Is being a broker a sensible option?

I know of a lot of networks that do not recruit their own publishers – they function as brokers i.e. they get campaigns and run them on networks. This seems to be a simple, hassle-free option. But does it make long-term sense?

Let’s explore the merits and de-merits.

When one is making a foray into the online advertising business, we are starting out cold. We only have a company name, a few key people. Period. No track record, no brand, nothing. In such a situation, hiring publishers could be a daunting task. Publishers usually wish to know a bit about the company, types of campaign run etc. In any case, in its infancy a company is looking to get traction in the market – propagating the company brand, getting new campaigns going, getting the cash registers ringing etc.

In such a situation, working with other networks is a very sensible option. Benefits of such a strategy are –

Quick go-lives

Your campaign can go-live within hours of the contract sign-off. Provided you have given a campaign brief to the supplier in advance, the campaign can be online in hours and the first set of statistics available at the end of the day.

Spreading Risk

If the campaign is a ‘big’ campaign, it can be apportioned over different networks. Campaign performance can be monitored over the different networks and upweighted/downweighted on performing/non-performing networks. Campaigns can thus be very quickly ‘optimized’ , getting good CTRs and a happy and satisfied customer!

Better Profitability

It is generally easier to negotiate hard with networks, getting better CPM, CPC rates and hence better margins. Since the network is under pressure to deliver, they are able to mobilize relevant inventory at better costs.

Insulated from the actual publisher

By insulating oneself from the actual publisher, one is protected from risks of ‘bad’ creatives. Whether we like it or not, we do encounter creatives with malaware. In such a situation, it is useful not to have to face the wrath of the publisher and the likelihood of being blacklisted.

However, working with other networks is always a short-term strategy.

If one is looking to build a business in the long-term and create ‘value’, it is important to create a proper ecosystem. Using a good adserver, getting publishers on board, building publisher goodwill and creating a track record on successful campaign delivery are key to creating value. Another very effective way of building value is to build the adserver inhouse. This creates IPR which further enhances the value perception of the business. Revenuemantra (RM)is a case in point. RM has built the adserver ground up.

The bottom-line on this discussion is – yes it is worthwhile using other networks in the short to medium term to get revenues going. But there should a simultaneous plan to hire publishers and create IPR in the form of a robust adserving solution. The result in a ‘valuable’ business.