Publisher co-operatives: fighting the giants of digital
Working with the competition might induce anxiety - but it could also prove a turning point for traditional media, writes Rubicon Project's Jay Stevens.
The writer Mark Twain once said: "Never pick a fight with someone who buys ink by the barrel". It's an adage that lost its relevance in recent years as traditional media brands have been overshadowed, in audience and ad revenue terms, by the digital powerhouses of search and social. The five biggest digital businesses took over 50 per cent of global digital ad revenue last year, reflecting the tough competition facing individual publishers.
But developments this year show that the fight is far from over for traditional media brands. After wondering for years how they could possibly match the digital giants' reach, scale, data and ease of access to buyers, hope has emerged in the shape of the publisher co-operative.
Publishers have been joining forces to sell their combined inventory and audience data on single platforms, offering advertisers and media agencies the kind of programmatic scale that they increasingly demand.
These co-operatives, also referred to as alliances or coalitions, are able to pool and package first-party data along with their inventory, offering advertisers access to great depth and insight to make campaigns that are finely targeted.
For example, The Guardian has teamed up with the Financial Times, CNN International, Reuters and The Economist to pool their ad space. The Pangaea Alliance offers advertisers a programmatic media-buying solution at scale (a combined 110 million global readers) and technological ease. But also, crucially, access to the kind of premium ad environments that automation has so far failed to deliver.
Rubicon Project was chosen to provide the technology platform that powers Pangaea's operations. At the time, it was the sixth co-operative that we partnered with across the world, and another three have followed since, so we've been able to see at close hand quite how valuable, if complex, this development is.
Small markets embracing co-operatives
Co-operatives are proving particularly successful in smaller countries, where a lower average order value combined with relatively higher overheads mean buyers and sellers alike have more to gain from automation. It is perhaps little surprise that The Czech Publisher Exchange (CPEx) has seen a 500% annual increase in private marketplace revenue two years after launch. Those direct orders now represent 30% of its total revenues.
Similarly, two year-old Danish co-operative Dansk Udgivernetvaerk (DUN) offers access to almost three-quarters of the country's web users. As well as offering local advertisers audience-based premium inventory via orders, DUN was an early proponent of 'audience extension'. Sometimes also referred to as a publisher trading desk, DUN used its quality audience and scale as an answer to the question of how to bring classified advertising up to date.
Starting with the employment vertical, prominent local brand and DUN member Jobzonen allows advertisers to reach their target audiences of specific types of job seekers across the entire co-operative's portfolio of sites and apps.
DUN Director Troels Nielsen says this has "effectively rejuvenated our classifieds offering, a market that for some was considered lost to our larger digital-only competitors." The results of the audience extension initiative are impressive - 500 ad campaigns from more than 150 clients in the last 18 months.
The global march of co-operatives
Whilst co-operatives first appeared in France three years ago, when the nation's biggest media owners got together to form La Place Media, they have since spread beyond Europe with the newest media co-operatives popping up in Argentina (RPA Media Place), and New Zealand (KPEX).
It's worth looking at La Place Media to see what three years of operation has brought its partners (TF1 Publicité, Figaro Medias, France Television Publicité, Amaury Médias and Lagardere Publicité).
Strong, independent management and a skilled, dedicated workforce has yielded strong results - CPMs increased by 70% in its second year, and €20 million in revenue is forecast for 2015.
With a reach of 70% of France's digital population, or 30 million unique users, La Place Media's model has become a blueprint for the other co-operatives.
These are all very hopeful signs that the forming of co-operatives could prove a turning point for traditional media. But we also acknowledge that this development isn't without its own challenges.
As one might expect, some publishers might be reluctant to share data with potential competitors, preferring to keep the status quo and maintain a more direct relationship with advertisers. But by investing in a dedicated, independent co-operative organisation, these competitor anxieties are quelled and as a result, the whole becomes much greater than the sum of its parts.
And as media owners realise how powerful their data becomes when combined with another's, these barriers should increasingly come down. In the words of the Czech national co-op's MD Matej Novak, "individually we are weak", while the value gained from working together is "great...even if we are competitors."
Jay Stevens is general manager international, Rubicon Project.