Venture capitalist blogger Fred Wilson posted something today that got me thinking.  In a nutshell, one of his portfolio companies is comScore.  Yet on his blog, he approved ads for Compete.com and Hitwise (Disclaimer: Compete.com is an advertiser on HipMojo.com and the Mojo Supreme network).  The thing is, Compete.com and Hitwise are competitors of comScore.  I commend Fred for approving ads from Compete.com and Hitwise because it’s the right thing to do as a publisher, but I agree with some of the concerns from comScore employees who think that Fred might have sold them out.

It’s a tough spot to be in, I guess, and a touchy subject.  Fred is in the unique position of being a blogger and a VC.  And while he controls the content on his site, naturally he has less control with ads.  Now, that being said, as a well-known and influential blogger (oh yeah, and VC), Fred actually has oodles and oodles more control over his inventory than the regular publisher with his traffic.  Fred is genuinely a great guy and very gracious with his time and advice, so any time I say anything remotely negative about him, or mainly, his posts, I make sure to include that disclaimer and shout out…

But I think Fred is kind of off on this one, with all due respect, for two reasons. 

Most publishers would give up their kidney to have:

- Compete.com and Hitwise advertise on their sites.

- anywhere near the amount of control Fred has.

- his notion of Favoriting ads

comScore should buy some ads from FeedBurner and Federated Media to run on my blog and if possible, I’d favorite them. Compete and Hitwise should be able to get their message out on this blog, but I’d favor comScore ads for sure because it’s the superior service. 

is neat in theory and actually already available, it’s called frequency capping or weighting, but more importantly, not really a solution for his problem (unless I’m missing something, not really going to address random comScore employee #Z987654321 from seeing an advertisement from a competitor such as Compete.com and Hitwise and think that Fred is pushing their competitor).   I also like the blatant plug for comScore at the end…

But frequency capping, weighting of ads is an option when you sell ads and control your inventory.

Fred’s predicament is simply something a publisher chooses when they outsource ads.  Sometimes outsourcing makes sense, oftentimes it does not.

I worked as a VP of Ad Sales for a publisher with 5M in readership.  I did direct sales to clients, direct to agencies, worked with ad reps, ad networks etc., and allow me to confirm that in 9 out of 10 times, you want to be in contact with advertisers or agencies, and not ad reps or networks.  In Fred’s case, his time is better spent on doing his actual work (being a VC and having 2 successful exits in a week, for example) and his site too small to merit going direct…

In other words, unless he wants to block advertisers who compete with his portfolio companies (which in this case might be the most sensible thing since his main line of work is being a VC).

But this got me thinking, while online advertising is booming, the percentage contributed by good old fashion sponsorship and listing fees, essentially fixed priced deals, is going down.

Why?

When we work with advertisers, we try to move the discussion away from CPM, CPC and CPA.  Trust me, I have closed 1000s of ad deals with 100s of clients, large and small.  I’m also quite skilled with numbers.  I can, if I choose to, make the numbers add up to justify any spend.  But I don’t.  I outline likely scenarios, candidly, but ultimately explain the value proposition and try to get the advertiser to spend a given amount that makes them feel good about the buy.

Otherwise, you have no choice but to be at the mercy of CPM, CPC and CPA which don’t really address client’s concerns anyway because there are countless problems with all of those metrics anyway.  For more on these terms and online ads in general, click here.

But for the odd client that wants to pre-empt other clients, or the publisher that wants to be in control, it seems like a way to go.

What this allows me to do is simply cut out networks so that I am in control of our inventory.  Fred’s situation is very different as a VC, he shouldn’t call up comScore’s VP of marketing and put a gun to his head and say: “hey, if you don’t want Hitwise on the site, then outbid them,” but for any other publisher, that’s indirectly or implicitly the option that is presented to advertisers.

If an advertiser wants exclusivity then they should pay a premium for it, that seems fair and square.

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