Exclusivity/ Contracts/ NativeAd Vendors/

Blog by the WhizzCo Team

24.05.2021

What to ask when your native ad vendor wants exclusivity

Does your content recommendation vendor want you to sign an exclusive agreement? Here are a number of questions to ask and consider to make sure you are making the best decision for your business, your bottom line, and your users. 

Why is it so important for your content recommendation vendor to have exclusivity on your domain?

Your vendor may want an exclusivity agreement because they don’t always win when they have to compete. Our data shows that not one of the vendors – not even the big ones – offers the highest eCPM more than 40% of the time. 

In other words, not having an exclusive agreement with you could mean losing the bid at least 60% of the time if forced to compete.  And they will see a 60% drop in earnings from your traffic.

They also may wish to leverage the prestige of working exclusively with you to help close deals with other publishers.

WhizzCo - Exclusive Agreements

How much is exclusivity worth to you?

So we know that exclusivity is worth a lot to the vendor, but what is it worth to you?

When introducing fair competition for their traffic, most WhizzCo publishers see an eCPM lift of nearly 40% (and some see a lot more). Exclusivity, then, is worth a lot of money…is your vendor willing to pay the difference?

What is your vendor willing to give you in exchange for exclusivity?

Are they offering you guaranteed RPM, upfront payments, or revenue sharing? Here are the pros and cons of each:

Guaranteed RPM is typically ideal for publishers from a revenue standpoint, but often comes with very restrictive guidelines, for example, it may exclude non-CR platforms like video placements, editorial restrictions that may alter placement, etc. 

Upfront payments can be great for publishers who need access to capital for audience growth needs or other projects. This too can come with restrictive terms and because of the potential risk on delivery, is becoming less common among content recommendation vendors

Rev-share is the most common offering in content recommendation. Structured correctly, it offers all parties involved (advertiser, vendor, and publisher) maximum flexibility and a balanced structure for ongoing business. The challenge is the RPM to the publisher can vary greatly based on CPC bid, CTR rate, audience fluctuations, changes to the page layout, advertiser campaigns starting and stopping, etc. All of these factors can diminish returns to the publisher when access to demand is limited to one provider. 

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How will your vendor handle ad quality and ad fatigue?

The truth is, no vendor can ensure ad quality; They can’t predict what advertisers will offer a few months down the road, or even next week (which is why it pays to work with several competing vendors). 

Often, when working with only one vendor, they only have a limited supply of advertisers that are relevant to your users. Over time, ad fatigue will set in, causing a drop in engagement, and ultimately, in CPM and in revenue. This will hurt you most if you have an exclusive rev-share agreement with them. In addition, requests to the publisher like asking for larger ad formats and trimming of filter lists will be asked. The truth is, with an expanded base of competitive demand there is no need for publishers to make these concessions to their editorial needs or quality guidelines.

So this leads to the next question. Will your vendor compensate you if the ads don’t convert anymore? The impact is not just on your bottom line, but also on your users’ experience on your domain.

While “being exclusive” has a nice ring to it, ask these questions and get sound answers before you sign any binding agreements, in order to protect your short and long-term revenue. The benefits of exclusivity are nearly always outweighed by the rewards of healthy competition.

 

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