Web advertising is beset with problems. Ad blocking is growing. Giants like Facebook and Google currently vacuum up 74 percent of new ad spend. And fighting fraud feels like a game of Whac-A-Mole.
For digital publishers that lean heavily on advertising technology for revenue, the frustration is palpable. Mic, for example, told The Wall Street Journal that its millennial-focused site is not using “any programmatic whatsoever,” depending instead on traditional sales tactics. BuzzFeed, meanwhile, relies entirely on native advertising produced in-house.
But The Washington Post is taking a different approach. Rather than eschewing ad tech, it’s attempting to build better ad tech, which it plans to sell to other publishers and clients.
Towards a SaaS model
When Jeff Bezos bought The Washington Post in 2013 for $250 million, people were shocked. Why would Bezos, the founder of Amazon and one of the wealthiest people in the world, invest in the volatile news business? Since then, however, Bezos’s plan for the Post has become clearer: Rebuild the august newspaper for the digital age, experiment like a startup, and create as many revenue sources as possible.
Software has been a central part of that transition, perhaps more so at The Washington Post than at any other news company—even digital-first publishers like Vox Media and BuzzFeed.
Over the last few years, the Post has innovated at an impressive pace. Its Talent Network product, which I wrote about last year, was built to help editors quickly find and pay freelancers, a recurring problem in the newsroom. Improvements in code cut page load time by almost 85 percent. In total, 18 products can be licensed via the Post’s proprietary technology, Arc Publishing.
Arguably the most surprising investment has been in ad tech, where Jarrod Dicker has led the company’s ad product team, called RED, since August 2015. Previously the head of commercial product at RebelMouse, and head of product at Time Inc. before that, Dicker is a veteran of the revenue side of media. He thinks a change in the way publishers approach advertising technology is long overdue.
“Right now, the way advertising works isn’t as efficient as it could possibly be, and the mentality has been, ‘Well, that’s just how it is,'” he said, “If advertising is slow, you go to the DoubleClicks and other big-hitters and say, ‘You guys are slow, you need to be faster.’ Then they’ll put an update in their pipeline and there will be a back and forth. … We can no longer rely on partners or vendors to solve problems that are so core to our business.”
“We can no longer rely on partners or vendors to solve problems that are so core to our business.”
While Google and Facebook take in about three-quarters of new digital ad revenue, publishers and ad tech vendors are not keeping up, according to Dicker. However, he believes publishers are uniquely positioned to create the kind of advertising technology required in an era when users are bombarded with brand messaging.
“Ad product and edit product might be two separate teams, but the mentality and what we produce should be the same,” he said. “We should be connecting audiences. We should be looking to engage users. We’re publishers. We understand what our users want. We understand how to deliver a message to a user.”
One thing audiences want is a better user experience. Facebook Instant Articles and Google AMP, both of which debuted this year, were built for one thing: speed. Instant Articles hosts content within Facebook’s walls, allowing articles to load within milliseconds on mobile phones. Google AMP was built for the mobile web and loads pages almost instantly.
“Facebook Instant Articles and Google AMP have been very inspiring,” Dicker said. “There’s one thing that’s very loud and clear when it comes to how users are embracing it, and it’s that they love speed and fast content. If users aren’t going to wait more than four hundred milliseconds for content, why would they ever wait for an ad?”
“If users aren’t going to wait more than 400 milliseconds for content, why would they ever wait for an ad?”
Now users are starting to expect that speed. Yet while publishers like The Financial Times have focused on improving load times, Dicker noted that less attention has been given to the ads that bring in revenue.
The Washington Post’s newest ad product, WashPost-Zeus, was built to solve this issue. The technology uses various loading and caching techniques to speed up load times for third-party programmatic display ads, which has allegedly produced a “seventy-five percent decrease in latency.” Zeus employs “lazy loading,” and will deny running a programmatic ad if it is too data-heavy. Since the ads themselves still come from programmatic vendors, the Post can only speed them up so much. Still, Dicker believes Zeus gives the Post leverage to pressure vendors to improve.
“We can talk to a partner and say, ‘This is how fast our content is, and your tech is slowing things down,'” he told AdExchanger. “Now that we are actually doing it, partners are coming to us with solutions.”
A new kind of advertising
While Dicker believes Zeus and programmatic advertising is important, he sees it as only one part of digital advertising’s future.
“Being able to run advertisements that advertisers are creating programmatically or directly is extremely important to our business,” he explained. But he seemed more excited at the prospect of The Washington Post creating its own ad formats.
Look no further than Fuse, released back in April, which copies much of what makes Instant Articles so appealing. The product lets the Post host and deliver ads natively, meaning they load almost instantaneously and don’t send a user to a different page. There’s even a lightning bolt symbol—which Facebook uses to identify Instant Articles—to signal that an ad is part of Fuse.
The format is also similar to another Facebook ad product, Canvas, which is a native ad format with different interactive features, such as 360-degree images and video, all in a vertical carousel-style presentation.
So far, most of the ads using Fuse come from The Washington Post’s in-house native ad studio and, like Canvas, are much more interactive and in-depth than your typical display ad. Dicker labels this new style “content-driven advertising.”
“Everything that you see with social and mobile video on the web is completely different then anything that you’ve seen in television commercials,” he said. “I think we’ll move out of a lot of the standard ad-delivery type approaches because people just assume desktop ads work on mobile, just like they assumed print ads would work on desktop. We’re just making ads smaller, but that doesn’t mean that’s right.
“I think it will come to a head where we’re all going to recognize the true value of pre-roll and display advertising,” he continued. “Then we’ll need to get marketers who have a lot of the money and a lot of the budget a better way to reach our audience in an authentic way, the same way we reach audiences through our [website].”
Building for other publishers
The Post isn’t just building these products for itself. The company also sees its software as a new revenue stream with the potential to bring in $100 million a year, according to a New York magazine profile of the company.
Of course, the Post is not the only publisher investing in ad tech. Vox, BuzzFeed, and other traditional players like The New York Times have all created their own products. Just yesterday, for example, the Times announced it’s in the process of replacing all third-party banner ads with a proprietary display format.
Thus far, none of these publishers have licensed their software on the same scale as The Washington Post. (Vox and BuzzFeed have shared their software with certain partners.) Dicker even ventured that the Post was “becoming a SaaS company.”
Some publishers, such as The Globe and Mail in Canada, and advertising partners have already invested in the products. For now, though, the client base seems limited.
“We think that we need to push everyone this way, and building the tools that allow them to go in that direction is crucial to keep publishing alive.”
The SaaS approach also separates the Post from companies like Facebook and Google, where ad innovations largely stay on the platform. The Post wants to make money off the software, but the company hopes it will improve the publishing landscape as a whole.
“We think that we need to push everyone this way, and building the tools that allow them to go in that direction is crucial to keep publishing alive,” Dicker said.
Despite the cooperative positioning, buying software from a rival might be a hard pill to swallow for competitors like the Times. But if the Posts’s software investment leads to an arms race to improve ad technology, Dicker might just get his way.