A ValueClick SVP says eCPM, not revenue share, is what matters most to publishers.

The value an advertising network brings to an online advertiser is the aggregation of quality inventory across a multitude of independent websites. As the model evolves, via increased targeting capabilities, transparency and other technological innovations, one thing remains constant-- the value publishers represent in the equation, and how they are compensated, cannot be understated.

The commitment of any ad network should be to provide the best campaigns and tools to enable its publisher base to earn the maximum amount possible for their inventory. However, in recent years, several ad networks have placed greater emphasis on the percentage of revenue a publisher is being offered, rather than how much they will actually earn, or their effective cost-per-thousand impressions (eCPM).

In 1997, ad networks were a new beast on the internet, offering website publishers an outsourced sales force and optimization technology platform to capture what little ad dollars were being spent in online advertising. Early publishers were either wary to join a network or just happy to be monetizing their site at all. But as ad networks became viable revenue generators for independent websites, the question became who would pay the most for a site’s inventory. Clearly, website publishers wanted to ensure that the network representing their inventory would generate them the highest revenue. 

“Revenue share” emerged as the pre-emanate method of communicating value to publishers, with Fastclick leading the way at a 65 percent revenue share marketing position, providing an interface that showed exactly what a publisher was getting paid by campaign. It was a great marketing approach that helped networks like Fastclick grow quickly and provided a catalyst for establishing strong ties to the publisher community.

Since then, however, rev-share has become an over-used marketing term that fails to accurately consider what publishers care about most. Today, with hundreds of networks vying for a piece of the online advertising pie, networks are offering anywhere from 45 percent to 70 percent revenue share and above. But for publishers, the key questions have become: how much can they earn on an effective CPM basis; and what will the size of their checks be at the end of each month? After all, 70 percent of $0 is still $0. 

The real value lies in offering the industry’s highest eCPM, not the highest percentage of revenue share. For each impression that publishers serve, they should always know exactly what they will earn (eCPM), and it should be easy to find in any advertising network’s publisher interface.

Why eCPM?

eCPM, translates every pricing model (CPM/CPC/CPA) into a common term, assessing the value of specific inventory against what is being paid for it in terms of the resulting revenue for a publisher, taking into account clickthrough ratios and action tracking to calculate the true value of each impression.

eCPM equals total revenue earned divided by the number of impressions in thousands. It boils down to how much money, per 1,000 impressions, publishers can earn, regardless of how a network is selling their inventory. It’s simple math, making it easy to calculate true revenue for publishers. 

How to maximize eCPM

What drives eCPM is the ability for a publisher, or its network partner, to command the highest rates possible. And higher rates are, in large part, driven by the quality of the inventory and available targeting options. As publishers evaluate prospective network partners to represent their inventory, here are key factors they need to consider:

• Rate-- What effective CPM can the publisher earn?
• Fill-- How much of the inventory will be sold?
• Sales Force-- Who will be selling the inventory and what type of coverage can they provide?
• Control-- What is the mechanism for controlling what appears on the site and how easy is it to work with other ad networks?
• Quality-- What is the nature of the advertising that will appear?
• Terms-- How often does payment occur? What is the publisher’s responsibility for credit?
• Revenue Streams-- How many ad formats are available? Are there alternative ways to earn revenue?
• Technology-- What sort of optimization technology is available to aid the publisher in earning the highest eCPM?
• Service-- Can a publisher increase their earnings through advice from their partner?

Bottom line: rev-share as a representation of the value a network brings to a publisher is obsolete.

Networks need to stop hiding what matters most to publishers behind meaningless marketing messages and focus on bringing them more true value. And publishers should focus on establishing more substantial partnerships with the networks that can yield the maximum amount of revenue for their inventory, each and every month.

At one time, revenue share was a truly meaningful method of expressing a network’s value proposition. But now it is time for the industry to be more direct with publishers by shifting the conversation toward one of how much they will actually earn: eCPM.

Jeff Hirsch, senior vice president of business development for ValueClick, Inc., is responsible for strengthening and expanding the company's publisher networks. Hirsch is currently focused on building an integrated publisher network and technology platform for ValueClick Media/Fastclick that delivers the industry’s highest eCPM rates and highest fill in the industry.

Hirsch previously served as chief revenue officer of Fastclick.com, Inc. for over four years, and previously served as vice president, business development, for the pre-IPO ValueClick, Inc. In addition to over five years in senior management positions at advertising and promotions companies, Hirsch founded Xymox Systems in 1988 and successfully steered the company to a position on the INC 500 list of fastest growing private companies in 1993, selling the company in 1995. Earlier in his career, Hirsch held sales and marketing management positions in various start-up and later stage technology and media companies.