RCS MediaGroup and L'Espresso have founded a premium publisher advertising network in Italy. This has bolstered the value of their quality content in the face of strong competition.

• The Premium Publisher Network is growing fast: It was launched at the end of March 2009, and by July, it comprised about 50 websites whose combined traffic reached 55% of Internet users in Italy.
• The consortium uses a third-party agency to handle advertising sales and manage the technology platform.
• The network is performing well, with the quality of the offering enabling it to charge a premium price.

Newspaper publishers:

• Consider joining competitors in a premium online ad network. If such a network exists in your region, consider the strategic as well as economic benefits of participation; if such a network doesn't exist, consider creating one, but ensure that the combined reach achieves critical mass.
• Ensure your ad network has a clear differentiation from existing ad networks, and actively promote it to advertisers and agencies.
• Put structures and processes in place to leverage the collaboration between participating publishers.

On the Internet, newspaper publishers face new competitors, and the value of their premium content may be undermined by behavioral targeting networks. One way to preserve the value of their inventory is to cooperate with other quality publishers to create their own premium ad network.

Publishers must compete effectively in the online advertising market. To do so, publishers are seeking to improve their online advertising offers, both to meet advertisers' requirements and to maximize revenue from their digital editions. Many are proposing to charge subscriptions for access to their online content, but that promises to be a difficult transition: No one wants to suffer from "first-mover disadvantage." In the meantime, advertising revenue remains the primary source of revenue for online publishers.

The issue here is that it is proving increasingly difficult to charge a premium for high-quality content. In particular, the rise of behavioral targeting (BT) allows advertisers to target the individual directly, rather than indirectly via the content. Also, many ad networks are dominated by nonpremium inventory, so they are not necessarily the best way to maximize revenue.

In the U.S., this condition has led to the development of an online newspaper advertising network called quadrantONE, which was launched in early 2008 by Tribune, Gannett, Hearst and The New York Times and now represents over 340 local news sites nationwide.

Faced with this environment, RCS decided to cooperate with its competitors to establish the jointly owned Premium Publisher Network (PPN). According to Giorgio Riva, managing director of RCS Digital and chairman of PPN, "The motivation was to keep control over our inventory, ad sales, ad formats and pricing, and to ensure that we receive adequate recompense for the quality of our brand and content." (RCS Digital is the business unit that develops and manages digital media activities for RCS Quotidiani, the newspaper publishing division.)

RCS MediaGroup is an international multimedia publishing group with revenue of €2.7 billion in 2008 (see Note 1). In Italy, it publishes Corriere della Sera, the best-selling Italian daily newspaper, and La Gazzetta dello Sport, the nationwide leader for sports information. Despite its powerful brands, RCS faces the same pressures as the rest of the industry, exacerbated by the economic downturn. (For example, in the first half of 2009, group advertising revenues were down 28.6% compared with the same period in 2008.) In this context, RCS Digital is actively developing its digital media: corriere.it , gazzetta.it , Corriere TV and Gazzetta TV, classified sites, and services for mobile phones.

There is great pressure to optimize online ad revenues, but RCS was faced with a very competitive market and therefore was looking for a way to create a unique offer for advertisers, preferably leveraging the quality of its brands and content.

For contextual, performance-based ads, RCS was working with Google AdSense. However, there was some dissatisfaction with this service because it involves a loss of control and a lack of transparency. With AdSense, publishers supply inventory and receive revenue, but they have no idea of what ads have been served or which performed best, and advertisers do not know where their contextual ad links have appeared. In that sense, most ad networks are "blind." RCS was therefore keen that its new offer to advertisers would deliver more control, transparency and optimization than AdSense.

In order to improve on AdSense, RCS wanted to base its offering on quality of content, performance-based pricing and transparency of results. However, no single publisher had sufficient reach to create an attractive offer for advertisers. Therefore, RCS Digital and L'Espresso decided to join forces and establish a strategic alliance. After initial discussions, it was decided to set up a consortium open to all quality publishers in the Italian market. It took about a year to establish the legal framework, including compliance with antitrust legislation, and the result is the Premium Publisher Network, in which the publishers are equal partners with equal rights. PPN offers advertisers quality inventory, reaching 55% of the total Internet audience in Italy.

As the consortium members are competitors, it was decided to outsource the advertising sales and technology platform to a third party, which would act as an agency. To choose a provider, they created a solution brief, and after considering proposals from a selection of agencies, they chose 4w MarketPlace as the company best able to deliver the required organizational structure and technology platform. The decision was made during a summit meeting of the consortium.

4w MarketPlace customized its platform (4w Net) to PPN's specification. It provides advertising placement and has targeting technology to help advertisers plan campaigns to target users by specific topics, demographics and location. Pilot trials were run on both RCS and L'Espresso sites to test the system, to measure the optimal position for ad placement, and also to test the inclusion of images (GIF), which were not allowed with the previous system.

According to Alberto Fioravanti, CEO of 4w MarketPlace, "The peculiarity of our approach for a news contextual network was to integrate our performance online advertising platform with an existing robust solution for contextual text link advertising. We chose Mirago Plc ... because we need the technical skill to develop and maintain a highly customized version and the flexibility to integrate with our existing platform." Some of the unique features 4w MarketPlace introduced are:

• Bidding at both channel and keyword levels, where channels are types of content based on declarative and automatic classification
• Sophisticated algorithms for high-volume frequently updated pages with nondifferentiated content like newspaper website homepages and photo galleries
• Geolocalization for local advertisements
• Customizable announcement format enriched with GIF logos
• Self-service bidding environment designed for both media professionals and end-user customers

Once the platform was built, the transition from AdSense was very rapid, thanks to the fact that trials had been run prior to the full implementation. As it was an independent platform, there were no significant integration issues. The project was announced in January 2009, when contracts were signed, and it was commercially launched for advertisers on 30 March 2009.

To provide transparency, the PPN platform gives publishers a console (that is, dashboard) through which they can monitor everything: the performance of specific sites and campaigns, which ads are served on which sites, impressions, click-through rates, average cost per click (CPC), effective cost per mille (eCPM), revenues, and so on. The most important key performance indicator is the eCPM, which is closely monitored.

The PPN includes only performance-based contextual ads, sold on a CPC basis. Each publisher continues to sell the rest of its inventory independently. However, advertisers currently prefer CPC to CPM, so it's possible that additional inventory could be made available to the PPN in the future, partly by extending the network to other publishers.

At the moment, advertisers receive reports from the agency on the performance of their campaigns, but from 3Q09, the system will allow self-provisioning, so that advertisers can plan and monitor their own campaigns. Once self-provisioning is available, the PPN expects to attract much smaller advertisers (the long tail), because it will allow campaigns to be run for as little as €100.

The PPN will also implement bidding in the coming months. At the moment, the CPC price is the same for all ads, but bidding will allow the market to determine the price. The finance and gaming industries, in particular, are very interested in bidding, so the CPC could vary by sector.

The system is quite new so revenue is still building: The results are benchmarked against those achieved using AdSense, and the new system is performing well. In particular, due to the premium quality inventory, the CPC is twice as high as the average for the Italian market.

The network currently includes about 350 million page views (excluding home pages) per month, and the objective is to increase this to 1 billion page views per month. This will be achieved partly by increasing coverage on the sites within the network, and partly by increasing the number of publishers belonging to the network. There is an ongoing publisher recruitment program, and the PPN has grown from around 25 sites this May to about 50 by July, with others in the pipeline. Satisfaction among publishers is high. No specific research was conducted with customers prior to launch. However, market feedback has been excellent: Advertisers are very satisfied and are planning new campaigns.

Qualitative benefits include better relationships with advertisers and control over formats and inventory. Control allows optimization of targeting — for example, the PPN is testing to identify the best method for geolocation, either IP geotargeting or local titles.

The fundamental concept of the PPN was to join forces with competitors to create a consortium with a unique offer to advertisers. So the main critical success factors were:

• A strong vision to create a unique offering for advertisers
• A strong willingness to cooperate with competitors to create the network
• An environment of growing demand and limited supply for performance-based online advertising

According to Silvia Angeloni, head of trade marketing for RCS Digital and a member of the PPN technical committee, it shouldn't seem strange that companies that usually compete strongly can cooperate so successfully within the Premium Publisher Network. "It could sound weird but it shouldn't. Online publishers can undertake successful projects both individually and jointly — the reason being that they have the common aim to enhance the value of the branded source of the content and the quality of their advertising offer."

The technical trials were also vital to ensure the platform worked properly.

The importance of market timing is underscored by the challenges of quadrantONE, which entered a more mature U.S. ad network market characterized by fragmentation and oversupply, in which critical mass is more difficult to achieve. According to comScore Media Metrix, quadrantONE has yet to succeed in penetrating the top 25 ad networks.

Collaboration is the key strength of the consortium, so it's necessary to have structures and processes to leverage that collaboration. In particular, it's important to have close collaboration between the publishers and the agency. In PPN's case, this is done through a technical committee that meets once a month to discuss possible opportunities to improve the platform.

In the print world, publishers are highly competitive, and such an initiative would not be possible. But online, publishers face new competitors (Google, the pure-play portals, etc.). Therefore, they have a common interest in proving the value of their quality content to advertisers, and indeed, to prove the value of the branded source of the content.

"Hype Cycle for Media Industry Advertising, 2009"

"Hype Cycle for Media Industry Publishing, 2009"

"Performance Advertising Takes Center Stage as the Economy Puts Pressure on Brands and Publishers"

"Making Digital Advertising Work for Media Companies"

"Newspapers and Magazines Must Focus on Digital Channels That Offer Immediate Payoff"