model for creating media content readers/viewers love.

This simple yet radical change will reward real publishers, cause garbage and fraudulent websites to go out of business and disappear, and finally allow publishers and advertisers to have the time and resources to focus on optimizing our symbiotic relationship to deliver good content and good ads to our shared customers: the readers/viewers who we care about most.

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Damien Hoffman is the CEO/Founder of Cheat Sheet, a successfully boot-strapped digital publisher powered by an awesome team.