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Penny Arcade Report on ad-blocking, breasticles

10:00 AM on 04.18.2013 // Niero Desu
  @destructoid

More gaming sites are speaking up about the elephant in the browser

[Minor update: I moved my CPM real-world stats from the comments to the post so that its more visible]

Whether you're an aspiring writer, an established games critic, or a hopeful webmaster building your first gaming site it would behoove you to read Ben Kuchera's piece on the business of pageviews and ad-funded content publishing, and why posting a photo of breasts to headline this story makes more business sense than attempting to write anything remotely intelligent. You needn't look further than the much-chastised gallery of "40 hottest women in tech" to understand how low some writers will go for pageviews. But I digress. 

Web publishers are at an impasse: the terms that the advertising industry and ad-block users demand from each other are completely at odds, and small web publishers like me who rely on both are caught in the crossfire. It's refreshing to see the issue get a little more visibility. 

Last week I was invited by NPR's show On The Media to discuss my story. I thought it was going pretty well until Brooke asked why I don't just turn off annoying flashing ads. I truly wish it was that easy, dear readers. I really do. After mumbling what I'm sure was an unremarkable response she then pressed: "So, how long do you think you'll continue to be in business?"

A ghastly technical portrait of the online advertising ecosystem

Replacing third-party flash ads for static ads media buyers have to self-load, self-serve, self-audit, and self-bill is like throwing a warehouse party in the middle of nowhere with no liquor. Nobody will come except your very few best friends, primarily because they feel bad that you're a gimp.

The logistics of the business are mind-numbingly frustrating: The most annoying ad units we all hate perform the best, so buyers ask for those first. Third party javascript that bogs your system down is what keep the numbers honest -- its the auditing that helps count views, make sure ads aren't shown in 1x1 pixel hacks, or aren't resold and displayed on a different unsavory site. None of the above is pro-consumer. The speed of your browsing and whether or not an ad accidentally expands without your consent isn't exactly at the top of an advertising executives' conversations. I know this first-hand: I used to work as an ad agency for four years prior to starting Destructoid. I know the trenches too well.

It is not realistic, without chopping staff, for most web content publishers to reject animated ads. Not many media buyers will take the time to produce static ads to load without javascript specifically for a site our size. May you also never learn the laziness of many corporate media buyers, quick to scribble contracts against Comscore numbers and hope they only have to write one check and reconcile one report. To be fair, I'm sure they have better things to do than buy tiny bits of polite advertising proven to be less-effective than rich media ads. 

The real-world ad revenue split is lower than any online CPM calculator will tell you

Kuchera mentions that $5 CPM is a starting point (that's dollars earned for every 1,000 ad views) but in my experience that number is much, much lower. Even a $5 CPM is the advertised price, that is not a $5 CPM earned to the web publisher. It is standard, when working with a company like Federated (which I have), that they take 50% commission. At a certain scale you can probably get a better term, but that $2.50 is the real jumping point unless you have ad sales in-house (in which case you're paying half to your ad sales team and then what remains goes to your creative team anyway).

The other thing to take into account thats crucial is "fill rate". Nobody sells 100% of their inventory across all markets. That's very rare. Even if you sell 100% of our ads in the US most advertisers don't want to pay a $5 for ads being shown in Brazil where they can't ship product, so you end up not serving your true 1000 views. This is where third-party ad networks, ad quality control, and all that crazy javascript come in if you break even on bandwidth bills going out of the country.

What is more likely is earning less than 0.50 CPM on international traffic, and depending on domestic fill rate and international performance you're praying for a take-home the "true blended CPM" which is closer to $1.25 from $5.00. Next, you'll be wishing that a AAA-domestic title will want to offset that with a $$$ ridiculous campaign when those games come around, and you better let them get a refund when your reviews editor shits on the game or (a) they'll never buy from you again (b) you let them influence your review and your site is a piece of garbage unworthy of existing. That's the business, in a nutshell.

Now, divide all of the above by your ad-block rate and that's your take home, 60-120 days later, when the client pays the advertising agency who then pays you who are trying to feed your super awesome bloggers.

On the bright side, surviving and rising up against this absurd level of adversity is incredibly satisfying if you can keep the lights on. Otherwise everyone would be blogging videogames for a living. It takes a crazy person, or an investment group who will sell your life's work to the highest bidder in a few years. TLDR: I miss old EGM.

Ad-block rates may continue to soar, so we're marching ahead

It's not the readers' problem that the business model I'm currently working on is on shaky ground. Still, sites like mine will inevitably have to move away from online advertising to some degree, and having an honest and transparent conversation is in my mind respectful of the readers. The opposite of that is waking up one morning to find out that 1UP was inexplicably sold three times then shut down, which makes me want to chew foil. 

It's refreshing that more publishers are coming forward to talk about this concept of sustainability. Whether its ads, hat sales, venture capital, letting eFax buy you, or whatever -- we're just trying to keep our videogames sites online, because we love our damn jobs. 

A writer in the games journalism group pointed to Gruber's SXSW talk, citing a famous quote by Walt Disney: “We don’t make movies to make money; we make money to make more movies.” That's the thing. You could argue that Disney is a little different these days but there's a lesson there too -- don't die (or sell your company) to defend your manifestos.  

My role at Destructoid is changing again. I'm scouting new ideas, crowdsourcing

I was your first blogger, then webmaster, then publisher to a host of this crazy cast of Associate Editors and Contributors. Now a hopeful CEO looking for ways to navigate us away from dumb ideas like pay-walling content and steer us into better waters, like crowd-funding the production of stuff we can't afford under the boiler that is advertising. For starters, would you like to see more Holmes, Jim, Dale, Conrad, Hamza, Allistair, Spencer and others on camera? As their publisher I'm their #1 fan, so I sure would, and it's on me to figure out how. Look for shiny new changes you've voted on around here this summer when you'll soon get your chance to become the new boss of us. A more intimate Destructoid, perhaps.

The NPR radio host chuckled at my solution: "That sounds like more work." Truth of the matter is, if I don't come out of this by soon offering readers a plan for a better Destructoid then I don't deserve my job or a penny from them. Please don't pity my position; the challenge to rise above this and see it through is incredibly fulfilling because I care about it so much. Surviving the Ad-Blocker battle peacefully with those who will forever use them has become a fantastic real-time strategy game. We're going to work damn hard for our pylons.

[Header photo credit: Ad Week. Also, cute animal photos rank as the next best thing to breast traffic.]



Niero Desu, Blogsmith
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