ESPN recently decided to stop selling remnant ad inventory via automated ad networks / exchanges.

“We’re heading down a path where it no longer suits our business needs to work with ad networks,” said Eric Johnson, executive vp, multimedia sales, ESPN Customer Marketing and Sales. Sources say that ESPN would like to rally support from other publishers behind this move and ultimately tamp down ad networks’ growth. Turner’s digital ad sales wing is rumored to be considering a similar move, though officials said no decisions are imminent.

The two logical options from there are

1. set a floor price on house content and show fewer ads to offer a better user experience
2. look at currently hot stories, key markets in the weeks and months ahead, and market positions where you are close to leading but do not yet dominate and advertise your own products and services
3. Advertise branded widgets that go on third party networks which help get your brand exposure on those as well. ESPN should have made an official NCAA bracket gadget rather than letting that traffic and branding and traffic go to Google
4. add interactive features to your own site which increase brand loyalty and reduce content creation costs…which end up making the ad networks a more viable offering for back-fill content
5. If the ad networks are too cheap buy out inventory on competing sites to further distance yourself from them as the market leader.

All of those strategies allow you to buy market-share in your vertical on the cheap. The more of your market you own the better you will be able to sell ads for. If ESPN was 60% of the sports market Nike would be required to buy ads with them, largely based on ESPN’s terms. Part of being remarkable is about creating featured content, but an equally important piece is making sure you are branded as the leading source. There is no better place to market your content and ideas than your own site.

Big news by Google. After announcing the DoubleClick acquisition (~ 60% of the display ad market), Google announced the launch of Ad Manager, a free ad management tool with built in yield optimization. Ad Manager allows you to sell direct ads, and then backfill with AdSense and/or any other ad networks you choose. Huge for Google for 5 reasons:

• minimizes the value and risk of competition from larger ad exchanges like Right Media, smaller start ups like the Rubicon project, and open source ad networks like OpenAds
• gives them yet another way to follow web users across the web to create a proprietary web graph based on usage data (along with Google Analytics, Feedburner, RSS Reader, iGoogle, AdSense, search accounts, Gmail, Google Talk, Youtube embeds, and Google Toolbars)
• allows them to spy on other ad networks such that they can quickly buy out the competition and/or clone any features from newer ad networks more profitable than their own
• this allows Google to establish more meaningful relationships with publishers, and help recruit publishers to the DoubleClick level once they get big enough
• Google has yet another way to spy on any competing web service (outside of ad networks) and be alerted to change before any competing networks

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YouTube probably gets about as many pageviews as Google does. By aggressively running display ads on YouTube, Google could likely take that 60% marketshare to 75% in a matter of months. Add in the self-serve expanded network for smaller publishers, and they are well over 80% of the ad display market inside a year.

WebmasterWorld has another thread about lowering AdSense prices.

When the economy is good and advertisers have robust ad budgets, an ad network might be willing to sell them whatever they are willing to buy. If the advertiser wants to overpay for some ads and associate that spend with branding then so be it. But when the economy slows down, the ad marketplace needs to separate the best ad inventory from the weakest ad inventory to protect the rates of their best ads.

From Google’s perspective, search is the golden goose tied directly with conversions. Syndicated ads, which can lead to conversions, may often carry a premium price based on branding value. Here are some of the forces that might be lowering AdSense earnings

• Some brand advertisers cutting their ad budgets, trimming brand related ads before they cut direct response ads.
• Those brand ads being replaced by less trustworthy ads from smaller advertisers who bid less and are less likely to get clicked on.
• Google changing the clickable region of AdSense ad units.
• Google lowering the estimated value of content clicks to help protect the value of search clicks and shift more of their network spend toward search.

Given Google’s market dominance over the contextual ad market there is virtually no floor to how low they can price AdSense ads on non-premium publishing partner websites.

I have one site where the ads are AGGRESSIVELY integrated into the content, where that site gets thousands of search driven visitors per day in a big money vertical. That site has a CPM rate which is roughly equal to what one to two clicks would cost if I had to buy that traffic from Google directly (rather than me arbitraging their organic search results then selling that traffic). Clearly there has to be a better way to monetize that site. The ad prices are so cheap that I would be the buyer if I had a higher value model in that space.

If you have been using AdSense as a business model now is a great time to create new revenue streams and test shifting from an AdSense ad seller to an AdSense ad buyer.