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March 18, 2015, 1:32 p.m.
Business Models
LINK:  ➚   |   Posted by: Justin Ellis   |   March 18, 2015

Five of the biggest online news publishers in the world are joining up to form a supercontinent. For advertising.

With The Pangaea Alliance, The Guardian, CNN International, Reuters, The Financial Times, and The Economist are creating an advertising network they hope can capture premium rates from brands. Specifically, Pangaea is designed to capitalize on the rise in programmatic buying, allowing advertisers to access 110 million unique readers — “global influencers” — across the collection of sites.

More than just offering space for automated ad buying on the five sites, Pangaea will also give marketers access to the combined audience data of its publishers. That data will be anonymized, but offers big benefits to marketers, writes Jack Marshall in The Wall Street Journal’s CMO Today:

“The data is crucial. One thing we can do together is share first-party data with each other and create unique, compelling audience segments,” [Tim Gentry, global revenue director at Guardian News & Media and leader of the Pangaea project] explained. For example, subscription information from one publisher might be combined with behavioral information from other to create a detailed profile of a user that an advertiser is willing to pay a premium to reach.

Pangaea is being led by The Guardian, with plans to launch in April with display ads and later expand into other formats like native advertising and publisher trading desks.

Automated ad buying has increased in recent years as brands and agencies try to be more specific in the readership they reach on the web, and it’s generally been a force for lowering the rates publishers receive from advertisers. For publishers, the hope is twofold: leverage the halo effect of your brand to attract advertisers and use the demographics of their audiences to push for better ad rates. One way publishers try that is through creating private networks that can protect their remnant inventory from being sold for pennies on the dollar.

Teaming up like this is a natural option in an environment where the scale any individual publisher has is dwarfed by the digital giants. As Gentry told Digiday: “The sort of quality audience and trusted relationships we have with the audience we have — at the scale we have it — doesn’t get anywhere close to what some of the digital pure plays like LinkedIn or Twitter do.”

According to a study from eMarketer, spending on programmatic display advertising was projected at $10 billion in 2014, making up almost half of the display market in the U.S. They estimate spending will double to $20 billion by 2016.

While the digital advertising market presents great opportunity for publishers, it puts them in competition with giants like Facebook and Google. Those two dominate digital advertising, and, according to Pew’s 2014 State of the Media report, news companies make up just 12 percent of the total digital ad market.

This is not the first time publishers have tried to pull a Marvel Team-Up in the name of saving digital advertising revenue. In the pre-programmatic days, quadrantOne was a failed attempt by large American newspaper companies to provide a similar sort of scale. More recently, the Local Media Consortium launched as a collection of 1,200 local newspapers and TV stations working with Google in a private programmatic ad exchange. Rusty Coats, director of the Consortium, summed up the potential of private exchange to the Lab last year:

“What we learned early on with targeted selling was that if I wanted to sell, on a banner ad campaign, to women under 30 who were interested in fitness, and the only site I had to sell that on was the Knoxville News Sentinel, I did not have thousands of those women,” Coats says. “I needed to have a partner like Yahoo, so I could have thousands of women under 30 who were interested in fitness, and target those banners at them. If you think about that on a global perspective of brands wanting to reach into local markets and sell millions if not billions of impressions against that — you being out there on your own as the hometown news — you’re just not going to be coming up on the radar of these agencies.”

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