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Many fingers in the ad revenue pie

Posted by Michael Bloch in web marketing (Tuesday March 2, 2010 )

Most publishers sell display ad space via ad networks for a reason – it seems more simple and saves time. But perhaps that approach is coming at a huge cost.

According to an article on AdAge, there’s sometimes too many middlemen between the advertiser’s bucks and the publisher’s check; all grabbing their piece of the pie and leaving the publisher with crumbs.

AdAge provides an estimate from Tolman Geffs, co-president of investment bank Jordan Edmistona, who says a publisher may only receive $1 of a $5 cost-per-thousand media buy. The rest is divided up like so: The agency ($.75), ad network ($2), data provider ($0.75), ad exchange ($0.25) and the ad server ($0.25).

I was quite surprised to read those figures – perhaps times have changed. When I bounced around between various ad networks a while back, it was often a 60/40 split in the ad network’s favor, but that didn’t include the top level – the ad agency and I had never really considered that aspect.

As for the revenue share split contextual advertising giant Google offers publishers under their AdSense program, I don’t think anyone knows, but I suspect it’s far higher than 20%, but again, if an advertiser uses an agency, then the agency takes their bit first before paying Google.

Just a side point – I believe Google is also moving towards more transparency in revenue share details this year, so we may have firm figures soon.

If you are running display ads via a network, I feel it’s not too rude to ask what the split is and then decide from there if you want to switch or start chasing advertisers directly – bear in mind what the ad network tells you, even if they do, won’t include the ad agency slice if a 3rd party agency is involved in a buy.

It’s wise to bear in mind that chasing advertisers yourself can be very tedious and time consuming work too – developing a media kit and rate card is just the beginning as it’s often not a case of build it and they will come.

However, with AdAge raising awareness of the issue; perhaps we’ll see some backlash from publishers and a more fair system as a result.


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