Publisher-controlled ad networks like Spain’s Premium Audience Network and publishers like Switzerland’s Tamedia realise there is power in numbers, writes John Lervik. By controlling their own data and digital advertising, they saw tremendous increases in digital revenue.

When the digital revolution swept over the publishing landscape, profits for publishers largely got swept away.

With publishers anxious to find ways to make money through the digital landscape as their print profits dwindled, third-party middlemen swooped in to lend a helping hand, taking care of all that ‘technical stuff’ on publishers’ behalf.

Those same third parties also kept publishers in the dark about how they were exploiting the publishers’ most valuable asset: digital data.

These intermediaries, some of which are publishers’ direct competitors, may not have had nefarious intentions, but they knew the value of the data goldmine publishers have always been sitting on.

But unlike publishers, they had the technical maturity and know-how to manipulate Big Data to achieve their own profitability goals. Exacerbating the issue was that the publishing industry was slow to embrace the digital age and missed out on some of the early breaks and benefits.

The lesson learned is that ceding control over data turned publishers into passengers on the digital journey, and the middlemen “took them for a ride.”

So here’s a question for publishers: Do you want to be passengers or drivers?

The ride has hit some bumps, but it’s far from over. Publishers can retake the wheel and start driving their own revenue generation with a little creativity and by taking back control of data.

A 2012 Pew Research Center report cited statistics from an eMarketer survey stating that tech companies are taking up to 68 per cent of online ad dollars. The 2013 version of the report showed that while the middleman’s share of digital ad revenue remained stable, the digital ad market is growing at a much faster pace than any other advertising segment.

Publishers face some daunting challenges and competition is intensifying. The dominance of these tech players “leaves only a small share of the digital pie available for news organisations — and if anything, their ability to beat back against the tech giants’ strong grip is getting weaker,” according to the Pew report.

The question, then, is how does a publisher take back all its own data, head off these middlemen and reclaim this digital ad revenue?

First, most publishers’ Web sites have a dozen or more third-party scripts on their Web properties from companies like Google. Google uses the publisher’s own data to sell its products and services.

Step one in taking back control of audience data: Remove the intermediary scripts from Web sites and plug any data leaks. It is entirely within the publisher’s control.

Google, and other Big Data-driven companies – Amazon, Yahoo!, and Microsoft – mine the data and use analytics to understand what their users really want. Integrated systems then deliver real-time personalised content, editorial, and advertising to meet their users’ needs.

Publishers have the power to do this, too.

Step two: Remove the intermediary entirely and use the data now to understand and target the audience, which is key to generating sustainable ad revenue. Targeting and segmenting can boost ad prices by 50 to 150 per cent.

Some publishers see the light. “If you can remove some of the intermediaries between you and the client, and you and the customer, there are more pennies left for every single dollar,” says Robyn Peterson, chief technology officer at Mashable. “At a higher level, you strategically sell your inventory in ways better for the brand.”

Big Data is a numbers game. The sheer amount of data that publishers own equals untold amounts of insightful information and intelligence, which amplifies the power of a publisher’s winning hand.

Some publishers already have proactively identified creative solutions and counter-balanced the pirate middlemen cannibalising their revenues. These publishers, operating either independently or in collaboration, have tangibly realised the truth behind the words “there is power in numbers.”

By banding together, they have overcome this dual hurdle of data and revenue loss that almost all of them have faced.

Key success stories include publisher-controlled ad networks, such as the Premium Audience Network (PAN) in Spain.

Instead of going it alone, virtually all of Spain’s major publishers created one cooperative to take on third-party networks, eliminating price pressure and regaining control over their own value chain.

By taking this tack, PAN news publishers saw a greater than 50% revenue increase in four months and, thanks to the power of numbers, jointly reached more than 90% of Spanish Internet users with highly effective targeted advertising.

Tamedia, the leading publisher in Switzerland, experienced all the same issues as other publishers – including the 50-80 per cent loss of revenue to its “partners” (in truth, the aforementioned middlemen who surreptitiously siphoned off these revenues).

Tamedia’s executive management knew drastic action was required and decided to remove these partners from its properties and take control of its online advertising revenue and audience data. Every piece of intelligence Tamedia gathered pointed toward reining in the Big Data.

In doing so, Tamedia could better understand and segment its audience to increase advertising revenues, making each impression more effective and providing a higher ROI to its ad customers.

Capitalising on the expertise of a software as a service provider, Tamedia segmented its audience and provides highly targeted advertising campaigns on its online properties using real-time Big Data analysis.

Targeted advertising has proven to require 28 per cent fewer ad impressions and has led to a 150 per cent higher click-through rate (CTR), a higher conversion rate, and more sales. Following on this success, Tamedia implemented the newfound power of its own Big Data, leading to 20 to 30 times more on a CPM basis for display advertising campaigns, as compared to when they used external intermediary ad networks.

Taking back control of data, publishers can cut out the middleman and enjoy a much better outlook from the driver’s seat.

Reproduced from an INMA blog with permission. John M. Lervik is chief executive of Cxense.