Why Self-Serve Ads Don't Work for Traditional Publishers

James Avery
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Every so many years a company comes along selling the dream of self-serve to traditional publishers. In this article I’m going to explain why it never works.

Let’s start with a little story...

It was 2012, and I was meeting with a company who was getting traction offering a self-serve product to large publishers. The pitch was pretty straightforward: you have your traditional sales, you have programmatic, but you also have all these small advertisers who’d love to advertise on your site - if only they had a way to whip out their credit cards and get going immediately.

Just look at Google’s self-serve ad product, the pitch continued, and see the massive number of SMBs that are driving real ad revenue for Google; with something similar you could tap into that same demand and add meaningful revenue.

This pitch worked back then, and it still works today, but it doesn’t end up working out the way everyone hopes it will.

I remember talking to that company in 2012 and mentioning how I was impressed that they had one of the top 10 traditional publishers on their platform and that it must be driving a ton of revenue. I still remember the CEO’s response: “Yeah, not really. I mean, who is dying to buy ads directly on {Big Publisher}? If they want to, they can just buy them through an exchange.”

This concept of availability is a key one, but it’s only one reason why self-serve rarely works.

Availability

If someone can buy your inventory somewhere else, namely through any number of ad exchanges, there is zero incentive for the customer to go through your self-serve interface. Even the smallest buyers can buy through Google or a host of other small-market DSPs. Working with you directly just adds another UI they have to learn.

Price

Another key sticking point for the CEO was that this major publisher insisted on using their standard rate card for pricing out self-serve. But we all know that most rate cards are just starting points: during the sales process discounts are given, things are negotiated, and large buys are bundled at discounted rates. If the publisher listed the prices they would actually accept, their large customers could find it and start their negotiations at that lower price.

The irony here is that because the SMB is instead buying through an exchange, the publisher will get vastly less revenue from them (between auction mechanics and take rates) than if they chose to lower their rate card prices.

Limited Capabilities

One publisher Adzerk worked with launched a self-serve offering, but decided to limit what targeting options those customers got. The internal sales team was worried it would cannibalize direct sales if they couldn’t promise something unique. So the publisher launched their self-serve interface without the targeting features that make their ad product actually valuable. Needless to say, self-serve didn’t work for them, because SMBs couldn’t drive the results they wanted.

Data

Self-serve tools now and then rarely give an advertiser the ability to bring their own data for targeting. I think there is a common misconception that smaller publishers don’t have first-party data, but this is patently untrue.

Smaller publishers might not have sophisticated DMPs, but pixel-based retargeting is important to them. Companies like AdRoll, Google, and others let them incorporate such data for ad targeting - but traditional publishers usually don’t build this functionality into their self-serve platforms. If you don’t have a way to help smaller advertisers collect and use their own data, then they are going to have a hard time finding success.

Same goes for what targeting features you offer. If you’re not harnessing your own unique data - such as through behavioral audience targeting or keyword targeting, what’s going to differentiate your self-serve tool from standard targeting they get from Google/ad exchanges?

Results

These issues could be overcome if the results were there, as SMBs with limited budgets are as a rule performance-focused. Let’s imagine a hypothetical advertiser. They are a small manufacturer of bike helmets geared towards mountain bikers. They’ve had good success running ads on Google AdWords by targeting search keywords like ‘best mountain biking helmet’, but they are spending all they really can there.

So this brand branches out to Facebook, where they target the interest segment of ‘mountain biking’, which doesn’t work as well but is still profitable. Same goes with Reddit Ads, where they target the ‘r/mountainbiking’ subreddit.

Then, using Google’s retargeting capabilities, they run retargeting banners across the Internet; the CPMs are good, and they are driving purchases. They even let Google take over the bidding based on conversion rates, and it becomes a solid acquisition funnel.

It’s all working, but they still have more funds in their advertising budget, and they want to spend it to grow their business quickly. So they hear about and find your self-serve offering. It interests them that they can now buy ads on a well-known publisher’s site. They go through the process, put their credit card in, and grab some banners from their retargeting campaign. They have some sticker shock from the high prices: CPMs are $20 when they normally pay $2-3 on Google, but they want to give it a shot. They decide to test with $500.

Their banners are shown, and all 25,000 impressions serve pretty quickly, so they go to check Google Analytics. If you have spent time in digital advertising you can probably guess their results: there were 30 clicks from these ads and no sales.

The advertiser shrugs, writes off the $500 test, and never buys from you again.

These SMBs, who are ideally the target audience for self-serve, will be more performance-focused than your branding-focused direct-sale advertisers. They may test you, but without good results, they won’t return.

Building a self-serve platform doesn’t suddenly mean more revenue. Google’s SMB growth is partly due to having self-serve, but mainly due to the great performance advertisers see.

Conclusion

Thinking that self-serve will magically appeal to small advertisers will lead to wasted time and budget. Unless you can overcome the issues above, you might get some early sales, but it will quickly fade. Your contract with the self-serve vendor will expire, the product will be deemphasized or sunsetted, and your internal sales team will say, “I told you so.”

This doesn’t mean self-serve can’t ever work, though, and in my next article I’ll share the key characteristics that go into building a successful self-serve product.

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James Avery

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