Local and regional publishers still rely on the numerous small print ads in their newspapers as a key advertising revenue stream. Most of those ads come primarily from small local businesses. Often those ads just reside in print, and increasingly publishers are trying to extend those offerings digitally to add value (and lifetime value) to a local business’ investment – and get more revenue. Essentially, creating smart ads that have this longtail effect of generating more revenue, much like Amazon has done, i.e. compare local ads to those books selling in small numbers individually, but at scale when taken across the regions.
Christian Scherbel, Founder & CEO of Transmatico in Germany, set that background for the session while begging the question: How does this longtail strategy of small ads play into a broader premium content strategy?
The Long Tail
Scherbel makes the point that the longtail is not only crucial to regional press in terms of income but also relationships and future-proofing the advertising and sales process. He also made clear the relationship between local relationships and quality content and ads, a point then hammered home by Thomas Schultz-Homberg, CEO of DuMont, the regional news media and technology company based in Cologne, Germany.
“Premium content is key,” he said. “Premium content motivates audiences to use our products more intensively than they do without premium content.” In the world of advertising it’s not just about premium content; “It’s where premium content meets premium products, and that brings us to larger audiences and makes us relevant for the audiences.”
To do that, he says the focus is on personalization.
“Everybody does that in the digital world today. Whether it’s Netflix or Spotify, everybody tailors the delivery of content to the users needs. And that’s what we have to do in regional and local media as well. That is key to our success for the future.”
The virtuous circle model applies, explains Schultz-Homberg; “When we enhance and broaden our audiences that leads us to premium advertising as part of the premium content delivery and fosters our business towards the future. That’s the reason why we use smart ads, in combination with print advertising campaigns, to enhance this business.”
Schultz-Homberg also pointed out that another benefit of smart ads is to encourage existing customers on board when it comes to online advertising. “Smart ads help lead our customers into the digital world, especially those who have traditionally focused on the printed word, which is not the future. The audiences love premium advertising, not fraudulent advertising. So giving customers the opportunity to play with small ads, set against premium products, and smart premium ads is the key to our and their success and the path we need to survive with the competition in the digital world.”
Scherbel pointed out the cluttered, complex and murky nature of display banner ads – not only historically, but today. So how can a simple print ad be converted into a more simple digital ad?
“The solution was to take what we have, which is basically the print ad, and enrich it with what we can have.” That translates to social media connectivity with reviews and opening hours, graphic overlays, YouTube videos, click to go to landing pages retaining consistent look and feel but greatly increased relevance and detail.
Scherbel’s point was that even a relatively modest sounding number of ads for a local title – he cited 50 as an example – leads to scaling and significant uplift in reach.
Saarbrücker Zeitung’s journey
Groß began frankly by confessing from the start that; “We always offered a digital extension of print ads but it was a bit of a DIY solution with, to be perfectly honest, very little value add for the advertiser. We just put the same ads online but we didn’t really adapt them at all. It became very clear to us that we needed a digital offering with a clear USP in the eyes of the advertiser, but which involves no overhead for the sales team. We also needed dependably high-quality production, delivered reliably on time.”
The decision process
The quest for that goal began with internal product workshops and it became clear to Groß that she faced more than one audience that needed convincing of the benefits; “at this point the sales team was the first customer since if they said they did not have confidence in the product and its performance then they wouldn’t sell it.”
So after getting sales onboard, another realisation emerged: this couldn’t be done in-house due to capacity requirements and freelancers were largely ruled out by the need for specific local advertising knowledge.”
Proving and pricing
Ultimately, the company landed on Tranmatico’s SmartAds product and hasn’t looked back since. In fact, they undersold the value of their new online products… “Initially we didn’t dare charge a premium price but rather added a little to previous charges. After three or four weeks, however we got the feedback that we were actually too cheap for the performance we were offering. Sales staff realised it meant no extra workload: they just sell their ads and everything else happens in the background (from Transmatico). There’s no extra work for the back office either so the system gained rapid approval. And the advertisers also liked it.”
Groß didn’t hold back from going into the specifics of pricing either. “When the Smart Ad is €199 on top of a €499 advert I can’t just squeeze it in as a bundle; I have to actively sell it. At the moment we are creating roughly 50 ads per location in Trier and Saarbrücken, which can fluctuate monthly. Generally we focus on extending the long tail of our local ads but we don’t auto-bundle and so they have to be actively sold.”
Goldbach’s autobundle approach
Next up was Rea Kramer, Head of Commercial Product Management bei Goldbach neXT, the digital advertising products, technology, data and programmatic services subsidiary company of Tx Group (previously known as Tamedia) & Goldbach.
Kramer detailed the current scale of Tamedia’s use of the SmartAd approach; “Yes we’re currently doing about 100 a month, and we plan to extend that further. We are currently working with Tages-Anzeiger, and 20 Minutes and plan to expand it to other titles in the near future.”
Tamedia chose an autobundle approach compared to the upselling approach from the other cases.
So how does that translate in terms of the original three business goals every publisher should have with these types of ads: improving the sales process and team’s motivation, increasing eCPMs, and critically, increase revenue?
Scherbel shared some numbers, first for eCPM – with the proviso that the chief goal here was about quality rather than simple clicks.
For eCPM for Tamedia,
- On average they had 5000 ad impressions for €99
- On average they incurred about €20 cost per ad + landing page + all operations
- So… €20 eCPM before cost and €16 eCPM after cost.
In general, for most of these types of ads and titles Transmatico has worked with, Scherbel said they could expect the following
- the capacity to do 100 ads per title after the first three months
- 100 Smart Ads at €100-400 each, and most importantly,
- €250,000 extra revenue in year 1 for 1 title
- €500,000 extra revenue in year 1 for 2 titles.