Could remnant ad sales kill online publishers?

Every week I’ll get an email from a random agency telling me they absolutely love my site and they’d like to advertise on it. This gets me really excited, because I work incredibly hard on it. It has fairly decent traffic too, about 5 000 unique visitors a day, so to monetise the site would be a dream-come-true.

Said random agency will ask me for all sorts of stats about my site. I’ll email them everything including my now-deceased grandfather’s birth certificate from Prussia, because they need to be absolutely sure that I am a “genuine” publisher. They’ll want site stats, traffic projects, Twitter followers, Facebook fans, rate cards, etc. If I ask them any questions, it’ll be carefully side-stepped while they gather information. (This is usually my red-flag warning).

After a long “negotiation” they’ll tell me they’re incredibly excited to use me. They then email me the ad-code to insert in my website (usually the prime spot, of course) and to let them know when it’s up so they can take a look.

It’s then when I go … “Uhm, we need to talk money first.”

Their response usually goes along the lines of: “We’re a remnant ad-sales company, so we just want your unwanted inventory. We’ll pay you “top dollar” for the inventory. In their world, “top dollar” is about US$1.00 CPM. I can earn more than that on Google Adsense.

The problem these days is that companies are now wising up to this. Instead of buying advertising inventory from publishers and respectable agencies, they use these “remnant advertising agencies” who charge a fraction of the cost, which effectively dries up the pool of advertisers for online agencies.

Now, imagine an agency approaching a print-company and saying, “We know you charge US$2 000 for a full page advert, but we’re prepared to pay you US$20 for a full page advert, since we’re pretty sure you have unsold inventory.

Of course the analogy is a little wonky, as publishers will just print a thinner newspaper, but the point I’m trying to make is that no one would expect any other media publisher to discount their rate card by more than 95%. We understand the value of the advert — whether it’s about brand recognition or product promotion.

In fact, online adverts are even more powerful than print-media because an advert’s effectiveness can be measured. We can track the person, from viewing the impression, to clicking through directly to the customer’s website and eventually to a sale. Print adverts allow no tracking, unless you’re going to use coupons and vouchers — and when last has anyone seen that?

Remnant ad sales devalue what online advertising has to offer. It’s no wonder that companies spend a small fraction of their advertising online. I had a recent meeting with a client who spends well over US$100 000 a month on radio adverts, and freely admits he has no idea how it’s helping his company but says it’s all about “Brand Awareness”. This same client refuses to spend US$1 000 a month in online advertising because it’s “just too expensive” and “doesn’t give him the return on investment that he needs”.

Confused? So am I.

Selling in an online world is difficult enough. Sure, I don’t have the same huge overheads as a traditional print publication, but it doesn’t mean I don’t have overheads. Salaries are expensive, though. And for some reason my staff refuse to work for five percent of their salary in the “remnant hours” they have available when not sleeping.

Remnant ad sales have created a false ideal in online publishing. It’s told companies they can squeeze the publishers because online publishers are usually desperate for ad sales. And if the publisher goes bust? So what. There are new ones cropping up all the time.

The problem with this philosophy is that real online publishers cannot grow because they’re constantly being squeezed on advertising price. Advertising platforms like Google and Facebook have driven down the price of online advertising even further.

If there ever was a more subversive threat to online publishing, it’s this one. Remnant ad agencies. Bah! Humbug!