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Will publishers and ad networks ever strike a balance?

Will publishers and ad networks ever strike a balance? Michael Estrin

Earlier this year, news broke that Jim Spanfeller, the long-time CEO of Forbes.com, would be leaving the company after what had been a very successful nine-year run. When Spanfeller joined Forbes.com, the financial news magazine's online destination, the site was a far cry from what it is today. Audiences were small, and integration with the offline media property was an afterthought at best.

Today, Forbes.com, which works closely with the magazine and its sister properties like Investopedia.com and RealClearPolitics.com, garners 42 million unique monthly visitors, making it one of the leading publishers in the financial vertical.

Spanfeller will be speaking at the December iMedia Agency Summit in Scottsdale, Ariz. We recently caught up with Spanfeller to see what's next for him, and what he thinks the future will hold for online advertising.

iMedia: You left Forbes.com earlier this summer. What's next for you?

Jim Spanfeller: Well, I'm still winding things down here at Forbes.com. But I'll be done shortly. What I'm working on now is starting a media management company that will help existing companies better manage their online assets. There are a lot of big media companies that need help integrating their offline properties with their digital properties. And people still don't understand how to value digital inventory and make the most of what they've got.

iMedia: Back in August, you wrote a really great column for PaidContent.org about online publishers making the mistake of pricing their inventory differently than offline publishers, and in so doing, effectively dropping the price to an almost inconsequential amount. At least in the short-run, low media prices are great for media buyers and advertisers. But of course, in the long-run, online publishing needs to be profitable. So how do we get from where we are now to a model that provides value to publishers, advertisers, and users?

Spanfeller: Right now about 40 percent of traffic online is around content. What that means is that people are going to something someone wrote or created, as opposed to ecommerce, social media, or mail, which are all significant in their own ways. But looking at that traffic that goes to content, which is the single largest chunk of what's out there, you're seeing content companies take a beating. If things continued like this, you'd see people getting out of the content business. I don't think that will happen, but there will be a lot of pain in the meantime as things get sorted out. At the end of the day, marketers need advertising that works with professional content if they are going to be in the demand creation business. So, what I was saying in that article was that publishers should stop undercutting their price. When they do that, they're giving away too much for too little, and that's not a business model that will survive long-term.

iMedia: Does that mean ad networks will go away?

Spanfeller: No. Ad networks will stay. But publishers who just throw everything at ad networks give too much away. The mentality is that "We're not making money on this now, so something is better than nothing." That's just completely wrong. There's this misconception about there being remnant inventory out there, but the truth is that there's very little remnant inventory. On the web, every interaction is of equal or greater value than the previous action, so it doesn't make sense for a publisher to devalue the so-called remnant inventory.

So, I think that in the near-term, you're going to see a lot of quality advertisers exit horizontal ad networks -- something many publishers have already done. Advertisers will use vertical ad networks because those can deliver a more refined audience, and those will be the networks publishers will use if they don't sell the inventory themselves.

That's not to say that horizontal ad networks will go away. They won't. But they're part of a very different business model, and they have a lot more to do with demand fulfillment, which is direct response. Nothing against direct response, but that's not advertising.

Spanfeller: Yeah, that's always an issue, especially with a technology-driven industry. First, we've got to get over this false notion that every new development is 180 degrees new. I'm a big proponent of new, but at the end of the day, people still behave in a relatively similar way to how they did in the past. That is, if there's a reason for them to do something, they'll do it, and if there isn't, they won't. So, I think you always have to keep that idea -- what will people do? -- in perspective when you're looking at the "next big thing." The second thing is that you just can't assume that because there's noise, there's meaning. A lot of people have been yapping about Twitter, but that doesn't mean it's as important as people think, and it might be critical to one company and irrelevant to another.

iMedia: What are you most excited about for 2010? What are you most concerned about?

Spanfeller: The biggest thing I'm excited about is that the economy seems to be improving. What that improvement looks like may not be all that clear, but the climate is improving and there will be more clients spending more money than they did this year because most brands have found that their brand attributes have decreased over the past 18 months. Brands have suffered in this downturn, so I think we're going to see a lot more money spent on branding. Of course, what I'm most excited about is also my biggest worry -- that things won't improve.

My other big concern is about is privacy. If the industry doesn't do a better job when it comes to privacy, it will hurt everyone. Most people still have no idea what happens with the data that's collected about them, so we really do need better transparency for the consumer and then really good education to explain what's going on. Who knows what will happen in Washington, but right now it seems that we can, and should, do a better job of self-regulating and educating around privacy issues.

Michael Estrin is a freelance writer.

On Twitter? Follow iMedia at @iMediaTweet.

Michael Estrin is freelance writer. He contributes regularly to iMedia, Bankrate.com, and California Lawyer Magazine. But you can also find his byline across the Web (and sometimes in print) at Digiday, Fast...

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to leave comments.

Commenter: Raj sehena

2009, October 31

Nice article thanks
i agree with u

Commenter: Raj sehena

2009, October 31

Nice article thanks
i agree with u