Hyperlocal publishing is growing up. After more than a decade of expansion, the industry’s top leaders are taking control and turning away from programmatic advertising in favor of direct ad sales.

Programmatic advertising has been around for long enough that most publishers know the drill by now. Just about anyone with a website can use Google Ad Manager, with CPM rates that vary from $0.25 to $5. Publishers don’t get to keep all the revenue from the programmatic ads that run on their sites, though. They’re expected to share up to 32% of the revenue from ads shown programmatically through Google, and that’s something a lot of hyperlocal publishers aren’t willing to do anymore.

How much ad revenue do publishers really keep with programmatic?/Courtesy of Google

Anyone who is involved in digital advertising understands the challenges that publishers are up against. The industry has been hounded by issues around viewability, engagement, and fraud. At both ends of the spectrum, publishers and advertisers are searching for objective players and trying to sort out heads from tails.

What they are increasingly finding is that going direct has some real benefits over programmatic, not just in terms of revenue, but also in terms of reliability and fraud.

Plenty of data backs this up. Integral Ad Science is one of a number of firms working to keep track of developments. It found that incidence of ad fraud when buying advertising direct from publishers is dramatically lower than when buying programmatically, 2.2% versus 8.3%. When businesses buy direct from the publisher, they have a greater chance of getting what they pay for. 

What’s in it for publishers?

The data on the publishers’ side is equally compelling. Direct-sold advertising is now a “large or very large” source of revenue for 50% of publishers, and building direct-sold ad programs is either a large focus or a very large focus area for 64% of publishers, according to a survey by Digiday Research.

Publisher revenue by channel/Courtesy of Digiday

With the maturity of the hyperlocal publishing industry has come an increased emphasis on control. Publishers who have been doing this for a decade or longer are no longer willing to put their fates in the hands of technology giants like Google. One of the fastest ways to decrease that reliance is by focusing less on programmatic advertising and more on direct sales.

Hyperlocal publishers know their audiences better than anyone else. They feel confident in their ability to provide the kind of premium placement opportunities that make the most of their advertisers’ budgets. Custom targeting and custom metrics for measuring performance are only one part of the equation. 

When publishers can show a direct correlation between on-site display advertising and increased brand awareness and sales, they are in a uniquely desirable position. At Broadstreet, we have hyperlocal news publishers selling billboard placements directly for as much as $2,500 per month, and click rates that are at or near 1%. Those metrics far exceed what most advertisers could realistically expect to hit with programmatic.

Those sorts of anticipated gains help to explain why publishers like SweetwaterNOW have been so eager to shift the focus to direct ad sales. SweetwaterNOW is one of the most prominent local news sources in Southwest Wyoming, with an average daily readership of 20,000 and more than two million pageviews each month. SweetwaterNOW had been gradually building relationships with businesses in its area for years, but running display advertising with Google Ad Manager didn’t give the publication the opportunity to capitalize on those relationships in an impactful way.

Sweetwater Now offers a robust media kit they sell directly to advertisers/Courtesy of Sweetwater Now

Making the switch to direct ad sales gave SweetwaterNOW the ability to offer personalization and custom placements to local advertisers. The publication is now using custom ad units, social media integrations, and sponsored pages to upsell and sign-up new clients. 

My Edmonds News has seen similar gains on the direct sales front.

“We tried programmatic advertising for a while but found we didn’t earn much revenue from it. Plus, some of it wasn’t the type of advertising I wanted on our website,” explained Publisher Teresa Wippel. “Over time, I acquired two more websites in neighboring cities. They share many of the same advertisers, so we can charge more to reach all three cities instead of just one.”

With more ad formats to sell, and a strong platform for managing custom ads, My Edmonds News has been able to develop a more robust revenue stream. Wippel says switching to direct sales and selling a wider range of advertising formats has also increased her publication’s credibility with advertisers, which leads to an increase in revenue.

At the end of the day, hyperlocal publishers want control. As the industry matures, and publishers gain more experience selling directly to advertisers, they’re no longer willing to run advertising they’re uncomfortable with or share revenue with tech giants like Google. The winds have shifted. Publishers are finally in control, and they aren’t looking back.

About the Author: Kenny Katzgrau is the CEO of Broadstreet Ads and the author of Ten Advantages: How Magazine and Hyperlocal News Publishers Will Win in the Era of Google and Facebook.