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Do you know the definitions and the roles of both an advertiser and a publisher? Have you been asked recently “do you have any high-quality traffic?”, “are you a direct advertiser?”, or “which kind of offers work well with your traffic?” and so on and so forth?
Let’s take a deep dive into this topic, shall we?
We’re going to focus both on the “Advertiser” and the “Publisher”. To have a better understanding of their relationship and to additional factors, take a look at this graph:
From this image, it is easy to identify a few important players:
- The user: the owner of a mobile device.
- Advertiser: the content provider and the offer owner.
- Publisher: the traffic provider and the one who is responsible for the ads.
- Affiliate network: an intermediary between an advertiser and publisher (read here to know what affiliate marketing is).
Seems quite simple enough? Does it seem like all players are playing against each other? False. In fact, they’re all dependent on each other. They’re just all part of different zones. What is intended when I say this?
Content without any traffic has no value. If traffic does not land on monetized destinations, this is simply a waste of resources and money. This is the same concept for vice versa.
So what is the difference between an advertiser and a publisher?
Advertisers are the owners of offers and are ultimately searching for users to and on their content. Publishers, on the other hand, provide quality traffic who will eventually convert the offers on which they land. Let’s go more into more detail…
Who is the advertiser and what do they do?
Basically, an advertiser is an organization that has a product or service (CPA subscription/sale offer or CPI app/game offer) and relies on another source (in this case, the publisher) to advertise that product/service ad for them.
They’re looking for users to acquire this good/service which is the reason why they entrust the publishers to publish their ad and to drive traffic to their offers. In other words, publishers manage the ad and lead high-quality users to the ad in order for them to ultimately make a purchase.
Each offer has its own set of rules on how they can be promoted. This includes what type of traffic can be directed to the ad, what types of ads used, where the ad can be placed, how it will be promoted, and so on.
Who is the publisher and what do they do?
A publisher could be one single person as it also could be a company. They’re responsible for linking the advertiser’s product to the end-consumer as they’re the ones providing the traffic.
A publisher’s job is to take care of the ad’s promotions and search for the best quality offers to ensure that they deliver the best product to result in a high monetization rate for the traffic.
There are media buyers, buying traffic on ad networks, webmasters who gain their own organic traffic from webpages, or social marketers who acquire their traffic from social networks.
You could say that there are different types of publishers based on what they do and how they get their traffic. You could also say that different types of traffic have different performances on each offer.
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What is an affiliate network?
Are they publishers or are they advertisers? Actually, affiliate networks’ are like mediators between advertisers and publishers.
An advertiser’s goal is always to gain as much as high-quality traffic as possible. However, it is not always so easy or time feasible to manage a pool of publishers. This is where the affiliate networks come in.
If the work is divided in a proper way between advertisers, affiliate networks, and publishers, everyone can concentrate on their other’s tasks to ensure higher performance as possible.
The conversions
Business is often about money and providing the correct information in order to get some cooperation. This is where publishers play an essential role. They need to promote the offers by showing the offer payout.
You may wonder…How much money is needed? How do they actually make profits?
Most advertisers prefer paying on a CPA basis when they want to gain users for subscriptions for example. As for CPI, they use for when they aim to get a user for the app.
To understand how much one needs to pay for one user for the offer, it is important to look into the user’s LifeTimeValue (LTV) and the Average Revenue per User (ARPU).
The LTV is a critical variable for advertisers as it helps them measure the Return of Investment (ROI) made on the offers published by the publishers. This is the value that directly determines the perceived value of each user that was acquired from the publisher’s traffic. It can also be a prediction of revenue a user will generate in its lifetime while still being affiliated to the product/service. The LTV takes time to determine.
ARPU is also a good indicator as to how much the advertiser will pay the publisher for providing new users to the product.
Getting complicated isn’t? Let’s recap.
- The advertiser needs to know the cost of each new user, which is the offer’s payout, or what they will pay the Publisher.
- To come up with the offer’s payout, the advertiser needs to forecast the total revenue of generated users throughout the campaign.
- Then, the total revenue is to be divided by the predicted number of users the campaign is forecasted to gain. This equates to the average revenue for each new user in a given period of time (ARPU).
- This value is multiplied by the average amount of time the user remains subscribed to the product/service, or is active on the app.
- This results in the amount of money the Advertiser is expected to make in revenue per user. The Advertiser then simply needs to take out the amount they would like to keep as profit form this amount, which results in the Payout.
Again, to make this clear, in order for the Advertiser to make money, the payout (CPA or CPI) needs to be lower than the LTV because the difference between those two numbers is the advertiser’s margin. For this reason, the advertiser is always preoccupied with the quality versus the quantity when it comes to users. In most cases, the advertisers will closely monitor the publisher to act accordingly such as perhaps lowering the payout or blocking some sources.
Obviously, the volume is not a negative thing. The higher the volume of quality users, the higher the ARPU, the higher the LTV, the more money the advertiser is willing to spend on the advertisements.
And that’s a wrap for this article! We hope you got a better understanding of this advertiser and publisher world. Till next time!
