Justin Stefano and Philippe von Borries, founders of fashion and lifestyle site Refinery29, are among a growing band of Web publishing rebels—not because of any edgy or controversial content they produce, but because of how they sell ads.
Almost every publisher on the Web now teams up with “ad tech” firms, specialists in software that automates ad sales. Most media industry executives consider it a must to employ such brokers, the “networks” and “exchanges” that serve as middlemen in the roughly $60 billion online advertising marketplace.
But Refinery29 and a host of other new-media companies—among them, Vice Media, Vox Media, BuzzFeed and Mic—are bucking that approach, arguing that automated ad technologies are to blame for overrunning the Internet with too many ads and obnoxious tracking mechanisms.
“Consumers are tiring of disruptive ad experiences across the board,” Refinery29’s Mr. Stefano said. “The way people use ad tech is very toxic for a user.”
These publishers are opting to build their own technology to sell ads directly rather than employing third-party ad tech firms.
Mic, a youth-focused politics and culture site, offers its own customized formats like oversize banner ads and “sponsored content” created for brands. With 12 people on its sales staff, the firm has generated about $10 million in ad revenue since it began selling ads last year, said a person familiar with the matter.
Of course, in doing this, publishers risk missing out on revenue, particularly as big marketers shift more of their spending to automated ad placement.
“At some point all these publishers will capitulate to ad tech or they will not have ads,” said Jonathan Mendez, founder of Yieldbot, which helps publishers manage data.
But advocates for eschewing ad-tech partners point out that they don’t have to share the proceeds or give others access to their audience data. Some 55% of such “programmatic” ad spending in the U.S. in 2014 went to middlemen, not publishers, according to the Interactive Advertising Bureau.
“We looked at what ad tech looked like three years ago or so, and we saw that the experience was bad for users and didn’t look like it worked well for advertisers anyway,” said Chris Altchek, Mic co-founder. “Even if you do it and did it really well, you still don’t make a lot of money.”
Generally, ad-tech companies offer a range of services that fall under the umbrella of programmatic ad technology. Ad exchanges such as OpenX and SpotX use computer algorithms to buy and sell Internet ad space in milliseconds, while firms like AppNexus and Rubicon Project give publishers electronic tools to sell ads and manage inventory.
Ad-tech firms say they have made the process of buying online advertising more efficient and precise. Brands can place orders with fewer meetings and phone calls, and target specific Web surfers.
Spending on such automated display ads in the U.S. is projected to jump 37% next year to more than $20 billion, according to eMarketer.
Mr. Stefano at Refinery29 acknowledges that some level of advertising technology is vital for a Web publisher because “you can’t hand craft ads onto 100 million Web pages.” But he is hesitant to put the company’s ad space and consumer data into the hands of third parties. Refinery29 instead focuses on curating its advertising, selling ads directly to big brands like Macy’s.
Some ad-tech avoiders also steer clear of various ad sales or ad tracking services provided by Facebook Inc. or Google Inc., both of which have built their own ad networks, exchanges and data management tools aimed at helping publishers bring in more ad revenue.
Even Facebook understands the objectors.
“The first generation of ad tech hasn’t necessarily been focused on value creation for publishers, and that has made people feel nervous,” said Brian Boland, Facebook’s vice president of advertising technology. “A lot of publishers feel like they need to build their own tools because nobody is looking out for them.”
Many publishers have opened up their sites to so many ad tech players that their pages are overloaded with code and tracking devices. More than 1,200 distinct vendors are potentially collecting audience data from the top 50 websites in the U.S. to sell ads, according to Ghostery, which monitors consumer privacy online. Web surfers can also be bombarded by ads for, say, a pair of shoes they briefly looked at online but decided not to buy. That type of experience can lead consumers to use ad blockers, according to John Snyder, founder of the U.K.-based online ad firm Grapeshot.
“We don’t like to be chased,” he said. “It has alienated many consumers.”
Brian O’Kelley, chief executive at AppNexus, said some criticisms of ad tech are fair, but he expects an industry shakeout, which will thin the huge number of players.
ESPN takes something of a hybrid approach. The company carefully oversees ad tech, allowing marketers to apply better data to digital and TV ad buys, but makes sure ESPN controls the sales process and the money changing hands, said ESPN’s executive vice president of multimedia sales Eric Johnson.
“If you don’t experiment in this realm,” he said, “you can end up very far behind.”.
Write to Mike Shields at mike.shields@wsj.com
