It's been more than two years since Jim Spanfeller left his post heading Forbes.com to create the Spanfeller Media Group, a content network that includes foodie site The Daily Meal and, more recently, sporting enthusiast site The Active Times. Spanfeller is well-known for his view that publishers have mistakenly tended to outsource much of their ad sales to ad networks at the risk of devaluing their premium direct sales. As he builds out his content outfit, AdExchanger thought this was a good time to see how his views of audience buying, real-time bidding, ad exchanges and ad networks have evolved.
AdExchanger: In terms of the advertising, is that pre‑roll? Is it sponsorship? Branding on the player?
All of the above. We certainly will take pre‑roll advertising. One of the things about this is you want to offer specialized things. We have special reports. We have one about cutting‑edge chefs in restaurants coming out, that's sponsored by Wusthof knives. Knives are about cutting, so this is cutting‑edge.
Ba-dump-bump. On a bit more serious note, what’s you’re pitch to advertisers? Is it about traffic? Is the benefit the ability to more closely target a particular set of demographic profiles?
What we also want is to be able to take someone's advertising that says, "Hey, we're looking to find epicurean‑oriented key influentials with higher than norm household income," which basically fits our demo pretty well. "Here's $500,000 for a six‑month campaign. Can you run it?" "Sure. Absolutely."
Whether we do that as pre‑roll, whether we do it as banners, it's up to the advertising industry. Having said that, we are quite happy to work in a more bespoke manner and develop special sections or special sponsorships, or even special units, for folks who are looking to get that done.
I know you always tended to avoid ad networks, going back to your days at Forbes. What do you think about any kind of ad exchanges or RTB? Do you try to avoid that as well? Do you feel it's, as some premium publishers continue to argue, “RTB: what it really stands for ‘race to the bottom?’” Or do you see RTB as a key part of a publisher’s ad tools in certain instances?
First of all, the ocean of data is powerful. I'm not suggesting that it's not worth thinking about or working on. But the level of importance that it's being given now is ridiculous, at least as it's currently practiced. Maybe we find some new targeting mechanisms or algorithms that really make this stuff sing. Right now, most of the data buying is not particularly effective, [compared to] buying contextually.
The context is the filter for getting the type of audience that you want for something – which is boring, because it's the age‑old ally method of how people bought advertising.
It’s natural that audience buying would have clear advantages for advertisers, since magazines, newspapers, TV and other specific media brands were always considered a proxy for the kind of consumers an advertiser wanted to reach. But can’t publishers find a way to realize certain efficiencies in the process, such as attracting certain select advertisers to their ad inventory?
Audience buying is getting lots and lots of attention because it's a way to buy really efficiently. If you're the buyer, not the seller, audience buying is a way to go out and buy a mass without spending a lot of time or money to make that buy, so it becomes a much more efficient thing to do.
I get the allure of that. It's just that, as it's currently being practiced, it ends up oftentimes being a real negative, as opposed to an even‑steven type thing or something that can actually deliver more precision to the buying and selling process.
So are ad exchanges inherently a bad deal for publishers?
An ad exchange isn't a terrible idea, in and of itself. My strong suspicion is that [ad buying and selling software provider] MediaOcean has the ability to really move this along in a much more compelling way than the current set of exchanges have done so far.
The exchanges were billed as a way to take a lot of the pain out of the back‑and‑forth buying and labor intensity of the web. What they ended up becoming, really quickly, was a place where ad networks traded inventory.
What happened is, and this is not the fault of the technology or the fault of the actual original theory, it's just the way things developed: There wasn't governance placed on it, so what happened is the exchanges became the bottom of the bottom, the dregs of the dregs. There's now a lot of work being done on a lot of exchanges to try and fix that, and hopefully that will happen sooner than later.
But don’t ad exchanges address a wider problem for publishers: namely the over-supply, practically infinite supply, of ad inventory. Isn’t that what depresses prices?
People talk about this oversupply of inventory. "Oh my God, there's so much inventory online. How can you not get any kind of pricing?" In fact, there's actually not that much inventory online -- if you take out the impressions that are never actually seen. Hopefully, the [Interactive Advertising Bureau] or some other industry movement, will get us to a point where some very large percentage of the currently accepted impressions will go away. Depending on who you talk to, that could be anywhere from 40 to 70 percent of current impressions online would be obliterated.
At that point, you come back to a place where there's a lot of inventory still left, but it's not an indefinite, unlimited supply of inventory. On top of that, the inventory that is in quality environments becomes even more dear.
Then, I think we get to a place where it makes more sense to spend more time doing a bespoke media buy. And the value of the impressions are truly recognized because you're not simply getting all this dreg mixed in with everything else.
Let’s get back to The Daily Meal. Are all the ads on those sites all direct ad sales, or do you use ad networks or exchanges in some capacity?
At the initial stage, we didn't really have a sales team. It's really, during startup, the sales team is still embryonic, so we've been using a couple of, I think they would refer to themselves as "premium ad networks." They go out and they set up, "These are the sites you're going to be on." They have high quality advertisers, and we've put a floor in that's quite high, relative to this space, for what we will accept in terms of payment. Anything below that, we won't take.
Part of that is we just simply don't want to get out there at too low a price point. We also don't want to get into a lot of that lower, bottom of the barrel, “spank the monkey” type advertising.
We've done a little bit of work with Rubicon and we are trying to see what the RTB area looks like. That's more of an exploration type thing. It has not been used on our site yet. Who knows where that goes? That's the supply side element to the tie‑ins and all with the DSP and RTB stuff.
At the end of the day, RTB, in and of itself from a concept isn't terrible. It's just that how it's practiced can end up being pretty bad.
What about the idea of private exchanges? For example, Rubicon offers private marketplaces to ad sellers. Most operators acknowledge that the private exchange model – where publishers can set specific terms like placement and price floors – can be done within any general exchange framework. Still, others feel that it offers publishers’ clearer protection to put more inventory into exchanges. Is that a prospect you could endorse?
"I don't know" is the answer, but I do think it's certainly worth looking into and thinking about. We're not big enough, yet, to do it on our own. Hopefully we will be in a year or two, as we add in more sites and all the rest. In a year or two, my guess is the marketplace looks radically different anyway. Maybe RTB is still there, maybe private exchanges are how things really get going. I grant you, it's not like it's a super private exchange, at least that's not the intent.
In terms of the audience, it seems like a lot of people are talking about women, certainly Tim Armstrong emphasizes that a lot. There's Glam out there, who seems to be doing OK. Food and fitness are not just an area for women, but is it largely?
We're ending up with 60‑65 percent women on The Daily Meal. I don't know, but my guess is we'll be close to 50/50 on The Active Times.
I'd say we've got The Daily Meal up and running and moving in the right direction, feeling pretty good about that. We're launching The Active Times. We're going to take a breath and get The Daily Meal to profitability, and then move The Active Times into the place where The Daily Meal is now. Then we'll definitely launch a third site, and if we're feeling really smug, we might launch the third and a fourth site at the same time.
Just before The Daily Meal debuted, you bought a restaurant review site called Always Hungry. What kind of acquisitions would you consider these days? Content? Technology?
We definitely look at technology that helps the overall platform, going to view all the sites. Certainly, we'd look at either adding to the spaces that we already occupy, or using an acquisition as a way to get into a new space.
You’ve also done some hiring. How many people do you have working for you now?
We're at around 40 people right now, in the company. As we build up the sites, we're going to need more people. At its peak, I think Forbes.com had 250 people. But in many ways, this is still just the beginning.
By David Kaplan