Since its launch in early 2012, the ad-service company Broadstreet has grown to 250 mostly independent local news publishers and trade publications.
In this Q & A, Broadstreet founder and CEO Kenny Katzgrau talks about what he calls the “growing divide” between publishers, like local newspaper groups, who pitch advertisers with the scale of big numbers of pageviews, and independents, who emphasize value:
What are local advertisers looking for when they do decide to buy space for their message?
Sometimes they like to support local. Sometimes they like the 1:1 attention they get when dealing with the publisher. Sometimes they’re looking to buy a little influence in town.
But at the root of it, they’re looking for value — getting more for your money than what you’ll get from the other guys. Advertisers and marketers will always be attracted to prominence, branding power, and performance. Indie publishers can always be ahead in the value game, because programmatic will always be restricted by its own rules of creative ad standardization.
Nobody likes to spend money and feel ripped off. The wrong kind of display advertising has a way of leaving people feeling like that.
There is the specter of the giant search and social media platforms Google and Facebook swooping up most of the ad revenue. Does this mean that in the future news publishers, especially those at the local level, can expect only crumbs?
There is an inevitable and growing divide in the revenue generation processes between local publishers who rely on scale (primarily newspapers) and those who cater to a niche (community-based news, trade magazines, etc).
I don’t see the situation improving for most national publishers. Niche publishers have a definite survival strategy.
Now and in the future, advertisers who buy at scale have an extreme amount of leverage in sales conversations with publishers who have bought into the numbers strategy. The root of the problem is an oversupply of content and a relatively limited amount of demand. The ad-tech industry has helped create runaway leverage for buyers which threaten to corner and destroy the majority of sellers/publishers.
Niche publishers who rely on direct sales have the ability to deliver naturally targeted, high-quality campaigns for their clients. They have the ability to innovate and offer something that performs better than options like Facebook or Google. Niche publishers can deliver more value for their clients.
Is this value-based strategy working for your clients?
My rule for digital advertising is innovation always trumps standardization.
Programmatic network display requires standardization of ad “creatives.” It’s the only way creatives can be trafficked at scale. To trade money and inventory, a standard creative is required. This is why we have organizations like the Interactive Advertising Bureau. It’s incredibly difficult for national publishers to set themselves apart from the crowd when they have limited control over the product they’re selling, other than audience. Their ability to differentiate has been largely lost.
Standardization also creates a breach in the hull of exchanges, Facebook, Google, et al. They rely on it to sell ads at scale. Meanwhile, smaller publishers in true guerrilla style can offer ad products (like those we make available at our recently launched Broadstreet XPRESS) that aren’t offered elsewhere. The end results are that their clients are more impressed during sales meetings, creatives perform better and more renewals take place.
One of your independent client publishers uses and likes your services, but he told me he’s “warming” to programmatic. Is he an exception to the rule among indies or can they balance your “value” approach and the scaled strategy of programmatic networks?
Indies can certainly try to balance both approaches, though most shy away from programmatic. The majority of indie revenue is going to come from direct sales because most niche publishers don’t even crack 1 million PVs, which would be the floor for programmatic.
Display advertising, which you promote, has many critics. Do these ads work? When don’t they work?
I’m also a critic of display advertising as it is today. The standardized creative, like a 300×250 banner ad, is a poorly performing gimmick that has given a bad name to internet display advertising as a whole.
Broadstreet offers ad formats and tools that take a different approach to what is traditionally thought of display ads. They perform three to five times better (the proof is in the reports), they’re even easier to create than standard ads. They impress clients enough to get a “yes” at the sales pitch.
Critics of display advertising are seeing the world in terms of what it is and not what it could be. There are very few other revenue strategies that can be so low effort and yet perform effectively if done well. I have customers who have mocked up an ad, sent it by email, and have gotten a “yes” within the hour. That sale might grow to a few hundred per month. For that simple reason, I don’t believe display advertising will ever die.
Based on your more than four years experience with Broadstreet Ads, how important is editorial content and user engagement to digital local-news business models? Are they joined at the hip?
Quality editorial content and user engagement are absolutely necessary to the local news publisher because that is what usually forms the advertisers’ first impression of a publisher. It’s a much easier sales conversation when you’re known for quality work and have a name in the community before you walk in the door.
That said, most publishers don’t realize that while content and engagement is necessary, it’s not sufficient when it comes to selling ads. The product that you sell, be it sponsored content or display advertising, must be innovative and impress the client enough for them to say yes.
Mobile platforms continue to get more user share. What are you working on to make mobile more popular with advertisers?
We have the most advanced mobile placement technology on the market. We have smart ad units that can automatically reposition themselves, interspersed with content, on mobile devices. With this technology, sidebar ads no longer get pushed to the bottom. We recently launched this at the LION conference in October.
Based on a recent experiment, we were able to increase a publisher’s CTR nearly 4x by simply finding better placement of ad units on mobile.
You emphasize your digital “pureplay” clients in local news. Do you have any clients among local newspapers?
We absolutely do. We have also begun to serve the trade magazine industry very effectively as well – many of which have print products. I’m on board with whatever a publisher needs to do to keep the cash flowing.
What are you planning for 2017 that will be new?
Currently, most of our sales come from inbound requests at a rate of two to three per week, largely fueled through word of mouth. In 2017 we’ll begin major outbound sales and marketing campaigns, something we have historically been too hands-off with.
Tom Grubisich (@TomGrubisich) writes “The New News” column for Street Fight. He is editorial director of hyperlocal news network Local America, and is also working on a book about the history, present, and future of Charleston, S.C.