It doesn’t take a genius to know that the online advertising model is damaged goods. It makes little to no sense to sell thousands of impressions for cents and then have to undercut the price of those ads to compete with low cost bloggers or content farms. The old adage of “trading analog dollars for digital pennies” remains true and the only people really making money are the advertisers who charge for the production. Federated Media, an American company that sells display advertising for various types of websites. It’s a bold move but it makes sense:
“The model of ‘boxes and rectangles’ – the display banner – is failing to fully support traditional ‘content’ sites beyond a handful of exceptions,” wrote Federated Media founder John Battelle in a recent blog post. He explained that the next generation of native ads on social networks and strength of Google Adwords make direct sales more competitive, and that ad agencies must evolve with the growing trend of advertisers who want more social/conversational ad campaigns.
Essentially, it no longer makes financial sense for companies like Federated Media to hire a team of people to find and keep track of advertisers who want to buy banner ads. And if publishers still want to fulfill what they view as a demand for premium-level direct banner ad sales, they’ll need to use a self-serve ad service like isocket.
Federated Media plans to refocus all its resources into the two areas of advertising it believes is growing. The first is its premium conversational & native advertising, which includes sponsored posts, special coverage sections, and ads/promotions that are more directly integrated with a publisher’s content. The second area is in less expensive, “programmatic” advertising, which automatically displays ads on websites at all times.
It’s about time someone took a stand. Publishers are quite literally getting screwed, it’s almost a charity to be an online publisher these days. Federated Media is going to hurt in the near future but it’s a move we all should support.