Narcity: Moving towards a better programmatic future

Adrian Seeley Adrian Seeley
Oct 19, 2021 - 9:05 AM

A fair price for digital advertising continues to be a long standing debate in media. Narcity Media aims to end that by taking a stand against the race to the bottom of programmatic display ads. 

Narcity holds a stronger valuation of its display inventory compared to automated buying/trading systems.

On September 1st, 2021, Narcity permanently applied new pricing rules across its properties for all display ad units (i.e. banners), in an effort to ensure the quality of ads reflect the quality of content and user experience. This has had a dramatic impact on inventory bought through open exchange channels.

What's the issue?

Like the stock market, the cost to programmatically purchase ad space is primarily decided and executed through an auction/bidding system by a buyer/trader/advertiser through various exchanges/DSPs.

One of the problems in programmatic trading is that the value of publisher inventory is defined by bidder systems and technology partners. They set the price to be purchased based on what data can be both applied to/used on a site's inventory as well as which data can be communicated back to itself. This means open exchange buyers help decide the financial fate of publishers with some standard ad performance taken into consideration but with little concern for brand safety measures, ability to create intrinsic/emotional value to a brand through audience awareness, or deep-thought on the impact ads have on users. 

To highlight this value discrepancy, an example can been seen through iOS users, who make up about half of all Narcity readers (55%). From Narcity's research and Comscore), iOS users typically have a higher household income and are more likely to spend. However, internal market data shows that this user base is actually significantly cheaper (~$1.00 lower CPM) to buy for traders compared to all other operating systems. This situation is likely a product of Apple limiting the ability for 3rd parties to apply targeting which means traders may consider this low quality inventory.

The goal for Narcity was to see if limiting low quality ads could sustain or create a better user experience while maintaining high quality inventory, with revenue considerations. Since local is at the core of Narcity's mission, it has allowed small businesses to continue to spend affordably through open auction flooring as well as its self serve platform, NCM. By adding a high floor price, Narcity created a barrier to entry for large businesses buying open auction, which prioritized and increase campaign performance for partners.

What has happened, so far?

In short, daily revenue from open auction dropped with fewer ads but only higher quality ads on all Narcity properties.

While many factors affect user experience and user metrics, sessions per user have grown as well as increases in overall Sessions (+13%) and Pageviews (+11%) from the date of this change (compared to the previous period).

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Since this change, Narcity has seen a small increase in viewability (+5%) but notably drastic improvements in CTR (+32% overall; +74% open auction), compared to the previous period.

 

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From a revenue perspective, the expected drop on revenue per day from open auction was about 30%, as well as an increase in unfilled ads (buyers were not willing to pay the floor rate). In what's considered a correlation in the industry, the eCPM improved as expected however it surprisingly over-achieved by 46%.

Narcity was able to generate strong activity on its programmatic direct business which helped it grow 116% in overall revenue growth, during this test period.

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What's next?

With the slow demise of third party cookies, there's a major shift in advertisers’ reliance on publishers to effectively reach their target audience. The best way buyers can take advantage in programmatic is by holding publishers accountable to maintain quality inventory standards, focus on anti-fraud as well as brand safety. For publishers, they must continue to build a valuable experience solely for their readers/viewers/audience and not solely for revenue-generation.

While Narcity believes Branded Content is the future of advertising, it puts emphasis on the relationships with all advertisers and will continue to offer full access to targeting through affordable programmatic deals. In fact, programmatic guaranteed and preferred deal rates have been lowered for agency partners as a result.

If you have thoughts or questions about our approach (or want to know more), contact us at partners@narcity.com or directly adrian@narcitymedia.com.