Low CPMs Pose Challenge
Established in 1995, Lycos is one of the original Internet brands in the world, evolving from a search engine into a comprehensive network of social sites. The company now offers tools for blogging, web publishing and hosting, online games, e-mail, and search.
Lycos has a direct sales force that targets key advertisers; they monetize the inventory they don’t sell with ad networks and various third-party partners. CPMs for nonguaranteed inventory hovered around $0.25, a frustratingly low price for a valuable audience.
“We found it challenging to optimize revenues when shuffling inventory through several partners. It’s harder to get competition between the players going,” said Colleen Stephan, Product Manager for Search at Lycos.
And because their ad server could not segment audience data, Lycos had no way to show potential buyers the true value of their visitors.
Switch to OpenX Enterprise Ad Server
In 2009, Lycos replaced its ad server with OpenX Enterprise to manage both direct sales (exclusive and guaranteed campaigns) and indirect sales (non-guaranteed campaigns).
“We switched to OpenX Enterprise because it had granular targeting capabilities and great reporting features,” explained Kristyn Lyons, Ad Operations Manager at Lycos. “We also really like the customer service; whenever we need a new feature, we just call our OpenX team and they implement it right away.”
Experimenting with OpenX Market
OpenX Market, an ad exchange, is integrated directly into OpenX Enterprise and provides publishers with instant access to global demand. Buyers bid on inventory in real time, creating a competitive environment that benefits publishers. In mid-2011, Ms. Lyons decided to test OpenX Market with Lycos’ non-guaranteed inventory. Lycos saw immediate success.
“We quickly realized that both our fill rate and the CPMs were high, so we began allocating more impressions to OpenX Market. We now expect to send 50% of our non-guaranteed inventory to OpenX Market,” said Ms. Lyons.
With OpenX Market, Lycos now sells its non-guaranteed inventory at a CPM that reflects its true value. “Within two months, and with a lot of help from our OpenX team, our CPMs grew from $0.25 to well over a dollar. Some days CPMs are $2.00 and higher, and in select placements, we see $3.75,” Ms. Lyons said. “We’re getting double what we expected to get from OpenX Market, making it a top competitor for our inventory.”
Strategic Use of Price Floors
OpenX Market lets publishers set minimum price floors for their inventory – a feature that Ms. Lyons has used to Lycos’ advantage. “We actively pit our direct advertisers and third-party partners against OpenX Market. If I’m getting a current CPM of $0.75 from my partners, I’ll see what OpenX Market will deliver. I’ll set the floor to $0.85 or even $1.00 and give OpenX Market buyers a chance to outbid them. If OpenX Market can monetize 75% of that traffic at a higher CPM, I’ll let it run all day against non-committed campaigns.”
Lycos also uses price floors to create a competitive environment for their direct buyers. “Our sales teams see the CPMs our inventory yields in auctions, and use those results to justify higher CPMs with direct advertisers. The competition has been good for us.”
Lycos’ Advice: Be Aggressive
Ms. Lyons has a word of advice for other publishers who are considering OpenX Market. “Don’t be afraid to take risks and be aggressive. For so long we weren’t taking full advantage of OpenX Market, but with the help of our OpenX team we got our CPMs to rise significantly. OpenX does a great job in showing you how to succeed.”