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This guest post is from Will Price, CEO of Flite, an online advertising technology company.


When we talk of the myriad issues facing publishers today, we generally speak about paywalls and copyright issues, or the loss of small town papers and beloved magazines. While all of these represent major shifts in an industry besieged on all fronts, publishers are facing yet another challenge rarely talked about: the democratization of audience aggregation.


In the past, publishers sold a rare good that was difficult, if not impossible, to replicate. While a strong editorial point of view and art department excellence helped to attract a loyal readership, most people with a cursory understanding of the publishing business know it’s not reader subscriptions that pay for writers’ salaries or the ink (or web hosting!) on each page. Rather, the lifeblood of the publishing industry continues to this day to be advertisers keen to get in front of their target audience. Thus, Good Housekeeping could charge a premium on ads for the latest cleaning products or grocery item, and Golf Digest may easily demand a favorable rate for ads from Callaway or Scottish golf courses.


Yet, as can be said about so many other industries, the digital age has staged a swift and relentless revolution against this traditional model. Today, ad networks and demand site platforms (like AppNexus or Turn) allow marketers to synthetically aggregate a very specific, targeted audience, irrespective of the domain this audience browses. It has never before been easier to find car enthusiasts in the market for a new SUV, or suburban moms looking to plan their family’s summer vacation.


No longer must media buyers rely on the top 250 ComScore sites as the only menu from which to choose places to place ads for the newest consumer goods or financial services. No longer are publishers the sole gatekeepers of a carefully (and expensively) cultivated audience of readers. Yet another affront to publishers? Marketers don’t even have to change their creative to switch from a publisher-centric ad buy to one from an ad network. 


For publishers to truly differentiate to the media planner today it is not enough to say, “I have this [affluent | professional | decision-maker] audience.” Audiences have become table stakes, and publishers no longer solely own access to today’s consumer.


Yet while the circumstances for publishers to demand higher CPMs may seem bleak, all hope is not lost. If publishers can combine their audience with a unique capability to leverage their strengths and engage that audience, they can still win the war for ad dollars, in a market that has the potential to grow from $25 billion annually to an astonishing $200 billion in the next few years.


Differentiating at scale


There’s a huge opportunity for publishers to help improve brand storytelling and make display ads useful for consumers. But how? The answer is the ability to make and sell differentiated ad products at scale.


If you think about online display ads today, there has been little change since ran the first banner ad for AT&T in 1994. Ninety out of every 100 ads still contain little more than a piece of creative, a tagline, and a call to action button. In print and TV, these have to be the platonic form of perfect – there is simply no method of iteration that maps to the medium. This is, to use the words of Peter Sims, a “big bet” business that involves enormous expense and difficulty of bringing media to market.


Online, brands continue to operate under this big bet mentality, despite the programmable, fluid nature of the new medium. Yet today, brands don’t need to serve the complete and “perfect” ad in order to engage potential customers online. What I call cloud-based advertising – that is, ads that harness the programmable web plus creative editorial content – empowers brands to shift their mentality from making big bets on the perfect ad to little bets on ad changes. In much the same way developers run A/B tests to find the best version of their homepage, cloud-based advertising gives brands the power to discover, test and develop ideas iteratively in the field, based on consumer feedback and new product information.


While it’s clear that cloud ad products offer enormous benefits to brand marketers, they are also a recognizable solution to the differentiation problem publishers face. Cloud ad products give publishers the ability to sell differentiated ad products at scale to leverage their unique content and viewpoints. Using cloud ads, publishers can design an ad product that addresses each publisher’s vision, vertical and proprietary assets.


Take, for example, an ad for IDG’s CIO online. This “Nanosite” ad unit pulled in CIO editors’ expert content around data management, virtualization and security through in-unit whitepapers, videos, surveys and even a share-to-mobile tab. This ad product is unique to CIO, and also recorded engagement levels and consumer response rates up to 10 times the industry average. 


Cloud, publisher-unique ad products are more than shiny new units with benign bells and whistles. They also outperform network-sold standard display. As publishers can point beyond increased CTR and CPM to higher engagement rates and increased audience interest, they can also boost their rate card and RFP win rates.


I don’t expect that everyone will make this adaptation from the perfect creative to iterative, “little bet” advertising quickly. Some publishers will squeak by with advertisers who still look to the fuzzy notion of “prestige” as a determining factor of ad spend; others with marginally better ad sales teams will be able to hold the line. But for how long? When publishers are all selling the same rich media ads, then ad space devaluation, consumer banner blindness and publisher brand dilution become inevitable.


Can we improve storytelling and the power of engagement? I believe we can – by increasing value to the consumer, helping publishers tout their unique value proposition and allowing brands to program their ads like they program their Facebook and Twitter pages. We can do this through cloud advertising.