Should You Enter Into a Long-Term Contract with an Ad Network?

Long-term ad network contract

Short answer: I have not and will not enter into a long-term contract with an ad network unless the amount of money was so ridiculously good I would be set for life (which isn’t going to happen).

Here’s my main problem with signing long-term contracts with ad networks

If an ad network can earn me more under a contract, shouldn’t they be earning me more now?  

Maybe I’m naive but isn’t it an ad network’s job to maximize revenue at all times for publishers?  If I owned an ad network, I would make it my responsibility to maximize the revenue for every publisher ever single minute of every single day.  Falling short would be a major failing.

If an ad network wants to retain publishers, it’s simple (perhaps not easy). Earn them more money than any other network and no publisher will leave.

It shouldn’t require a contract. It’s not rocket science.

In the real world, sometimes some ad networks like commitments from publishers and proffer a contract in exchange for more money.

Contracts with ad networks can cost you hundreds of thousands of dollars in the long run

I like flexibility. I value freedom to do as I please.  IMO, it would be insane to sign a one, two or three year contract with an ad network. We don’t know what the display ad landscape will be like in three years.  Maybe a new network crops up that earns publishers way more money due to some newfangled tech or capabilities?  This isn’t beyond the realm of possibility.  AdThrive and Mediavine have shaken up the industry big time earning publishers more money than they dreamed of not all that long ago.

At the end of the day, the potential lost revenue by locking in with an ad network could be millions. I’m not joking.  Let me illustrate.

Suppose your site currently gets 100,000 monthly visitors earning $20 per 1,000 visitors.  Your current ad network offers a three-year deal that bumps that to $30 per 1,000 visitors.  Sounds like a great deal.  That’s a 50% revenue bump; an extra $1,000 per month could sure come in handy.  You take it.

It turns out you’re very good at this publishing gig and in two years you grow your site to 2 million monthly visitors.  Your contract is paying you $30 per 1,000 visitors which amounts to $60K per month.  Life is good.  The thing is, you now have a site that most ad networks would salivate to onboard.  You learn in a forum one day that another ad network pays huge sites like that 90% revenue share with no contract or commitment.  You also learn that other sites in the same niche as you are earning $42 per 1,000 visitors with that ad network.  You do the math and realize at $42 per 1,000 visitors, you’d earn $84,000 per month.  That’s $24,000 more per month than you’re earning now under contract.  What’s worse, is you have another 12 months on that contract which means you will lose $24,000 x 12 = $288,000.

What seemed like a sweet deal for an extra $1,000 per month back in the day will now cost you a house or a custom Porsche.

The above scenario is similar to my situation

I’ve been with AdThrive for a couple of years. I’ve done very well by them.  However, late in 2021 I learned that Mediavine will pay pubs with high traffic sites up to 90% revenue share. AdThrive will pay no more than 75%.  Mediavine is essentially offering me a 15% increase in revenue overnight.  In early 2022 I moved one sizeable site to Mediavine to test it out. Sure enough, the ad revenue is awesome and with the 15% revenue share, it’s quite a bit higher.  I decided to move all my sites to Mediavine.  All else being equal, the 15% revenue share boost will put an additional six figures into my pocket this year.  Had I signed a long-term contract with AdThrive (which isn’t possible by the way because AT doesn’t offer contracts), I could be losing up to six figures this year.

I reiterate my point that I also strongly believe that an ad network should be earning publishers maximum revenue regardless of whether there’s a contract or not. I’m appalled ad networks would attempt to strong-arm publishers with a promise of more money if they signed a long-term contract.  Retaining publishers is simple… earn them more money than any other ad network.

But Jon, Mediavine requires signing an agreement. Is that bad?

Yes, Mediavine requires that all publishers sign an agreement. I had to sign one for every site I onboarded with MV.  The key here is it’s not a long term contract. I must give 30 days’ notice to leave but that’s it. 30 days’ notice is pretty standard. I had to do the same with AdThrive.  

If you receive such an offer and it’s too good to pass up, be sure you consider the following (courtesy of a friend who reached out to me)

  1. Can you sell the site while under contract?
  2. Will the contract transfer to a site buyer in case you do sell? Why does this matter? Because if it doesn’t transfer, you can’t include the extra revenue in the site valuation.  Or maybe a buyer doesn’t want the contract to transfer.  Maybe the buyer works with another ad network and wants to move the site over.  If the contract follows the site, buyers may not be interested.
  3. Do you fully understand the financial consequences if you break the contract? Will it cost you a little or a lot to exit?
  4. Protect your downside: Are there guarantees in place?
  5. Protect the upside: Will your “premium earnings” go up if traffic goes up? For instance, if the premium revenue is a flat sum each month, what happens if your traffic doubles over the next 12 mos.? The premium revenue should be tied into performance gains.

It’s your business so do whatever you want

I know how seductive an offer of money can be in this business.  It’s a hardscrabble business in the beginning. We toil for nothing. Then trickles of revenue come in. We see it works but we still toil weekly for almost nothing.  If you’re in this business for the long run and believe you’ll build up a large, successful online publishing business keep your eye on the long-term where a few percentage points up or down can mean an absolute ton of money.  Or not. It’s your business. Your rules.

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