Forget Last Rites: The New Opportunity for Publishers in Online Advertising

Indeed, one side of the news business is thriving. And, we're not talking porn, sensationalism or dumbed-down content (caught you, heh?)  We're talking about the new world of online advertising.

Welcome to remnant media (which sounds like a shop for used ads), a thriving sector of online advertising that is helping both publishers and advertisers monetize the web. Consider that research and investment firm Think Equity calls non-premium display (Think Equity's gussied-up description for remnant) the highest-growth segment of online media over the next five years, with the greatest potential to create significant opportunities and market dislocations. And if that's not going to grab you, how about Think Equity's estimate that non-premium display will reach nearly $11.5 billion by 2013 and represent more than one-third of all display advertising?

So what the heck is remnant or non-premium display advertising and why should we care? We're talking about online ad space (or in web lingo inventory) publishers don't sell themselves but give to third parties like AdMeld or Pubmatic to sell through ad exchanges or ad networks. These online marketplaces let advertisers bid to place ads online.

Consider for a moment that a site like The Huffington Post doesn't have any problems selling ads on its home page - or what's known as premium display advertising. But dig deeper into that site and there may be less prominent areas that either aren't selling or aren't getting a high enough price. It's sort of like a housing development where the prime locations sell quickly but the less desirable ones may languish or go for less than they're worth.

Enter companies like AdMeld, which help publishers maximize their revenues. AdMeld manages the entire process for high-end publishers like the Huffington Post and Thomson Reuters using its technology platform to obtain the most suitable ads at the best prices for publishers. Publishers, according to AdMeld typically see a 30-300% lift in revenues from their remnant inventory.

So what's in it for us?

To find out, I posed that question to online advertising maven Ben Barokas, co-founder and chief revenue officer of AdMeld.

"You can create the best marketing campaign in the world, but if it doesn't reach the right audience, it's a waste of your resources. AdMeld helps world-class, premium web sites deliver ad campaigns more effectively through networks and exchanges," said Barokas

"For the average Joe, we help his favorite web sites make more money from advertisers so they can keep providing him with all that fantastic content for free," said Barokas. We also help make the ads he sees on those sites more relevant by empowering the networks and exchanges to make more intelligent decisions."

AdMeld has created an online juggernaut; it just closed on $8 million of new financing and in less than two year's time has gone from zilch to many thousands of a percent growth.

So what can we learn from a company like AdMeld in terms of building our business and/or brand?

• Glom onto a high-growth niche area. Note that AdMeld didn't aim to become the online optimization solution for all publishers, just large publishers.
• Avoid conflict of interests. AdMeld doesn't work on the advertiser side, just with publishers.
• Solve a problem that you know firsthand. Before founding AdMeld, Barokas spent years on the publisher side struggling with the challenges of optimizing remnant inventory manually.
• Research your market thoroughly before jumping in. "The best piece of advice I have before starting a company is listen to your constituency," said Barokas. "Though I had my own knowledge of the space, I spent a lot of time with my peers in digital advertising operations and technology understanding best practices and the limits of current technology before launching AdMeld.
• Find partners with complementary skills. "My co-founder, Brian Adams, is a brilliant engineer, and my CEO, Michael Barrett has spent decades driving revenue for some of the world's largest publishers," said Barokas. "We make a really effective team because we complement each other's skills. I can't emphasize enough how important that is."