TC50 Panel: The Internet Is Killing Itself Softly With Remnant Ads

In between startup sessions at TechCrunch50, we are hosting a number of heavy hitters in a panel titled ‘Creating scarcity, value and brand protection as we face limitless ad inventory” in collaboration with AdMeld. On the panel we have Michael Barrett from AdMeld, Kenneth Fuchs from Sports Illustrated, Kal Patel from Best Buy, Peter Foster from Hi5, Jim Heckman and Ross Levinsohn from 5to1 and Aaron Broder from Gorilla Nation. TechCrunch CEO Heather Harde is moderating.

Talking about the dilemma that remnant ads pose to quality publishers, Ross Levinsohn cautions: “In many ways I think the Internet has killed itself to a degree because there was a notion that I will just add another page without maximizing the premium spots.”

Live blog:

Kal Patel is talking about Twelpforce, an initiative from Best Buy that taps into the essence of Twitter to leverage customer service.

Ross Levinsohn: Advertising doesn’t always work. Sometimes algorithms don’t function because it lacks a human touch. Big brands and advertisers need that, to not have machines take over where and when there advertising units appear.

Peter Foster: How low are we willing to go. It comes down to what are you wiling to accept and what aren’t you.

The real challenge to us as a publisher is to find a network that is truly premium.

Heather Harde: What percentage of inventory are you direct selling?

Kenneth Fuchs: We sell everything direct.

Peter Foster: We end up selling 5 to 10 percent.

Aaron Broder: Premium programs go beyond selling a box ad. It is really about connecting your ad with a marketer’s messaging. You obviously have to listen to the publisher and what they want.

Michael Barret: Typical publisher at AdMeld has 100 million impressions plus they can not sell directly, and they have direct sales forces. We’ve built this platform that allows publishers to tap into all of these different sources and concentrate on their direct selling.

Jim Heckman: You’re talking about campaigns that are built custom, programmed with a publisher. Something that will be complementary to the brand, ads that the user will relate to and not tune out.

When I was at MySpace, we had a 100 million (billion?) unsold ad impressions. Silicon Valley creates companies looking at the whole world of advertising, we are approaching a trillion unsold pieces of inventory.

When you have a nice ad followed by a fat belly ad after the sold inventory runs out, that hurts the publisher.

63% of all ads aren’t even looked at anymore, Consumers are tuning out.

90% of all ads are unsold, they are machine-based and pushed. So there is uplift, but when you disperse it among the inventory, the individual publishers are hurt.

Ross Levinhson: AT Fox Sports, 70% of the inventory was sold. If we sold out all the remaining inventory, I think in 2003, it meant only $250,000 in revenues. We made a determination that a quarter of a million dollars at that time wasn’t worth the hassle of policing it.

On MySpace, we had to create scarcity where there was no scarcity. So we had the homepage, ad networks were arbitraging. Tom shut that down, no more ad networks on that inventory. If you have a site like Hi5 or MySpace or Facebook, creating billions of impressions a month, you have to find a way to create some scarce inventory so you can talk to the Best Buys. They don’t want to be next to [remnant ads]

In many ways I think the Internet has killed itself to a degree because there was a notion that I will just add another page without maximizing the premium spots.

Kal Patel: We look at how does it actually show up in front of our customers.

Jim Heckman: What has happened is we are selling a small percentage of our quality content, and everything else is going to the remnant networks.

Peter Foster: Also back in the day there were a few dozen ad networks, now there are 500. That is the challenge, there are so many companies doing great work, but it is all being back-filled by the same inventory.

Jim Heckman: I think Ross is right. Creating scarcity in any business is essential. I think you are better off not selling an ad at all on your front age and protecting your ad integrity.

If you are Sports Illustrated and you have a story by a top writer with beautiful images. Do you really want to put a yellow teeth ad up there?

Heather Harde: it is certainly every publisher’s priority to sell as much inventory in a direct basis as much as their content will support.

Audience Q: Do you see a trend of moving away from measuring in terms of impressions versus other measures?

Heckman: Unfortunately, we are measured on impressions and clickthrough. I saw a company that looks at hover-over and things that cause people not to leave the site. So we need to start looking at things other than CTR.

Patel: There is going to be a next generation of things people use to measure because the connections to consumers that is improtant. We haven’t seen anything too exciting, so it is call-out for innovation.

Heather Harde: For smaller companies with 1 million pageviews a month, it is easy to get the remnant networks like the ADBrites, but how do we

Heckman: The advice is to get bigger.

Broder: You have to understand what your goal is. If you are a small site you might be able to better direct sell your site. Then if you think there are vertical networks that can direct sell your site you should contact them

Barrett: Normally an ad agency won’t look at a site unless it can generate 4 to 6 million uniques.

Heckman: The IAB unit is so low that CPM is not going to work for you.

Harde: one thing we focus a lot on at TechCrunch is the real time stream. How is that changing the ad landscape?

Barrett: I think the way that business used to be done, fax order, insertion order, approved by SI department of creative approval, sent out to Time Inc dept. of creative approval, no. When you are talking real-time, you are taking a little bit of risk not being able to see the creative ahead of time, but you have to have the ability to shut it down if it doesn’t appeal to your sensibility, all of those things are good.