Chicken or the Egg with Online Advertising?

If you're in the business of matching up publishers with advertisers, I'm sure you or your company has had a hard time dealing with the chicken or egg scenario. Whether your revenue model is CPM (cost per thousand), CPC (cost per click), CPL (cost per lead), or CPA (cost per acquisition), the challenge remains the same: do you focus your resources on appealing to publishers (sellers) to maximize eCPM (effective cost per thousand impressions) or to maximize ROI (return on investment) for advertisers (buyers)?

From my experience, far too many online exchanges are focusing on the advertiser versus the publisher. What often drives this focus is plain and simple: short-term revenue. Yes, it is a critical component of any business. However, what I have found is that in the early years of establishing relationships between publishers and advertisers, the focus should be on the publisher side of the equation. As it exists right now, publishers don't have enough outlets to monetize their web traffic for the highest eCPM possible. Many ad exchanges in the industry suffer because they are using legacy monetization strategies that don't generate the highest possible payouts for the publishers and are solely focused on selling web traffic this isn't of value. This in turn equates to lower value/demand for advertisers.

The answer is to shift the balance from advertisers to publishers. This can be done with a strategy that focuses on a) simple, high-converting, lead gen mechanisms b) scrubbing data to ensure highest lead quality imaginable and c) requiring that integration with the publisher to be as simple and seamless as possible. By employing an world-class lead gen strategy with your publishers, you strengthen the relationships you have with them and begin to take market share away from other less effective advertising models. As you build and focus on a strong foundation of quality traffic from your publishers, you will build an everlasting foundation that will always be in high demand by advertisers. Even if those leads that might not be easily sold at first due to less focus on the advertiser side of the equation.

My simple thinking: if you build it, they will come. You don't make a lot of money getting golfers to come play at your brand new golf course, if little thought was put into the individual holes, quality of facilities, strategic placement of bunkers/trees, etc. You won't get a big following by golfers as they soon discover that there's nothing to your product. Same with online advertising. You can't just build a marketplace of non-converting, low quality leads, and expect that advertisers will come, and come often. Build a strong base of publishers/traffic, with the buyer in mind....and when the advertisers come, they will come in droves.

Whether your in the business of creating a marketplace of buyers and sellers or you yourself is a buyer/seller, be sure to work with a company that executes a similar strategy.