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Google Internet Ad Assault Still Hurting Yahoo!, Bing and Content Publishers

Stocks in this article: YHOO MSFT GOOG ADBE NYT TST AMZN

For publishers, CPC was down 7% for finance sites, while it was flat in retail and rose 8% in the auto ad space. Advertisers are getting better at cherry-picking target audiences while paying run-of-network rates for ads, said Waddell.

"The reality is that programmatic purchases are becoming an automated way of buying premium content," he said. What's bought may be "remnant" space, but what counts for advertisers is that it meets their needs.

Publishers, whether they began in print like The New York Times (NYT) or online like TheStreet (TST), seek premium prices through "extrinsic" targeting -- ads specifically based on what the audience is reading. Google's ad purchase technology focuses on "intrinsic" targeting, ads based on knowledge of who the readers are.

With intrinsic targeting, Waddell said, publishers are "not getting a premium -- it is run-of-network pricing." For display and social ads, advertisers can also use first-party data to target ads to a more specific audience, without paying a premium placement price.

Here again, there is good news for Yahoo!, which uses a cheap, cloud-based publishing system for all its content. Conde Nast's recent decision to ditch its old computers and move exclusively to the Amazon (AMZN) cloud is proof of that concept.

"I agree" that run-of-network rates are hurting journalism, Waddell said. Publishers who require premium pricing to sustain their businesses are withholding their best content, and best ad inventory, from the run-of-network market. "For premium content, environments and audience there are still ways to get" better rates, Waddell said. But how long that will remain the case is subject to question. "In the world of direct response, it comes down to performance," he concluded.

At the time of publication the author owned shares of GOOG and AMZN.

This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.

 

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