In this part 1, free subscribers get the first ~30 minutes of the conversation; paying subscribers also get part 2 in their RSS feed. To access just hit the button below.
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Part 1 Show Notes
Ezoic’s founders previously sold their businesses to the same US-based company - John Cole sold Media Run to Adknowledge, and Dwayne Lafleur sold Cubics. John is from the UK and wanted to come back which is why Ezoic has 2 offices here, but their main base is in southern California.
Back in 2010, before Ezoic was founded, both John & Dwayne had their own portfolio of content sites, individually as investors. They realized that advertisers treat each visitor differently, however publishers treated all visitors the same, and that being able to adapt the layout to the visitor itself offered significant revenue upside. They wanted to build some kind of system that allowed them to adapt layouts on a website and this technology kickstarted Ezoic. They raised $6MM from Balderton Capital (based in the UK) and they bought close to 400 evergreen content sites (full story here) and within 8 months had returned all the capital!
By buying evergreen sites, ones where the content will be around for a long time and where you don’t need to keep publishing new content or promoting, they were able to focus on testing ad networks, placements, density and UX.
As Tyler puts it:
Buying and selling sites is a very thirsty business. The premise all along was to build a technology that all sites could use.
The still own a % of those sites today and use them as test dummies on new updates to the platform.
Tyler explains that Google Adsense, Media.net and Outbrain are all ad networks.
Below is a screenshot from my Ezoic dashboard showing some of the ones they integrate with:
Tyler states that the ad space transformed with the creation of the Ad Exchange, which allows fair bidding and prevents people from having to test out a lot of ad networks. Google’s Ad Exchange is the largest and most dominant and is where most publishers will make most of their premium display revenue from. When someone applies to Ezoic they get access to Google’s Ad Exchange and access to the ad networks. They also implement header bidding (explanation screenshot from inside my Ezoic account):
Tyler considers Ezoic as a technology platform where the real value is in the machine. Machine learning figures out the best combination of networks, locations and ad sizes to maximize revenue for every individual user (from advertisers bidding on them) based on their behavior and likelihood to bounce. If a user bounces they obviously do not view additional pages and see more ads.
Tyler speaks about outsourced ad ops companies who focus on working with US traffic, picking and choosing the best sites as it’s harder to scale when you do things manually. I mention that I applied for a site on Mediavine and was rejected, which now makes sense as it only had 55% US traffic with 30% from the UK.
Looking up in BuiltWith:
Ezoic has 12,882 currently live websites
Mediavine has 7,916 currently live websites
Ad Thrive has 3,056 currently live websites
When ad op companies talk about having direct relationships with advertisers, some will be referring to private marketplace deals (PMP) where you bunch up sites. It’s easy to set up in a DFP (Double Click for Publishers) inside Google Ad Exchange. Ezoic does this automatically, grouping similar publishers together.
EPMV (earnings per 1000 visitors) is what Ezoic focuses on - it’s total session revenue, also known in the SaaS space as average revenue per user (ARPU). You could be having an ad location on your site that is earning double that of any other location, yet your revenue could still be going down by having it on the page.
When comparing between ad networks or ad ops shops, you need to take into account the state of the ad revenue index, which is up over 2x since the bottom of the pandemic decline in March / April:
You also need to be aware of how many ads are crammed into a page and how this affects long-term revenue (by encouraging advertisers to bid less) as well as visitor-behavior. As Tyler states:
RPMs are a terrible metric because you can have RPMs that go up but your total revenue could be going down.
On Ezoic you can achieve session RPMs from $5 to $1200, but comparing between two different sites is one of the biggest mistakes you can make as there are so many other variables.
Episode 7 Part 2
In part 2 of this conversation we discuss:
The need for split-testing for comparing ad networks
How monetization is an engineering problem to be solved
The most valuable niches / audiences
The future of Amazon Associates…
Part 2 is for paying subscribers, you can access by hitting the button below.
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