LinkedIn starts officially auctioning off its desktop banner ads
Remember bookstores. Remember how if you wanted a book you had to put in the extra effort required to physically go somewhere to get it. Then remember when you started buying books online and it was so much easier and the bookstores started going away because it was cheaper for them to sell the books online. The same thing is happening to desktop display advertising.
LinkedIn has decided it will officially start auctioning off its desktop-only display ads because it will be easier for brands to buy those banners and more cost-effective for the social network to sell them. LinkedIn had started selling its traditional banner inventory — the majority of which is right-rail ads mixed with some horizontal “leaderboard” banners — through real-time bidding exchanges in the third quarter of 2015, but starting today it is rolling out that programmatic access to any advertiser interested in picking up these placements as if they were an antique collectible on eBay.
“It’s a win-win in that it’s better for advertisers because it allows them to more cost-effectively buy and drive better return on investment. But it’s also a win for us because it allows us to more cost-effectively support this ad format and put more resources into our native and mobile placements,” said Russ Glass, head of products at LinkedIn Marketing Solutions, the social network’s advertising arm.
LinkedIn has been winding down its desktop display ad business for the past year. “We see display as less of a strategic focus, but an important area that advertisers still want to have access,” said Glass. It’s not going away entirely — just like Barnes & Noble stores haven’t gone away entirely — but it’s definitely shrinking in favor of the sponsored content side of LinkedIn’s ad business.
In the first quarter of 2016, revenue from LinkedIn’s banner business declined by 30% year-over-year to account for roughly 10% of the company’s ad revenue. By comparison LinkedIn’s sponsored content — such as posts that companies can pay to place in people’s feeds and pin on their own pages — brought in 56% of its ad revenue for the quarter, having grown by almost 80% year-over-year.
LinkedIn’s desktop display ad business is something of a supplementary revenue stream, like Facebook’s desktop display ad business. Like Facebook, LinkedIn has kept those banners off of mobile devices, despite the majority of its audience going mobile. In the first quarter of 2016, 58% of the 106 million people who checked out LinkedIn each month visited on a mobile device.
If LinkedIn wanted to hang on to this more traditional ad revenue stream, it would have to make a decision: Either find a way to squeeze these banners onto smaller screens, or find a cheaper and easier way to sell them. The company has opted for the latter. By making these ads available programmatically through real-time auctions, LinkedIn’s sales team will be able to spend less time making a case for their desktop-only inventory and more time pitching likely more lucrative sponsored content deals. Glass said brands will still be able to buy the desktop-only banners directly through LinkedIn’s sales team, but left open the possibility that won’t always be the case.
“We expect to follow industry trends… If we see that the programmatic trend continues in that direction [where marketers overwhelming buy banners programmatically], there could be a day where it’s entirely programmatic,” Glass said.
Brands can programmatically buy LinkedIn’s banner ads in one of two ways. They can place bids in open auctions, which will lump LinkedIn’s inventory in with that from other sites. Or they can buy them through private auctions, which will ensure an ad runs only on LinkedIn and also offers the only way to bid on LinkedIn’s home-page inventory.
Brands bidding through open or private auctions can use their own data, like lists of people who visited a brand’s site or its customers, or data from an outside company to target these programmatically purchased ads. But private auctions are the only way to target programmatically bought ads using LinkedIn’s user data, such as which people LinkedIn has identified as “decision makers” in their specific departments based on their LinkedIn profiles.
Brands will have to decide ahead of time whether or not they want to use LinkedIn’s data to target these ads. If a brand uses LinkedIn’s data for ad targeting, it won’t be able to use its own or others’ data for that buy, and vice versa. LinkedIn decided to wall off its own data this way in order to protect it. As Facebook’s latest ad-tech moves have shown, real-time bidding programs risk exposing platforms’ proprietary user data. But instead of cutting off the open RTB world altogether as Facebook has done, LinkedIn is putting up a moat.
“While we’re allowing marketers to bring their own data as well as allowing marketers to target [based on] LinkedIn data, we won’t allow them to do both at the same time. One of the reasons is data leakage concerns. We’re protecting against data leakage by separating those two functionalities and capabilties,” said Glass, who added that, coinciding with the RTB roll-out, LinkedIn has built “technical capabilities to prevent data leakage.”
LinkedIn has already whitelisted 4,000 brands that are able to bid on its desktop-only display ads. GroupM-owned Essence is one agency that has already been able to buy ads programmatically from LinkedIn. Glass said any other advertiser can contact their LinkedIn sales rep, who will connect them with an automated ad-buying tool provider they can use to access this inventory. LinkedIn claimed the “majority” of automated ad-buying tools — demand-side platforms and agency trading desks — can buy its ads programmatically. Asked if there are any glaring omissions like Google, AOL or Amazon — all of which offer their own DSPs and compete with LinkedIn for display ad sales — Glass said “there wouldn’t anybody you’d expect not to be in there not in there. Any of the majors are eligible.”
But not all ads are eligible. LinkedIn will safeguard its site against any ads that you wouldn’t want popping up on your computer while your boss walks by, such as banners promoting porn sites. The company has an automated and manual systems in place to kick out any NSFW ads.