Publisher Purch profits from licensing its ad tech products
Profitable Utah-based publisher Purch is building up a healthy business from selling licences for its ad tech products to its peers. CRO Mike Kisseberth said the company's managed-service product, which relies on server-side connections, is responsible for 20% of the company's $120m annual revenue. The now separate unit, Purch Publisher Services, plans to increase that to a quarter. Kisseberth said Purch may look to self-serve products in the future.

With publishers realizing that they can no longer be wholly dependent on ads for their revenue, Purch is getting more serious about selling proprietary technology to other publishers.

Purch — a commerce-focused publisher that owns tech and product review sites such as Tom’s Guide, Top Ten Reviews and Live Science — is profitable. It makes about $120 million a year in revenue, with about 20 percent coming from ad tech products that it licenses to 25 publisher clients, said Purch CRO Mike Kisseberth. Over the next year, the company plans to grow its number of publisher clients to roughly 40, and have its tech licensing operation account for about 25 percent of its overall revenue, he said.

Purch began developing its own ad platform nearly four years ago. What’s changed is that the company has gotten more serious about licensing it to other publishers. In December, Purch broke out its tech licensing business into a separate unit, called Purch Publisher Services. About 60 of Purch’s 400 employees work on Purch’s tech platform at least part of the time, and 10 work on it full-time, Kisseberth said. These employees are made up of salespeople, engineers, data scientists and support specialists.

By licensing software, Purch is aiming to build a revenue stream in an area that most publishers have avoided. This is because most publishers don’t have the resources or patience to build their own ad tech, let alone build tech that can be licensed to other media companies.

One exception is The Washington Post, which calls itself a tech company and sells ad products to other publishers. But the Post is an outlier due to the fact that its owner, Amazon CEO Jeff Bezos, is a tech enthusiast who happens to be the richest person in the world.

What has driven the growth of Purch’s tech licensing business is that it was an early adopter of server-side bidding. Unlike on-page header bidding — where publishers simultaneously offer inventory to multiple exchanges before making calls to their ad servers — going server-to-server speeds up page-load times since the ad calls are hosted on publishers’ servers and not on users’ browsers. For over a year, Purch has sold all of its programmatic inventory through server-to-server connections.

The benefits of server-to-server might sound enticing, but as publisher tech teams are typically stretched thin, few publishers have shifted over to selling the bulk of their programmatic inventory this way. This is where Purch pitches itself as a vendor.

Purch’s server-side solution operates on a revenue share, but Kisseberth wouldn’t disclose monetary terms. It is a managed-service product where Purch takes control of the setup and maintenance, ad ops and relationships with the 30 supply-side platforms that are plugged into the product.

Purch last summer tested a self-service bidding product with some of its clients but found that it required more tech and service support than was worth it. As self-service gains steam within the ad tech industry, Purch is open to shifting its products to be self-service in the future, but that likely won’t happen in 2018, Kisseberth said.

Other tech products that Purch sells publishers include commerce management and CRM platforms. But these products are more geared toward B2B publishers. Purch’s programmatic bidding product is the main driver of its licensing business.

Purch doesn’t limit itself to selling its tech to non-competitors; its publisher clients include tech sites like VentureBeat, Mobile Nations and How-To-Geek. Purch figures that selling products to other tech sites, as long as they’re brand-safe, can bolster the reputation of Purch’s ad tech with buyers and in turn help Purch’s case when it comes to setting up private marketplace deals, where the ad rates tend to be much higher than on the open exchange.

Kisseberth emphasized that Purch isn’t looking to simply grow an audience extension. If a publisher already builds its own ad tech or runs its auctions server-to-server, then it’s likely not a fit as a client. Unlike the Washington Post, which licenses self-service products to a wide swath of publishers, Purch is focusing on selling its products to niche sites that want another publisher to control and scale their programmatic selling.

“This is not a huge land grab where we are signing thousands of publishers,” he said. “It is signing publishers who we think are good additions to our portfolio.”