Fighting The Nat'l Ad Squeeze On Local Sites

Shawn Riegsecker has developed a unique perspective about online advertising and the media business over the past dozen years. As CEO of Centro ad-placement service, he's in a unique position to do so. Some think of Centro as an ad network, although he is quick to point out that Centro serves both advertisers and web publishers in ways that ad networks and exchanges do not.

With this year's addition of a new backend tool called Transis, he says Centro is making online ad-buying efficient in a ways that give media buyers more time and information to match national advertisers with local sites. Learn more in his Q&A with NetNewsCheck consulting editor Chris Kouba.

NetNewsCheck: Shawn, you founded Centro in 2001 - how has the online-ad business changed since then?

Riegsecker: In the last 10 years, we really saw this ballooning of supply and overabundance of ad impressions on the web, combined with people helping monetize the long tail, and what that did was drop the CPM. The CPM just dropped through the floor in the last 8 years, which is making it very difficult for companies who pay professional journalists or reporters to cover important topics, to be able to recoup that investment on the web.

Now we’re getting to another fundamental shift that started really with Tacoda and behavioral targeting – I'm talking about audience-based targeting. You know, you should target the person not the page, and you’re seeing this just gather a ton of momentum with the advent of the ad exchanges. You’re seeing a push by marketers to say “we don’t care so much where my ad shows up. I care who I’m reaching and I’m willing to bid specifically for that impression to that one individual,” and that is a fundamental shift in how marketers buy.

This has a ton of consequences for media companies, because if traditional media companies can’t make the case that an ad on the New York Times is worth alot more because of the content that it sits next to, and because of the halo effects of the brand, then they’re going to have a very difficult time charging the right CPM for the value of their inventory vs, an advertiser just buying it off of an exchange targeted to the same person.

NetNewsCheck: How did you come to Centro, and what it is that Centro does?

Riegsecker: My background is in print media sales, both Yellow Pages and newspaper. At one point, I was helping newspapers get into the online radio business, and then from there I moved to Real Media, which was one of the original ad networks in this space. At that time, if you were an ad agency and you wanted to buy ads on a local website such as a newspaper or a TV site, Real Media was really the only company that did that on behalf of ad agencies.

When I got there, it was pretty evident that local, as a segment of online industry, was too fragmented, there were too many companies, too many people, too many moving parts. It was unscalable, it was unprofitable and it just wasn’t a great business. And so when Real Media went to merge with 24/7 to become 24/7 Real Media, I left to form Centro with the intention of developing a solution to that problem through technology.

NetNewsCheck: How does Centro differ from an ad network?

The vision from day one was that the world was just going to continue to fragment, and that if you just play fragmentation out to its Nth degree, you cannot execute on old technologies. There is going to come a day when we can’t be using e-mail, we can’t be using spreadsheets, we can’t be using fax machines to try and execute our orders. And so my belief was that software will have to come into the industry to automate the commoditized work - that low-value activities that are paper-pushing things.

In 2001, the prevailing mind set at the time was to build an ad network. What I did was I sat down with a pen and paper and I thought about the agency and said OK, if they’re going to outsource or have a company help them buy local, what does that company need to look like? One, they had to have 100 percent of all local opportunities. It couldn’t be a rep firm and it couldn’t be an ad network. It had to be a buy side solution, not a sell side solution. Number two, it had to be a software driven company because when agencies need something, they need it right away. You don’t have a week to contact 50 different local reps and negotiate from 50 different publishers and sales folks. And third, there had to be data behind it to help them become smarter.