Latest / The Yield Doctor with James Deaker / House Ads Explained

Transcript

House Ads Explained · The Yield Doctor with James Deaker

• 0:00
  Hi, I'm James Deika, the yield doctor,
• 0:03
  and welcome to my explainer series,
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  where I tackle questions that I hear
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  most often from publishers, platforms,
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  and digital operators. Today's topic,
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  how to use house ads effectively. It's a
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  surprisingly common struggle and one
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  that can quietly drain value if you're
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  not approaching it in the right way. So,
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  let's get into it. Let's start with a
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  quick definition. A house ad is simply
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  an ad for a product or a service owned
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  by the same company that owns the
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  website where the ad appears. An example
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  might be Yahoo promoting Yahoo Fantasy
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  Sports on its homepage. It might be an
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  airline advertising its own co-branded
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  credit card or it might be Disney Plus
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  pushing Disney cruises. So, it it sounds
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  like a no-brainer, right? You're
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  reaching people who are already familiar
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  with your brand. But here's the catch.
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  House ads often perform terribly. Why?
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  So, let's break it down. One of the
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  biggest issues is how house ads are
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  allocated. Let's say a house ad is 75%
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  sold through with ads from other
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  advertisers.
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  Then the 25% often gets filled up with
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  house campaigns regardless of the user
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  or the context. That results in the same
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  user seeing that internal promotion over
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  and over again. And guess what? The
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  conversions stay low. Why? Because
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  they're not targeted. It's just filler.
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  And when the performance looks weak,
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  someone eventually is going to come
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  along, shrug, and say, "Well, at least
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  we're doing something with that
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  space." So, here's the approach that I
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  often see, and again, another one that I
• 2:00
  strongly recommend against is a fixed
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  percentage strategy. It goes like this.
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  Someone might say, "Let's dedicate 3% of
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  all impressions on the site to house
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  ads." In theory, it might sound fair,
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  but in practice, it usually means that
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  one of two things. Either you're pulling
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  the 3% from high value revenue
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  generating impressions, or you're
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  carving it out from 3% of the worst
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  impressions, which will make the house
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  campaign look even worse. Either way,
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  you're losing money and you're
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  misleading yourself with bad data. So,
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  here's a better approach. You want to
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  target the house ads to those who are
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  most likely to convert. So, let's stick
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  with the airline example. You're
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  promoting a frequent flyer credit card.
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  Suppose the lifetime value of a new card
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  holder is
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  $100. If you know that the expected
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  conversion rate and you know for the
• 3:06
  users that are already on your site, it
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  is likely to be higher than those users
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  that you find out in the wild on on
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  other sites. So you calculate the CPM
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  value at which you want to win those
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  impressions of the in-house placements.
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  Now you're not just running house ads,
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  you're investing in high performance
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  internal campaigns. So, how would you
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  set it up? First of all, you would treat
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  the house ads like any other campaign or
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  any other programmatic campaign and have
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  them bid in the open auction against
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  other
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  advertisers. You would give each type of
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  product its own campaign line and
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  potentially each uh unique campaign line
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  for each format that it's running on.
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  So, for example, sticking with the
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  airline, you would have a different
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  campaign line for running on the
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  airlines website than running on their
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  seat pack. And then you let them compete
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  with the other impressions based on real
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  value. For the airline, the credit card
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  may outbid external advertisers, and
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  rightly so, if the internal ROI
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  justifies it. But here's the challenge.
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  The team running the airlines main
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  website may not get credit for those
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  house ads even though they're in fact
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  they're going to be giving up high value
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  impressions and may say that it's
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  leading to overall revenue loss for the
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  company. So this is where internal
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  politics and alignment come in. You need
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  clear rules so that everybody agrees
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  that this is to the overall benefit of
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  the company and even if those ads don't
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  show up on every department's balance
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  sheet. Let's clear up a couple more
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  misconceptions.
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  Um, one internal challenge that I've
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  heard is some groups will say to avoid
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  costs, let's just hardcode the house ads
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  and skip the ad server completely in
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  order to save money. No, please don't do
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  this. You're going to lose the
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  targeting, the frequency control, and
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  the performance measurement. It might
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  save you a few bucks on tech, but you're
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  going to be flying blind and likely
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  wasting impressions.
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  Another myth is that house ads should be
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  used to fill all of the unsold
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  inventory. Maybe, but maybe you want to
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  run a a sweeper campaign instead. And
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  even if you are running house
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  impressions, don't let those campaign
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  lines contaminate the analytics and the
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  data on the other house lines that
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  you're running programmatically.
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  traffic them separately and keep the
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  analytics clean. That way you know
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  what's really performing and what's just
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  filling up
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  space. So that is a high-level overview
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  of how to use house ads effectively. We
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  didn't even touch on some of the
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  advanced topics like P&L transfers,
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  non-auction environments or cases where
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  the user already has the product that is
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  being advertised to them. If you are
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  wrestling like with these types of
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  problems, you know where to find me. I'm
• 6:34
  James Deika, the yield doctor. Thanks
• 6:37
  for watching. Don't forget to subscribe,
• 6:39
  like, and shoot me your questions for
• 6:42
  the next explainer. See you next time.