Publisher Spotlight: 3 Ways Forbes Is Growing Programmatic Ad Revenue

Forbes CTO Michael Dugan discusses programmatic optimization, header bidding strategy, and more.


Digital advertising is a difficult nut to crack for publishers. Although digital advertising revenue continues to grow apace—it is now a $59.6 billion industry that grew revenue 20.4% in 2015, according to the Interactive Advertising Bureau (IAB)—publishers are only capturing a small share. The IAB reports that Facebook and Google capture $7 out of every $10 earned from digital advertising, which does not bode well for publishers looking to make digital advertising a primary source of revenue for their business.

How can publishers grow their piece of the digital advertising pie? Forbes CTO Michael Dugan advises publishers to bone up on programmatic advertising and harness the supporting technologies. At FUSE: The Convergence of Technology & Media in September, Dugan explained how Forbes is taking a three-pronged approach to maximize its digital advertising revenue. The strategy includes optimizing the price of Forbes’ programmatic ad inventory, diversifying its programmatic offerings, and targeting audiences with personalized content and ads. Read on to learn 3 ways Forbes optimizes its programmatic inventory.

Get the Highest Price for Programmatic Ads

Programmatic ad inventory should not be viewed as remnant inventory, says Dugan. Programmatic inventory is simply inventory that is not sold directly to a buyer by a salesperson, but that doesn’t change the value of the audience viewing these ads. Keeping that value in mind, there are a number of ways publishers can prevent their CPMs from depreciating.

One of the tactics Forbes employs to protect its CPMs is header bidding. Header bidding allows a closed network of preferred partners to review a publisher’s available ad inventory and the audience viewing it and buy that inventory before it goes to the ad exchanges. Publishers can also set minimum floors with these partners so that CPMs do not dip too low. Dugan says that header bidding is also an opportunity for publishers to showcase the value of their audience and nurture advertisers toward human-based direct sales, which lead to bigger sales. This is also a great way for publishers to avoid exchange fees because the ad never goes to open auctions. [Editor’s note: We use the term “human-based direct” ad sales to distinguish from “programmatic direct” ad sales. More on the difference below.]

If we see that a direct campaign is doing fine, we will intentionally slightly de-prioritize it and allow a programmatic ad to churn through a little bit. Then we will bring the direct campaign back up to make sure it doesn’t fall too far behind.

—Michael Dugan, Forbes

Publishers do need to be careful how they execute header bidding, says Dugan. Header bidding adds additional code to pages where inventory is available and executes these bids before the page loads. As a result, user experience can take a hit from slow load times. Dugan recommends working with a vendor that can mediate bids on a separate server. Forbes’ mediation partner allows the brand to work with 20-plus preferred partners at any given time.

Another key to optimizing programmatic prices is dynamic allocation, which essentially allows human-based direct- and programmatically sold ad inventory to compete. Dynamic allocation has built-in mechanisms for deciding whether a human-based, direct-sold, or a programmatically sold ad will win a particular impression. To manage its dynamic allocation, Dugan and his team developed a pacing algorithm, which determines when a human-based ad should run based on the promised impressions to the advertiser. “If we see that a direct campaign is doing fine, we will intentionally slightly de-prioritize it and allow a programmatic ad to churn through a little bit,” explains Dugan. “Then we will bring the direct campaign back up to make sure it doesn’t fall too far behind.”

Forbes CTO Michael Dugan explains the publisher's header bidding strategy and how dynamic allocation helps Forbes prioritize direct and programmatic campaigns. Watch the full video of Dugan’s presentation here.

2. Diversify Programmatic Solutions

There are a variety of programmatic models that publishers can pursue to optimize their unsold inventory. Dugan says Forbes has a minimum spend for its human-based direct sales of $50,000. Anything under that amount goes to the programmatic sales team. They work with advertisers to determine their needs and will recommend an indirect program—from programmatic guaranteed to a self-service solution.

Dugan views these different programmatic options like a funnel. At the widest point of the funnel is the inventory that is sold for the lowest price and without guaranteed CPMs. As advertisers go down the funnel, prices increase along with CPM guarantees. In practice, Forbes offers advertisers a self-service option on its private marketplace (PMP), private auction, preferred deal, and header bidding, as mentioned above. The self-service option allows advertisers to access Forbes’ PMP and purchase inventory, but the impressions may not be guaranteed. Private auctions are open to multiple preferred partners and allow them to bid on specific inventory. Preferred deals allow select advertisers to look at ad inventory before it goes to auction and negotiate the fixed price.

Programmatic guaranteed is the most premium of the programmatic solutions Forbes offers. “It’s almost as all-inclusive as a direct-sold ad,” says Dugan. In a programmatic guaranteed model, also called programmatic direct, the publisher sells inventory at a fixed price directly to one advertiser, guaranteeing a certain amount of impressions. It is similar to a human-based direct ad buy because the advertiser is buying an ad directly from the publisher instead of through an ad exchange, but the buy is conducted on the publisher’s programmatic ad platform, skipping the traditional RFP process.

Dugan adds that programmatic sales are not replacing human-based direct sales at Forbes, but that the two advertising models are necessary for success online. “Programmatic works in partnership with direct. They work together, and we’re seeing great growth here,” says Dugan.

An outline of Forbes' programmatic products, listed from most premium to least.

Use Audience-Targeted Ads & 
Content To Lift Ad Value

Outside of programmatic, Forbes uses targeting tools to improve the value of its human-based direct inventory. One tool that Forbes finds invaluable is its data management platform (DMP), which the publisher uses to parse audience segments and develop custom programs for advertisers. The goal of this audience targeting solution is to drive greater user engagement with a campaign and connect advertisers to the exact audience that they want to reach.

The DMP uses Forbes’ first-party data and second-party data from other companies that share certain metrics on the DMP. The platform can show how many consumers in a particular segment exist online and how many of those consumers are part of Forbes’ database. “So if we wanted to target small business people who work in production and are NFL enthusiasts, the total reach across the internet is 43 million,” explains Dugan. Then the publisher can layer its own user data over this and identify what portion of this audience it can reach on its websites. “So you could save that group as a segment and run it through your ad server, targeting that audience for a direct campaign,” says Dugan. The goal is to display ads to the relevant audience segments and as a result, increase engagement with those brand messages.

Our July traffic was amazing, but eight out of our top ten articles were Pokémon Go tips. That’s great stuff, but it’s not exactly where the highest valued advertisers are.

—Michael Dugan, Forbes

Forbes is also focused on content targeting, using machine learning algorithms to recommend content to Forbes readers based on their past behavior. Dugan and his team worked to develop a smarter recommendation engine on its website. “We’re producing 300-400 articles a day so it’s just a massive stream,” says Dugan. “We find that because it’s such a large volume of content, it’s very difficult for the best stuff to surface.”

Often publishers try to recommend the most popular content to their readers, but Dugan says that this popular content was rarely aligned with Forbes’ most valuable readers from an advertising standpoint. “Our July traffic was amazing, but eight out of our top ten articles were Pokémon Go tips. That’s great stuff, but it’s not exactly where the highest valued advertisers are.” Rather than capturing a high quantity of views, advertisers are looking to connect with high-quality consumers—ones that might have an actual interest in their product or solution. That’s what led to the creation of Forbes’ recommendation engine.

The recommendation engine that Forbes recently introduced drives readers to articles based on their past reading behavior. It also recommends native content from Forbes Brand Voice contributors that are related to readers’ interests. The algorithm takes into account readers’ preferences around article length, whether readers seemed to prefer image-heavy articles or video, and whether they read more content by Forbes staff or outside contributors. Weighing all of these preferences, the algorithm can help keep readers on the site longer and increase their level of engagement with both display ads and native ad content. And advertisers are increasing their chances of conversion by marketing to a highly engaged segment of Forbes’ audience.

Forbes "Your Reading List" feature on the top left of the screen is built on machine learning technology and recommends stories based on reader behavior.

Looking Ahead with Mobile

Dugan says that Forbes is still evolving its online advertising strategy and anticipates that the growth in mobile reading will continue to have a profound affect on that strategy. To accommodate ads on mobile devices, Dugan says his team is considering developing progressive web apps, which are a sort of hybrid between mobile web pages and mobile apps. These types of sites have app-like features such as push notifications but are built on open web standards. Dugan anticipates that this type of experience will drive greater engagement on mobile and hopefully limit the use of ad blocking.

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