Montreal-based online publisher Valnet Inc. isn’t exactly a household name, but chances are you’re familiar with at least one of its seven imprints.

Between TheSportster, entertainment- and listicle-loving news site The Richest, TV and movie news site ScreenRant, Comic Book Resources, BabyGaga, and online women’s magazines TheTalko and TheThings, the company’s network of websites receives more than 500 million pageviews, from 45 million unique users, per month.

And though other high-profile Internet publishers, such as Onion Inc. and Vox Media (and – full disclosure – ITBusiness.ca parent company ITWC) are increasingly relying on sponsored content, Valnet, which was founded in 2012, still earns the majority of its revenue through display ads.

Valnet advertising operations director Joe Alderson says that Google’s programmatic AdSense platform helps make his company’s business model profitable.

“If you’re running a website and have a substantial, valuable traffic base, the easiest way to earn revenue from the content you’re producing is through display advertising,” Valnet advertising operations director Joe Alderson tells ITBusiness.ca.

Though readers might not realize it while browsing Valnet’s content, the ads they see aren’t applied automatically to everyone who visits the site. Instead advertisers will typically submit multiple ads, each one designed for a different onscreen location, and the audiences they would like to have read the ad.

Behind the scenes, Valnet then runs a virtual auction, with certain advertisers willing to pay higher prices depending on the reader. The “winner” of this auction – and Valnet hosts literally millions of them per day – then has their ad displayed.

The scale of Valnet’s audience makes this system essential, Alderson says, with the company frequently dividing its readers into “packages” that it can then sell to brands.

“If our whole audience was considered exactly what a brand was looking for, we’d never run into these problems – we’d have one brand advertising in every space, at every page load, to every user, and then we could just walk away with that relationship and everyone would be happy,” he says. “But because of the diversity of the audience that reads our content, we don’t have a particular relationship that is going to be relevant to all of our users.”

Survival of the fittest

A key part of Valnet’s strategy for maximizing the value of its readership, then, through not only display ads but native ads, preroll, and digital, is what Alderson calls “constant rotation”: a testing cycle in which the company assigns “packages” to various partners, weeding out the weak performers and replacing them with stronger ones along the way.

“In terms of the mix we’re using – what we call ‘the stack’ – we’ve worked with just about everybody who has established any authority in the industry over the past four or five years,” he says. “If there are any newcomers on the block there’s a chance that we aren’t working with them yet, but within 12 months of them establishing themselves we certainly will be.”

Typically, Alderson says he will assign 50 per cent of the company’s website traffic to its top performers, while inviting new partners to run advertising for the other 50 per cent. If the new partner or partners delivers revenue growth for whatever package has been assigned to them, they move up in the ranks.

“Someone can stay alive in a relationship with us for some time, or it can be rather short-term – just a couple months – but it’s all based on providing value,” he says. “We’re constantly running cyclical testing periods to see who is the top performer in every possible scenario.”

Alderson acknowledges that it’s a complex system, much more difficult to implement and maintain than more straightforward programmatic ad platforms like Google AdSense, which the company uses as a failsafe.

“If you want to monetize a website, [AdSense] is a good way to start,” he says. “It’s not an integral part of our business, but if we’re not getting any high bids for our traffic – we call it ‘remnant inventory’ – we monetize that with AdSense, which runs on a business model of massive demand for low value and will fill your ad space every time.”

Some of Valnet’s higher-profile partners include Index Exchange, Rubicon Project, PubMatic, and AppNexus. It also uses Triplelift for native programmatic advertising, and digital marketing firm Undertone for what Alderson calls “high-impact” advertising – short-term brand awareness campaigns.

“We’ve been working with them for a couple of years now, and it’s been an excellent relationship,” Alderson says of Undertone.

The company has also found success with Montreal-based programmatic firm District M, whose platform it uses for header-bidding, which Alderson calls “the next frontier in programmatic and display optimization.” Header-bidding allows non-Google-affiliated third parties to compete on the same playing field as Google-affiliated parties despite not being directly integrated into Valnet’s ad server.

“The success we’ve had with [District M] has been enormous,” Alderson says. “It’s really kind of upped the standard for our ad rates and operationally it’s much easier to use – it’s an excellent direction for programmatic to be heading in.”

Finally, Valnet’s largest source of revenue is another Google product – the Ad Exchange platform by Google subsidiary DoubleClick, which is integrated into the company’s ad server and allows Valnet to cherry-pick its best content before offering it to third parties.

Mladen Raickovic, Google Canada’s head of partnerships, told ITBusiness.ca that his company is thrilled Valnet has achieved success using the company’s DoubleClick and AdSense platforms, emphasizing that the search giant only makes money when its publishing partners, who receive the majority of ad revenue, do too.

“We’re committed to helping news publishers grow their businesses,” Raickovic says. “Our approach is open by design and we want publishers to be able to succeed on their own terms.”

That said, Valnet’s Alderson notes that programmatic isn’t the only type of advertising that publishers such as Valnet could rely on: Some rely on direct advertising, if a brand is interested enough in the audience to liase with the publisher directly, or high-impact ad campaigns involving less traditional ad types – a homepage takeover, for example, rather than display ad placements.

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