Advertising Digital Publishing Guest Columns
3 mins read

Publishers: Just say no to exclusive rev-share contracts

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It’s not easy being a publisher today.

You need to support your users across multiple devices, media, and platforms, while Big Tech continues taking ad spend.

If that’s not enough, you also have to manage a new set of privacy issues, including Apple’s termination of the company’s IDFA app tracking in the iOS 14 update, which will likely be matched by Google in the future. And Apple’s iOS 15 update brought changes to email tracking.

These changes may be necessary to create a balanced value exchange between publishers, users, and advertisers. When this balance is achieved, each stakeholder can focus on their part:

–          Publishers: create and deliver good content

–          Users: consume quality content and return for more

–          Advertisers: promote their products and/or services to relevant audiences

Continuing with the theme of fair value exchange, one repeated yet unbalanced practice is when monetization platforms offer publishers revenue-sharing contracts while requiring exclusivity.

Some monetization platforms believe that they have the leverage to make such demands.

Here are three important points to consider before signing your next contract with a monetization provider:  

  1. Understand the downside of your contract: With every contract, there are downsides. With rev-share contracts, the downside kicks in when the revenue unexplainably drops. Before signing a rev-share agreement, think about what would happen if your vendor signs a contract with a competing publisher who agrees to a lower percentage of revenue than you did. If the vendor is making more money with your competitor, who will get the lion’s share of the ad dollars in your vertical? That’s why it’s important to understand the worst-case scenario of your contract and make sure you either have a minimum upfront price or some type of revenue guarantee if considering going exclusive.
  2. Make sure your contract gives you flexibility: As we all learned in COVID-19, literally anything can happen. That’s why publishers need to make sure that contracts provide flexibility to make changes when a large and profitable opportunity presents itself, like a major campaign from that advertiser you’ve been pitching for the last 18 months. Simply put – limiting access to the widest set of partners (spending advertisers) narrows revenue sources, growth opportunities, and limits control over your business.
  3. Understand the limitations of exclusivity: When working with one vendor, publishers often have to settle for a lower-priced ad or even an irrelevant/low-quality ad that will cause less engagement, therefore generating less revenue. When a publisher is working with more vendors simultaneously, they have more negotiating power to demand more relevant, higher-quality ads. Competition drives up revenue. WhizzCo’s comprehensive campaign data shows that publisher revenue increases by an average of 37.7% when working with a range of content recommendation ad vendors.

Beyond these factors, one of the challenges publishers and the entire industry is experiencing is the increasing push for privacy from governments and platforms.

That said, the increasing push for privacy is an opportunity for publishers to focus on direct relationships with readers and the first-party data it enables. By building a repository of first-party data, publishers can offer advertisers the benefit of relationships that may generate CPMs higher than what can be earned through programmatic exchanges or other forms of automated marketing.

First-party data is a way for publishers to turn around the trend of diminishing ad income and regain the ad revenue lost over the last 10-15 years.

So, publishers, while signing a contract with a powerful ad vendor can be appealing, don’t forget that you have a strong negotiating position. They want your inventory at least as much as you want their revenue. Just make sure the anticipated revenue justifies the terms of the agreement, and if it doesn’t, that you have the option to go non-exclusive.

Meanwhile, with an eye on the future, make sure to gather first-party data and build (and nurture) your audience base as your insurance policy for the post-cookie era.

Bill Nolte
CRO, WhizzCo

WhizzCo is transforming the native content recommendation space into a transparent, fair, and competitive ecosystem. By opening publisher inventory to multiple, competing vendors, WhizzCo empowers publishers to harness the best each has to offer with just one integration, thus raising content recommendation revenue by about 37.7%. The company’s proprietary algorithm, a machine learning neural network, predicts the CPM from the 40 content recommendation vendors worldwide, considering geolocation, device, site, widget location, and more, and then serves the ad with the highest predicted CPM. Performance is clearly demonstrated on WhizzCo’s unified and intuitive dashboard.