The first local ad networks weren’t online, but instead were networks of local newspapers that worked together — usually through state press or newspaper associations — to allow larger advertisers to place ads on multiple publications. And to this day most such groups still offer an ad network for their member papers.
This setup is great for newspapers. They receive almost the same amount of revenue from an ad placed by the newspaper association as they do if one of their local sales reps had sold it — and in some cases they receive more because they are charging a national not a local rate.
One would think that the Internet would help these networks operate with even greater efficiency, but instead state and regional ad networks are still in the early stages online. The main reason for this is that online remnant providers got to the newspapers before the associations did. In the early days of newspaper websites, remnant networks began buying unsold inventory on the cheap. The remnant networks then resold the inventory for way below what the newspaper would typically sell it for. Over time national, regional, and, now even local advertisers began purchasing from these networks.
“The accumulation of user knowledge and audience access in the marketplace have created a commoditization of advertising inventory,” says Rob Wescott, VP of publisher solutions for North America at cXense, a company that works with publishing organizations to help them regain control of their ad inventory and audience data. “It has become all about reach: Advertisers can effectively buy commodity audiences on exchanges with limited perceived upside to premium publisher placements.”
State press associations have found it difficult to charge the newspaper rate card when ad networks are charging the same client far less. And because newspapers are used to charging the press associations their rate card fee, in some cases it would be cheaper for the press association to buy the newspapers’ inventory from an ad exchange than go directly to the newspaper.
But press associations aren’t there to sell ads to bring in revenue. They are nonprofits set up to help newspapers. These kinds of organizations can help increase CPMs and assist newspapers with ensuring that their ad inventory is always sold at a set value in two ways: