The Low-Down On Revenue Guarantees: Helpful or Harmful?

It is tough being a publisher these days… The line between user experience and revenue generation continues to shrink and as publishers try to strike a balance between the two, ad network competition for their business continually increases due to innovation and market newcomers entering the race.

As a publisher, the most powerful indicator of long-term stability and growth is reader trust and loyalty. Creating an environment in which users consume content today and return tomorrow for another helping is a definitive recipe for success. A sustainable return audience consistently contributes to your bottom line revenues and produce much better returns over a longer period as opposed to the alternative; inundating your page with ads until the user experience essentially disintegrates faster than a Thanos finger snap.

With all of that said, over the past few years there has been an industry-wide shift towards focusing more on short-term revenue extraction per visit while entrusting platforms like Facebook and Twitter to handle reader engagement and loyalty. This may seem like a reasonable approach for publishers that lack the resources to invest in refining their user experience, but this focus has led to a rapid race to the bottom due to the emergence of guaranteed revenue deals with advertising partners.

While these guaranteed revenue arrangements can give publishers peace of mind when it comes to revenue stabilization, it comes at the expense of certain things that could be considered vital to successful long-term publisher/ad network relations. When considering if a guaranteed revenue partnership is right for you, keep the following things in mind:

Sluggish approval and legal overhead increase time to deployment, reducing revenue opportunities. In addition, ongoing compliance creates a burden of monitoring, coordination among internal teams and strains partner relationships. Ironically, most guarantee deals ultimately shift to revenue share partnerships over time due to the fact that compliance is so cumbersome.

The days of asking a publisher to preserve a static web page format or comply with a certain number of paid placements are behind us. Testing and optimization are vital to a publisher’s success. Guarantees limit flexibility by implementing restrictions on the types of changes a publisher can make regarding page format, design and ad placement. Without that flexibility, publishers run the risk of forgoing opportunities to improve user experience and site monetization.

Often, in order to for ad networks to deliver on guarantees, they are forced to push the boundaries of ad quality. This can sometimes create disconnect between editorial and revenue teams and create a bad overall user experience for your audience. It is a short-term revenue win at the expense of user trust.

While guarantees can be beneficial in certain cases, more often than not they are not a viable long term solution for publishers because the undermine reader loyalty. Additionally, that lack of flexibility and increased compliance process can detract from the more valuable and strategic aspects of the publisher/ad network relationship. In practice, there is often more to gain financially for publishers who look to leverage revenue-sharing relationships.

Recent trends show that publishers are starting to recognize the benefits of true partnership-based revenue share relationships, which encourage mutual participation on behalf of publisher and ad networks to improve the business and increase revenue in a more organic manner. This is in contrast to the one-sided revenue focused deals that are simply defined by trying to extract the highest possible RPM. These deals will continue to exist due to competition in the space, but hopefully over time, the industry will continue to recognize the mutual benefits of revenue share relationships.