Maximizing The Yield Curve

Oct
8

As a publisher, maximizing your revenue yield should be a constant theme. Every day I hear from publishers and members of my team, “how do I get higher CPMs?” High CPMs(revenue per 1000 impressions) is a concern for all online publishers large and small. I think it is the common denominator for conversations among all publishers and advertisers.

There is an ever present theme in our daily lives when we are ready to engage in exchange, “How much to I have to give in order to get.” In the case of online advertising, how much are advertisers(brands) willing to pay you(the publisher) to smack a banner ad across your content. As a publisher you want maximum dollars flowing to you for each impression you allow on your content. Advertisers want to spend only the minimum amount to see a return(product purchase, brand lift, etc). With a nearly unlimited market of supply(impressions requests by publishers) and a finite dollar amount(brand advertising budgets), the brands(demand) will follow the economic law of diminishing returns and spend less and less for each additional ad impression across your content. As a publisher you have a choice to continue to sell at a lower rate thus maintaing market efficiency or closing the market, ie making your content no longer available to advertisers.

Below is a sample of a publisher’s revenue yield curve. On the right side are highdollar CPMs(y-axis) but a low quantity of impressions served(x-axis). As you move along the curve, the CPMs fall and the quantity of ads served increases. This is not atypical for any publisher that maximizes the revenue across their content.

As a publisher there are several questions that remain in order to maximize revenue and push the belly of the curve up and to the right:

  • How do I slow the rate of diminishing returns?
  • When do I stop selling my advertising on my content?

I analyze these questions every day for the publishers in the Federated Mediaexchange. There are several techniques but the most significant driver to decreasing your revenue delta is a robust ad partner(demand) structure. The demand market is limited but there are solutions available to you. As an exampleI,your site receives 1,000,000 ad requests per month and one advertiser(scenario one) has offered to buy all of your impressions for the month. They agree to pay you $5CPM for the first 100,000 impression then $2.50 for the next 150,000, $1.00 for the next 250,000 and finally $0.50 for the remaining 500,000. Now imagine your savvy sales development skills landed a second advertiser for you the next month. They agree to pay you the same amount as advertiser one keeping in mind that your number of available impressions is constant at 1,000,000 for the month. Can you see what is happening here? You have have to advertisers buying your content for the same rates and the same quantities. Good stuff for sure. Now let’s look at the impact of your additional sale.

  • Revenue is up by 63%
  • Your lowest value ad inventory is now priced at $1.00, not $0.50

This brings me to the topic at hand, by using two partners you improved your revenue yield. Did you reach the maximum? Impossible to tell. You would need to add additional advertisers until you found a diminishing rate of return.

The above scenario is a bit simplified but my point is that as a publisher you should focus on increasing your revenue yield by maximizing the return from each ad partner. High CPMs, like winning streaks are great but eventually all begins to normalize. This leads to the second question of when do you stop selling your content. There is no easy answer for this as each publisher is different. The rule I like to follow is if you don’t receive an incremental or noticeable bump in your revenue then you have likely reached the point on your yield curve where selling more content space is not going to lead deliver noticeable returns.

I hope this helps provide you with a better understanding of the market dynamics that are at play. I will continue to write about this topic as it resonates daily with me. Post comments and I will do what I can to answer.

This article was originally published on www.drivingdelta.com. Matthew Barrowclough is the Director of our Publisher Management Group and currently oversees publisher revenue growth for our network. You will usually find him grinding away with spreadsheets and surfacing additional revenue yield for each publisher.

Direct Sales vs. Programmatic Sales

Jan
11

Direct sales and programmatic sales are often discussed as competing functions within the publisher business model.  However, the two channels are distinct enough that they should not compete with each other.  In fact, the most successful publishers we work with from a revenue standpoint have a strong aptitude for managing direct and programmatic sales alongside one another.  In order to do so most effectively, it is important to understand the distinctions.  Specifically, the following five points cover some of the things that publishers can offer advertisers through direct sales that they cannot get through programmatic channels:

  1. The guarantee/sponsorship/future: Advertisers want the guarantee of being placed next to premium content, above the fold, in front of a guaranteed set of eyeballs, for a specific period of time, at a set rate.  Further, media buyers are tasked with spending 100% of their budgets for fear they are reduced next quarter because they didn’t spend enough.  Without a guarantee in place with publishers, their media spend is at risk of (a) not being spent or (b) being spent in less than ideal context at the end of a fiscal period.  Programmatic buying technology like real time bidding (RTB) provides advertisers/media buyers no guarantee on price, contextual placement, or impression volume.
  2. Site takeovers and other non-standard ad units: A site takeover or “skin” is very visible to a reader, generates high CTRs, and creates brand awareness.  Because of this, takeovers have very high CPM rates and cannot easily be bought or sold on an exchange due to the infinite ways for designing and architecting a site.  Likewise, ad units that are not standard IAB sizes (160×600, 300×250, 728×90) can and should be integrated into the unique design and architecture of a site, and sold for premium prices.
  3. Banners integrated with content: Below is a banner from Miller Light from my Fantasy Football league that has been creatively integrated with content.  This banner shows the score of the Fantasy game each week and allows Fantasy players to “Smack Talk.”  This must have been an expensive campaign due to the way it is integrated into the site. The more integrated the advertisement is into the content of the site, the less the chance that an algorithm can decide the price programmatically.
  4. The leading edge of media technology: While there are emerging exchanges for both video and mobile inventory, nothing yet exists that is as efficient as the market for standard IAB display banners.  Publishers can much more easily package and directly sell media like video, audio, mobile web, and applications than any exchange currently can.  Even as exchanges mature for some of these types of media, there will always be something that is a little newer or more innovative than that which can be quickly commoditized.
  5. Conversation: Publishers have their own brand.  And in the age of social media, brands need to be a part of the conversation.  Blog posts, comments, and tweets are where this conversation lives in a public forum.  The influence of a publisher’s brand within the conversation should not be underestimated—marketers are willing to pay a lot for it.  This is something that our sister company, Federated Media Publishing, is pioneering across the Independent Web.

So why in the world would advertisers ever buy programmatically?  It comes down to one thing: audience data.  I will delve deeper into this subject in my next post and explore some ways publishers can manage their programmatic channels more effectively.  Again, the better a publisher is at understanding the distinctions between programmatic and direct, the better the two channels can compliment each other, working together to maximize inventory value and revenue.

How to use LinkedIn to build your brand, grow your network, and make more money

Nov
2

So you’ve managed to imbue your articles and posts with wit and creativity. Check. You’ve developed an audience. Check. You’ve embraced the twitterverse and gotten positive response but you’re still not getting paid.  Wait, what? Every day I meet new people who are in the various stages of monetizing their website through online advertising. From seasoned veterans to the novice looking for a turnkey solution, one aspect of connecting with your prospective income conduit is often overlooked: the personal branding found on LinkedIn.

Many publishers embrace the anonymity that is afforded them through their work by posting in a pen name or simply staying under the radar. When it comes to digging up information about potential advertisers it’s a cold case with no leads. If you want to make money with your content, and you should, let it be known who you are and why the world should do business with you. There are literally hundreds of options out there waiting at your beck and call to put a dollar sign in front of that talent if they could just find you.

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The future of search

Aug
31

Seems like every day I see another article talking about the “Future of Search”. In every article “Search” refers almost exclusively to the Reader (you and me) and how we use Search. Nearly everything anyone has to say about Search seems to always relate back to the reader:

  • What am I looking for?
  • Did I find it or not?
  • Was it presented to me in a unique and compelling way?
  • Is my location taken into account?
  • My social network taken into account?
  • Images? Video? Audio? Were they also available?
  • How about maps? Or discount coupons?
  • Did the Search learn from my prior searches or click behavior?
  • Is anything going to unseat Google as the dominant search engine?

The problem is that this Reader-centric equation is only half of what Search really is. In a literal sea of websites that are NOT Google, Bing, Yahoo!, eBay, or YouTube there is incredible value in Search that appeals to the Publishers of those millions of websites.

Think about it from a Publisher point of view. Search is a powerful insight into the intent of an audience of readers. In fact, site search on all of these millions of websites is largely an afterthought. That’s crazy when you think that a little search box on your site is the place where your readers assert direct and explicit intent against your content. Search is perhaps the most interactive and data-rich portion of your site and it’s also one of the most overlooked.

  • What are my Readers looking for?
  • What are they finding? What are they not finding?
  • Are they clicking on my site content, my Twitter content? My other sites?
  • Do they engage with intent on my site? Or simply read and exit?
  • Do they see and interact with results from my social media?
  • Do they gravitate to other media content like photos, videos, audio?
  • Do I show them related content from my network of sites? And if so, how often do they click through to those sites?

The points above illustrate incredible Publisher-centric information captured from the intent of your audience. The amazing part? Lijit is the only company tackling this Publisher-side value equation with Search. We do it for free, with easy customization, with no restrictive obligations, and no exclusive contracts. We focus 100% on Publisher-side value that helps these Publishers engage and better understand their audience of readers. We feed this data back to our Publishers through real-time actionable analytics. Oh… and if our Publishers want us to make them more money, we do that too; with no restrictive obligations, and no exclusive contracts. Does it get any better than that?

Interview with Lijit COO, Walter Knapp in AdExchanger.com

May
13

Recently, AdExchanger interviewed our COO, Walter Knapp. During the informative interview, Knapp discussed our services, challenges, business model, features, growth and where we’re headed. Included below, is the excerpted interview:

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Hear Ye, Hear Ye…

Dec
5

Another in our series of employee guest posts, this time around we’re honored to have Ryan Peterson contributing. He is a software engineer here at Lijit (although he prefers pimp), considers himself a tea connoisseur and can be found at his blog.


On January 21st, 2008, Microsoft announced its upcoming version of Internet Explorer (IE8) would not render Web pages in a standards-compliant way by default, and for the browser to do so, Web sites would need to include a special “meta” tag in its header.

Later, after tremendous outcry, they reversed their position and announced IE8 would render in a standards-compliant way by default.

This blog post is not about browsers or IE8–but an interweb phenomena which I have dubbed “blog events”. These announcements by Microsoft are perfect examples.



Defining “Blog Events”

Despite the likely fact that an academic or established Social Media personality has already observed and named this phenomenon something much more eloquent, I call Blog Events

“Events, announcements, or news that motivates large numbers of individuals from various social media demographics, online communities, or groups to blog and/or comment on the event of interest.”

When Microsoft made their announcements, Web developers and designers had various things to say. Blogs, comments, and forums filled with chatter regarding the issue. People were motivated to discuss the event. Even I rushed to write a blog post on the issue on previous employer’s blog, but another developer beat me to the punch by about 2 minutes, posting his blog post first. My blog post was naturally wittier and more fun to read, but that’s beyond the scope of this blog post. :)




Other Blog Events

Some other “blog events” I have observed are the recent Motrin advertising debacle, Magpie’s attempt at a Twitter Ad Network, and pretty much any Apple product announcements.

What are some other “blog events” you have noticed or observed, in your online communities or elsewhere?




photo used via Creative Commons courtesy of: davepatten

Grace happens to be Lijit

Nov
13

This is another in our series of guest posts written by Lijit employees. In addition to the business development she does for Lijit, Grace likes making lists, laughing, snowboarding, and the lost art of writing letters.

November 15th will mark the two months that I have been Lijit. Now, part of being Lijit isn’t just about having the right ‘tude or rocking MC Hammer balloon pants (okay, bad joke but you get it all the time when you work for a company called Lijit). It’s much more. Let me give you the newbie’s look into what being Lijit is really all about:

Intelligence: Our team is quick, witty, and good at what they do. We get it. We get our product, our users, and each other. I bet our combined IQ sky rockets our past our office window and over Mount Sanitas.

Progressive: Speaking of our product, Lijit’s trust-based search is pushing boundaries and not only giving an empowering tool for online publishers, but for their readers. I am Lijit today because I was so impressed with the search and installed it first on my own blog before even realizing they were located in Boulder, the town I had just moved to. Doing business development, I work with hundreds of people in a week from all walks of life and through many mediums. Nine out of ten times, when I explain what we do at Lijit and that our service is free, I can literally hear their jaw drop (yes, over the phone, even on Twitter). Excellence=Free=Lijit=Unparalleled. How Lijit is that, to be able to work for something you believe in while it also is helping people?

Laughter & Fun: I’m not just saying this to sound cliche, let me explain. There isn’t a day that goes by in our brightly lit, lime green hued office, where laughter isn’t heard. Whether it’s collective over Buck’s Russian accent, an inside joke within the Estrogen Lounge between the Product Evangelist/Biz Development ladies (me, Tara, and Jacqueline), a company outing at the racetrack watching our CEO spin out in his car and come in last, or it’s Friday late afternoon and a few people decide they need to unwind with Rock Band and Billy Joel begins to blare throughout the office. We stay serious and focused but never forget the importance of keeping the mood light, fun, and humorous. [On a side note, I truly think it's a hiring prerequisite that each person has an excellent sense of humor at Lijit.]

Equality: My previous employment ranged from a non-profit to hierarchical public relations agencies and sometimes a pompous air seemed to creep in from the higher level down to the lowest. That’s not what being Lijit is about. Here everyone makes themselves available for questions, concerns, and each individual’s well-being. We make time for each other and it’s as though we really exercise the notion that each piece is relevant to the greater whole.

So you see, being Lijit requires a balance of laughter, highly-attuned intelligent minds, a progressive and unparalleled product, and a permeating mentality of equality. Sounds like a pretty good medley, eh? I think so.

Crazy for working at Lijit?

Sep
11

This is another guest post in our series written by Lijit employees. Shawn makes up the majority of our QA team and once she was hired, a collective sigh of relief was heard around the office. She was kind enough to share her thoughts on what she thinks about working at Lijit.

A short time ago, colleagues, friends, and family told me I was crazy for even thinking about working for a start-up company where nothing is ever certain. But growing up, I was always told, “You’ll never know until you try”.

So I tried, and two start-ups later, look at where I landed!

The intrigue, adrenaline rush, and personal satisfaction of working for a start-up far outweigh any disadvantages there may be. Here at Lijit, the people really make this place go. I knew it from the moment I was told that Lijit was looking to build their QA team and the Software Engineers were driving the need. Could such a place really exist, where Software Engineers and QA Engineers work in tandem to get software to the market? Why, yes it can!

There is a core group of folks here that have successfully worked together at other companies. They provide a solid foundation for Lijit. Combine these folks with the rest of us and we all bring life and career experience into a collaborative environment where we take pride in reaching for and obtaining the same goal–getting it done quickly and getting it done to a great degree of publisher and investor satisfaction. How and when we get it done can be both challenging and exhilarating but well worth the effort.

We are continuously in motion to improve upon and formalize the processes that work well for us as well as being open to processes and procedures that will help us continue to improve and grow.

Lijit goes to the DNC

Sep
8

This is another in our continuing series of guest posts by Lijit employees. Jacqueline is a community catalyst who spends her days taking care of Lijit publishers and in her spare time, enjoys exploring what Colorado has to offer. She was kind enough to share her thoughts about a recent trip to Denver.**

A few weeks ago, Lijit went on a field trip (sans parental permission slips) to the Democratic National Convention. It was an opportunity to witness history in the making in Denver. History always transcends politics and we saw that firsthand. Generational and racial barriers fell to the side as people from all walks of life embraced themes portrayed throughout Obama’s campaign. It was inspiring to see.

A call to action within the Democratic Party was interpreted through an artistic lens at the “Manifest Hope Gallery.” The gallery was comprised of contemporary political art, with its star, none other than Senator Obama. Talented artists from around the country used their art as a voice in order to amplify and motivate the grassroots movement surrounding the Obama campaign. Progressive politics through art captured the core values of Obama’s campaign, “hope, progress, change, unity, and patriotism.” The art displayed has made a huge impact in the visibility of the Obama campaign.

Walking around the gallery provided a personal sense of patriotism. Collectively and individually each piece of art addressed the current challenges and struggles felt under the Bush administration, and how Senator Obama will bring about the change that is so desperately needed. The artwork captured strength, power, and intelligence as the brush, paint, and artist worked together to give Senator Obama a place on the canvas. Portrayed as an iconic symbol, it truly is an Obama nation.

As the end of the day drew near and things ended, the Lijit team headed home. Lijit has publishers from all different walks of life with different political beliefs. Today, we were lucky enough to meet and speak with some of our publishers. They expressed their opinion of the candidates and the issues important to them in this election. Separated from Denver by thirty miles, Lijit felt extremely fortunate to be a part of the Democratic National Convention and represent not blue or red but, our own color, Lijit green.

**As with all of our guest posts, Jacqueline’s views are her own and do not necessarily represent those of the entire company.

Now things get interesting

Aug
14

The following is a guest post by Bill, a software developer here at Lijit who is leading the search engine team. I thought his post was a great follow-up to the one from our CEO on the company’s recent funding and appreciate Bill taking the time to share his thoughts on how we should spend that cash.

As you may know, Lijit recently received 7.1 million dollars in venture capital funding. This means different things to different people. To the investors, it means they see promise in the company and are willing to take a calculated risk. To the executives, it’s a significant milestone in building a successful company. To the employees, it means we still have jobs, and it keeps alive the stock-option dream. But to the engineering team, it signifies a new phase.

Prior to this, Lijit has been a true startup. Everybody has worn multiple hats: the VP of Engineering does systems administration, the senior architect does configuration management, and everybody doubles as the QA team. This early phase can be very exciting and very satisfying. You get to do a little bit of everything, and the urgency to ‘just get it done’ means that you’re rarely constrained by bureaucracy or red tape. But it’s also a difficult time. Everybody is overworked, you often have to do tasks outside of your comfort zone, priorities and direction can change daily, and progress is often constricted by a lack of resources.

I only joined Lijit a few months ago, so I missed a lot of the early pains. But I got here in time to experience some of it, and I worked with many of the Lijit staff at a previous gig where we went through all these phases.

With the funding, it all begins to change. From an engineering perspective, this can be a very exciting time. In the past couple of months we’ve hired a QA team, built a dedicated Test Environment which mirrors the production system, and instituted a bug tracking process. We’ve brought additional developers on board with specialized skillsets, and organized into teams dedicated to each of our primary products (website, search platform, adserving platform). Not only have we built a talented IT team, we’re hiring a configuration management engineer. We’re adopting agile development methods, and we’re building a product roadmap and release timeline that give us direction months into the future. Across the board, we’re transitioning from a small team with limited process to a larger, more specialized team, with greater resources, and naturally, more process.

If we do this right, we become a more productive and higher quality organization which can quickly respond to business needs. If we do it wrong, we can become mired in process and overhead.

And that, really, is the exciting part–we get to define ‘doing this right’. The trick is to integrate these processes and resources while still remaining nimble. We get to pick and choose the parts that make sense. If it doesn’t make sense, if it doesn’t make us faster and improve our quality, then we don’t do it. It’s easy to get bogged down in all this stuff. But we won’t because we’ve been here before.

Photo credit: noahwesley