Three’s a Crowd

Originally Published 9/14/2005

One of the most interesting things about going to interactive conferences, or simply interacting with multiple clients, is getting a bird’s eye view of our business and gaining a sense of perspective. In other words, you get to see how other people handle their businesses. The question, “is it just me, or do other people have the same problems I do?” gets answered. In the case of handling third-party served ad campaigns, the answer is “yes, everyone is having the same problems.”

This column addresses some of the issues inherent for publishers who must deal with campaigns that are served from a third party. In this day and age, everyone accepts this type of business. I’ll address this subject from a fairly top-line basis. So if you’re an executive who doesn’t understand third party ad serving, or thinks that it can easily be solved, or feels you’re not getting the full scoop from your own operations group — read on. If nothing else, you’ll get a sense of perspective.

An increasing impact

This is not a new problem, ladies and gentleman. Media operations knows it all too well, and it has been around for quite a few years. The scary part about third party ad serving is that it is increasing rapidly and absorbing a significant percentage of inventory and revenue. This creates uncertainty in revenue recognition and a tremendous amount of manual labor on the part of the media operations group as well as finance departments.

Imagine that at the end of the month reporting revenue numbers and having to apply the caveat that they are not really complete and you won’t know the real numbers for another couple of weeks. This is a problem that many, many publishers are currently grappling with. 

This is going to get worse before it gets better because, from the advertiser and agency side of the coin, third party ad serving has a huge benefit: it consolidates both distribution and reporting so they can reach scores of publishers using a single ad serving application. Even I have to admit that it makes sense — it just creates complication we all have to resolve.

The nature of the beast

For publishers that are media based and rely on CPM campaigns to drive their business revenue, the complication falls into two basic categories. First, you have campaigns that are delivered by your ad server and for which you are paid based on your delivery numbers. Second, you have campaigns that are redirected and served by a third party and for which you are paid based on their numbers.

Believe me, the numbers never match.

A typical contract with a third party stipulates that if there is less than a 10 percent discrepancy in the delivery numbers, the publishers numbers are the basis for payment. But often the discrepancy is larger — and thus begins the process of reconciliation.

Whose numbers are right, what revenue was actually earned, and how much do I recognize that as a publisher?

Basically, how does the third party campaign work? Instead of scheduling a graphic image in the publisher’s ad server, the trafficker schedules a third party ad tag.

Here’s what happens when the reader (consumer) of your publication types in your URL: They get your content page, which includes your ad tag. The ad tag on that page requests a campaign from your ad server. The ad server gets the third party ad tag, which “calls” for the ad image from the third party server and delivers it to your content page.

I always like to think of the analogy of runners in a relay race. They pass the baton (the ad tag) from runner to runner. The only risk is that the baton gets dropped. Here are some of the reasons that third party numbers don’t jibe with publishers

  • “Breakage” in the handoff from publisher tag to third party tag (The baton gets dropped)
  • ” Differences in counting ad impressions. What is an impression? Is it when the publisher simply “asks” for the ad image from the third party or when it is fully displayed?
  • ” Differences in the method of counting unique viewers or in applying frequency caps to campaigns
  • ” Third party targeting criteria that are never shared with the publisher and may significantly increase the discrepancy of counted impressions, such as screening IP addresses.
  • ” Spiders and bots, programs that crawl the web looking for content and links, can artificially generate ad impressions.

“Do ya feel lucky? Well, do ya, punk?”

Side note to those uninitiated execs who are tempted to say “That’s it, we’re not going to accept third party advertising anymore – they can go on our numbers!”

Okay, now imagine turning away $100,000s in revenue per year, because that’s the business you’re going to lose. So face it, third party advertising is here to stay.

What are the solutions?

Today, most publishers handle third party served campaigns in one of two ways.

1) Campaigns are set aside for revenue recognition in following month. By that time, discrepancies are resolved and numbers agreed upon.

2) Campaigns are recognized immediately based on the publisher’s numbers and reconciled in the following month.

Both are manual processes. Neither method will be satisfactory as the number of these campaigns increases.

Hope is on the horizon

There are indications that several parties are starting to take this problem seriously. This includes companies that supply contract management solutions, billing/invoicing applications, the IAB and perhaps even agencies and clients:

  • The IAB “Measurement Task Force” is standardizing the definition of a delivered ad impression, and this will help reduce discrepancies. (It’s amazing that we as an industry are just getting to this. “we” meaning all of us)
  • ” It has become standard for third party ad servers to supply log-ins for clients and publishers to view “their” impression counts on a real time basis. That’s okay, although in many cases this simply let’s you see how far off you are in your impression counts — on a real time basis.
  • ” Some contract management applications are actively pursuing the ability to log on and download third party results automatically. Imagine being able to press a button and consolidate all third party results into a single spreadsheet. We can only hope that agencies and advertiser will actually let them — they should!

The best of all possible worlds

 accept the fact that discrepancies will always exist. Just let me view them quickly, evaluate them, resolve them, and report third party revenue at the same time I report everything else.

What I’d like to do is access my “Third Party Central” application and configure it for all the third party advertisers I work with. I’ll upload the campaign information including start/end date, impressions and CPM and include the URL, ID and password that will allow me to automate log on and access the actual results from the third party.

At the end of the month, I’ll press an “import” button and download everything. The UI will show me booked impressions, my ad server’s impressions alongside the third party’s. It will show me the percent discrepancy and sort the campaigns by acceptable and unacceptable margins.

Now I have the information I need without doing hours of research. I can easily spot the campaigns that are out of compliance in terms of discrepancies. I can compile a history — giving me the routine ability to accept third party campaigns or put others on a watch list because of unacceptable discrepancies.

Not too much to ask, is it?

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