Why Direct Sales Is A Great Way To Sell Ads

This is part 2 of a 4 post series about direct sales and web display ads. Many website owners are benefiting from or considering selling ads on their sites directly. But direct sales can be confusing and it isn’t right for everyone. The posts:

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Have you ever seen a website with an “advertise here” page, typically something like photojojo.com/advertising/? Are you unhappy with your ad networks and think you could be making more money if you sold your ads yourself?

Bottom line: selling your own premium ad inventory can lead to a big boost in your business – and not enough websites are trying it or doing it well.

Remnant advertising via networks and exchanges is very popular, and they definitely serve a purpose / fill a need. We believe that remnant ads are a good thing but not the only or even best thing. Like most things in life and business it’s best to have a balance between remnant and premium, and finding the right mix can do wonders for your advertising.

The problem is ad sellers / web publishers started focusing on ad networks as their main source of ad revenue. After all, it was quick and easy! You put some JavaScript on your website and BAM!, Google starts magically sending you checks. As the industry focused on building ad networks and exchanges to meet this demand, relatively little progress was made with premium ads and tools that support them.

Premium Ads Make More Money

When you’re selling ads, you can usually figure out how much money you’re making from your ad inventory by measuring eCPM, or effective cost per thousand impressions. When you’re using ad networks you often earn an eCPM of less than $1.00.

Ads that you sell directly can be sold for higher prices – or in other words, you can sell them at a “premium” (get it?). The average difference in pricing for what is essentially the same ad space can be as high as 10X! That means you might be getting paid $1 per thousand impressions by a network when the same ad spot sold as a premium ad could have brought you $10.

Here’s a recent and controversial MediaPost blog that shows some of the direct sales vs remnant pricing math. Regardless of the math’s merits, it’s good people are debating the topic.

Why The Big Price Difference?

Because the buyer is getting things they can’t get when they buy remnant ads through a network or exchange. After all, ad buyers aren’t stupid or willing to throw money away – but they will pay more for a better product!

Some of the direct sales benefits to ad buyers:

Transparency – One of the problems with remnant advertising is the buyer doesn’t know where their ad is going to show up. It’s a kind of “spray and pray”. They trust Google to put the ad in the “right” places for the “right” price. When buying a premium ad directly, they know who they are buying from, what they’re buying, how much it costs, etc.

Control – Because of the transparency, buyers have more control over their premium ads. They can intentionally pick where the ad goes, what types of packages they want to buy, for how many days/weeks/impressions the ad will run, etc. They can more directly analyze the ad’s performance and optimize accordingly.

Relationships – Direct sales usually occur between people, not algorithms. Having a person you can talk to and build a relationship with is a great thing with tons of benefits. For example, some sellers have given the buyer feedback on their ad creative / banners by saying “we know our website visitors really well, and we think they would love it if your ad talked about XYZ feature.”

Simplicity – Depending on the type of advertiser, direct ad purchases can be easier. Think of a small or medium sized ad buyer who has been spending most of their money on radio and print ads – those are direct purchases and it’s what they are accustomed to. As more of these buyers spend money online, they don’t all want to learn or deal with the complexities of networks and exchanges. Sometimes it’s easier for them to email a website and say “I’d like to buy an ad on your site for a month. Here’s my money.”

Remember the brick and mortar store example from the first post in this series? There’s value for the buyer to see and touch the product, to talk directly with the shopkeeper about what’s right for them, etc. There’s a level of personal touch and customization. You can’t get that when you buy a billion impressions from a thousand websites via a network.

There Are More Benefits For Sellers, Too!

Premium ads and direct sales isn’t just about making more money. Many publishers use direct sales because it’s a better fit for their business and how they want to spend their time. Many of the benefits listed above for buyers are also mirrored as benefits for sellers:

Relationships – Sales is about relationships. You can drive a lot of repeat and profitable business when you maintain relationships with your advertisers.

Business Control – Rather than relying on a third party that might not have your best interests in mind, many website publishers want to have that control over all aspects of their business. There’s something empowering about being the sole determiner of your success with ad revenue.

Inventory Control – You have the flexibility to try different things, such as a unique new form of advertising. Some sellers like to bundle together different ad packages, such as an option to buy a daily homepage takeover or a mixed campaign of banners, text, RSS and email. Although we don’t always recommend it, unique inventory options can be a good way to offer unique value to your advertisers.

Advertisement Control – You can control the advertisements that show up on your site. You don’t have to worry about ads for competitors, porn, gambling, herbal supplements, etc. Web publishers spend a lot of time and effort to give their users a great experience through quality content and design – why clutter that up with irrelevant or inappropriate advertising?

Money Control – Sometimes an advertiser will contact the seller to make a direct purchase, but the seller has to send them to a third party service to fulfill the order. But if the buyer contacted you directly and it’s your inventory, why send it off to a broker who will take 40% of what you rightfully earned? Plus you can control how and when you are paid – no more waiting 3 months for a check in the mail!

So How Do I Do It?

In the next post of the series, we’ll walk through how direct sales typically works, what’s wrong with it, and how isocket helps make it easier for you!

Let us know in the comments which of these benefits you like most or if there any reasons we might have missed? Would love to hear what you all think of premium direct sales.

May 1 | Filed Under Advertising

2 Comments

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2 Responses to “Why Direct Sales Is A Great Way To Sell Ads”

Twitted by arjunsethi on May 1st, 2009 12:45 pm

[...] This post was Twitted by arjunsethi – Real-url.org [...]
Max on May 1st, 2009 4:58 pm

We definitely prefer direct sales on our site. We weren’t happy with adsense and YPN. But people started emailing us to buy ads so we tried it out, and we started making more money. It’s kind of tough to do though.

Looking forward to seeing what isocket does!

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