Two of my websites have given me a lot of experience with boutique ad networks. These types of ad providers work a little differently than most. They require you to put their ads first in chain, above the fold, maybe even promote other network sites in a widget, etc. There’s a list of things you can’t do, one of which is tell people the truth about them – which is why I’m not naming either agency. Update: now that they’ve crashed and burned, leaving all their employees high and dry, I can tell you that one of the boutique ad networks I’m talking about here was Mode Media, formerly Glam Media. Some of them also have a really long net basis. That is, the money you earn in July might not be paid to you until October or November.
But they pay much better, pay reliably and have ads you’re proud to serve, right?
Fun with boutique ad networks
Not for long. In my experiences with these networks, the money starts out great, but then it falls. And meanwhile, their requirements are preventing you from working with ad networks that are performing better. Talk about a raw deal.
Behind the scenes
Boutique ad networks like to announce big ideas! Huge ideas! And they do this often. Unfortunately, they don’t enjoy the actual grunt work of making the big ideas happen. They make a big splashy announcement and beg you to put up code for native ads, for example. You comply, but there’s no inventory for them. They promise there will be, but it never happens.
And while you’re sitting there wondering if you should just remove that code, they’re like a kid opening presents. They’ve already forgotten all about it and moved onto some other really cool idea! I’m convinced they think like Silicon Valley start-ups – if they go out of business, so what? It was never their money to lose, and oh, the fun they had! These networks have a concept, but what they don’t have is a clue.
How to deal with boutique ad networks
If you choose to work with boutique ad networks, here are some danger signals to watch for:
- High employee turnover. If you’re getting a new account manager every month or so, the company is not treating employees well. And if they consider employees expendable, how do you imagine they feel about you?
- Big ideas, no follow through. This is a sign of instability. Chances are their real business is simply churning investor money. They don’t need to make money on the ads and their relationships with brands. They just need to keep those angel investors happy, and big ideas sound exciting to investors.
- Big parties. If your ad network gets brand sponsors to throw big elaborate parties for all the bloggers in the big cities… why? Parties for clients might bring in money, but I’d rather get a bonus than a party invite. (Hint: parties make awesome tax deductions for companies sitting on more money than they can spend. They’re getting rich, you’re getting…a tacky party that cost $12-20k to throw.)
- Falling CPMs. If the boutique network CPMs are falling while other ad providers aren’t, that strongly suggests they’re not satisfying their ad buyers. And if they don’t know how to keep them happy, those brands are going to go to cheaper ad providers… which you can’t work with, because you signed a contract with these other clowns. Which brings me to…
- Contracts. Most ad networks just have a Terms page that you agree to, which you can choose to quit anytime, without notice. I will never again sign a contract with a company that makes me jump through hoops. Unless, perhaps, they absolutely guarantee a minimum CPM that’s better than I can do with other networks.
- Icky revenue opportunities. If half the revenue opportunities from your ad network require you to compromise your site – i.e., writing sponsored posts that aren’t in your niche or writing only positive reviews of products, for example – this may be a sign the network is getting desperate.
- Revenue opportunities that are too easy for publishers to abuse. If the network is offering you money that’s too good to be true, that’s a sign you should cash out now. For example, offering to pay you to post something, with no specifications preventing you from taking the post down the instant they’ve credited your account with the money. If they were really trying to promote themselves, they’d say you had to leave the post up at least a month, more likely a year. If they’re letting you get by with murder, what are they letting their ad buyers get away with?
- Watch the brands. Did they start out with huge, venerable brands like Macy’s or Microsoft, but now they’re working with lesser-known and more questionable brands? This suggests they had an awesome pitch to the big companies, but fell short on results. And they will just keep moving on to brands they haven’t already disappointed. It can only go downhill.
- Unstable accounting. It’s normal for any ad provider to give you estimated earnings report through the month, but not finalize the accounting until after the month is over. But when the finalized accounting is consistently lower than the estimates, or occasionally has like a 20-30% drop, and their explanation is, “Yeah, accounting error”, uh, no. Either their accounting is done by monkeys or there’s something much more ominous going on behind the scenes – like, ad buyers so enraged by the ad performance that they outright refuse to pay what was agreed.
I learned my lesson. I need to work with companies who don’t have start-up capital and really do have to sell ads to keep their doors open. And I need companies that chase down late payments from ad buyers and don’t let anybody default on an ad payment. Your mileage may vary, and this is certainly an opinion post. But keep your eyes open if you’re working with this type of ad network. I wish I’d gotten out sooner in both cases, and it took getting burned twice to learn.