To guarantee or not to guarantee, that is the question
As the window of opportunity begins to shift, publishers are now moving on to a new phase in content recommendation services. Big players, such as Outbrain and Taboola, among other small ones, are now rewriting the rules for the content recommendation landscape.
Publishers are now finding themselves in a crossroads of guaranteed payments or revenue-share models – and it isn’t entirely up to them. Opting for rev-share, to be paid a share of the revenue when visitors click on a paid ad in a widget, is quickly becoming the new norm for publishers of all sizes. Larger publishers have even foregone million-dollar-plus guarantees for rev-share models with the big content recommendations services.
The main concern for most publishers is flexibility, which a guaranteed payment model does not accommodate. Some publishers are no longer being offered the choice between the different payment set-ups but are restricted to cost-per-click.
Outbrain and Taboola have become an inherent source of revenue for many publishers, despite the criticism. While the move from guarantees will prove beneficial for users, who will now see fewer ads, these moves will determine factors for the existence of many publishers, large and small. Outbrain has even reportedly credited itself with accounting for 30% of publishers’ revenue.
An evident material change has been occurring in the industry. While it’s not entirely clear whether a formal change has taken place within the companies’ strategy, Outbrain has reported that it has not stopped offering guarantees altogether. Various (large) publishers have opted to renew for a revenue-share payment model, which provides more flexibility and control. Taboola is perceived to have taken the same route.
But were these desired guarantees all they were chalked up to be? These rigid payment models limited flexibility for both sides. Content recommendation companies were losing massive amounts of money, according to publishers who worked with them. The stakes weren’t any more promising for publishers who were required to deliver a minimum number of page views, at the cost of worsening user experience. The size of the widgets was also non-negotiable, leading to bad editorial decisions. Both sides unhappy, both sides left with no choice.
Advertisers were also putting the pressure on publishers to limit content engines. Reasons to restrict engines are varying from page aesthetics to page control.
Publishers would be wise to heed the warning from advertisers seeking premium placements. The widgets leave room for a negative effect on brand safety, leading to unwanted ads or user comments and increasing scrutiny over the content. Besides, publishers are growing increasingly concerned with penalization from Google and Facebook, putting their foot down when it comes to spammy and clickbaity ads.
So what does migrating toward a rev-share payment model mean? For publishers interested in attracting more direct visitors, they will have more control of site aesthetics. Also, the lack of widgets and rigid site placement guidelines will give them more flexibility in how to use valuable site real estate. Publishers will also enjoy the ability to incorporate other means of generating revenue on their page. Overall, this model will lead to an increase in revenue for publishers. For example, publishers will be able to align their ad revenue strategy with business because there will be more flexibility regarding when and where to show specific content. This could be based on certain holidays, promotions, events, etc. related to the company’s bottom line.
By turning down a guarantee, which can be nerve-wracking, publishers can increase user experience and overall customer satisfaction. So while it may seem risky to expect revenue based on clicks alone, this investment in user experience could precisely be what will drive these organic clicks more than what would have been on a guaranteed business model.