AdExchanger: BrandVoice launched five years ago, so it’s had time to develop and evolve. What insights do you have to share about phase two of having a native advertising business?
MARK HOWARD: I would argue we are at stage three. When we launched the concept in 2010, the idea of having brands have access to the CMS [content management system] and publish content was foreign, especially with B2B and financial service advertisers. We thought it would be a home run, but only one brand, SAP, was thinking that way and developing resources to do that. Fast forward to 2012, native had this tsunami and everyone was ready to jump on the bandwagon. We saw the number of brands who were taking advantage of BrandVoice explode.
Fast forward into the second half of 2015. Now that every major publisher has some form of branded content solution, page views are becoming a commodity. What’s really important is influencers. For us, the ability to identify influencers to consume content on behalf of brands and distribute content to those influencers is going to be a big part of how we push forward in 2016.
What changed for Forbes when it sold a majority stake in July 2014? Would you put that in the same category as some of the other media investments and acquisitions we’ve seen lately?
They’ve provided us with the ability to fund our own growth. Whereas we hadn’t been expanding [staff] in years before, we’ve now been in expansion mode. Last year was our first significant growth in head count, and this year we’re budgeted for even larger growth. The skill sets needed now for a publisher are around graphic designers, frontend designers, back-end engineers, data scientists. The growth is happening in positions that didn’t exist before.
What areas in digital revenue will take a bigger piece of the pie in the future?
BrandVoice has grown 70% two years in a row, and we expect similar growth this year. When we first started offering it to the market, it was added value with a minimum [banner] ad investment. Two years ago, advertisers could purchase it by itself. But the large portion of digital revenue still lies in display, including standard banners, mobile banners and video pre-roll. Not only is it part of the direct sales offering, but the programmatic business is on a tremendous upward trajectory, and is 35% of total digital revenues.
Programmatic revenues are a big chunk, then.
And it’s continuing to grow. We’re starting to see the promises of private marketplaces (PMP) coming to fruition this year. There were technological issues in the past and philosophical issues around what was good for a buyer versus a publisher. But the technology has progressed to a point where PMP deals are being asked for much more today, while still representing a small part of programmatic revenue pie.
Are those high programmatic revenues because DSPs are identifying your readers as a high-value audience?
The majority of revenues have been through open exchange. Back in 2012, when people were concerned about programmatic cannibalizing direct channels or channel conflict, we took an aggressive path. We opened all inventory up to be biddable, with no blacklist, no floors, and introduced Google’s dynamic allocation product to compete with the open auction. Each year we see a continued increase in the CPMs we are achieving through the exchange. In high sell-through months and Q4 in particular, the delta between direct sales and open exchange is only $5 to $6 CPMs. That’s the result of the buying engines recognizing the value of the audience in the environment
Do you do header bidding?
We recently deployed header bidding.
What about Forbes’ platforms approach? Medium has become a place for business communication and op-eds, and I could see that being a competitor.
Medium has not been much of a topic of discussion for us as Google AMP, Facebook Instant Articles and Apple News. We have never rushed toward those types of decisions. We did not go out and spend a lot of money building a custom Forbes app. Others who did apps found it difficult to amass a sizeable audience and almost impossible to monetize the app. Right now we are in aggressive exploration mode and have resources devoted to better understanding the monetization opportunities. At this point, there haven’t been any reports of people doing well from a monetization standpoint, and there hasn’t been a clear understanding of how it would translate to business results.
With ad blocking, why be early to tackle it and why be public about what you’re doing?
You see the adoption of ad blocking occurring at a faster rate. You can either start to figure out why they’re doing it and what they’re willing to exchange for content, or wait and hope the industry solves the problem for you. We are going to go forward and figure out the root of the problem and put our solution ahead of the curve. We decided last year it didn’t have to be all or nothing, but to create a middle ground with an ad-light experience. We are now playing with and testing a dozen different variables on our road map.
With so many publishers cropping up and so many of them adopting a sponsored content model, do you think the market is oversaturated?
Some are going to have to fail. There will be interesting business models that emerge. Some have said they are exploring the possibility of going to a platform-only model. Other publishers are doing these really robust, immersive [branded content] experiences. They are spectacular from a technology and design perspective, but I find them difficult to consume on a phone, where consumers are moving more of their media consumption. We are on the cusp of a content bubble. We can’t support all those rich, immersive experiences over and over for every brand and every site on mobile.