You might be asking yourself why I am writing a column for a website other than my own? Back in the day (which was actually not too long ago) when FiveOuncesOfPain.com utilized a blog format, it was common for me to write in the first-person about matters that often had nothing to do with who was fighting when and against whom.
But with our AP-style format, there really is no room for me to interject myself into my writing without a massive backlash. The new style has allowed Five Ounces of Pain to grow its traffic and its brand, but it doesn’t leave much room for the ability to be personable. So here I am, writing a guest editorial on MMAPayout.com. And what better outlet to discuss the inner-business workings of MMA websites than on a website dedicated to the business of MMA?
I felt compelled to write this guest editorial out of sheer rage over what is becoming the scourge of the Internet: online exclusive advertising networks.
A lot of these exclusive ad networks are out of control; they come to site owners and they talk down to them and try to take advantage of them in hopes that they don’t know the true value of their site. Their sole purpose in life is to make money off your hard work. As you will read on, you will see that the demands of these networks aren’t all that different from indentured servitude.
These ad firms promise the world and refuse to put any of it in writing. They try to profit off your hard work by taking 50% of the ad money your site generates. They demand that you sign an exclusive agreement with them and they expect you to honor it regardless of whether they hold up their end of the bargain.
They are getting away with murder and they are running roughshod over sport content sites big and small. And you know why they are getting away with it? It’s because we’re letting them.
My site, FiveOuncesOfPain.com, gets at least one solicitation from an exclusive ad agency on a weekly basis. They ask for the world and offer little in return. They all use the same tired cliché’ pitches and rebuttals that are straight out of some sort of “Sales for Dummies” book as opposed to approaching us like a potential business partner.
You wouldn’t believe how morally bankrupt some of these sales reps are. It’s like I’m stuck in the movie Glengarry Glen Ross and they have Alec Baldwin for a boss and they’ll do anything to close a deal in order to save themselves from getting fired.
They’ll not only say just about anything to close a deal, they will also ask you to sign a ridiculous contract that offers them all the protection in the world while offering you none. I even had one major network send us a contract with a backdoor clause that would give them the right of first-refusal to acquire our site.
They made no mention of this clause in our conversations and I was only aware of it because I bothered to read the contract. When I called them on it, their response was, “Oh, don’t worry, this is a good thing. This helps you because if anyone wants to acquire your site, it automatically creates a bidding war.”
When I told them I have already sold two Internet sites and that I know that any potential buyer is going to be scared off by a restrictive clause such as a right of first-refusal held by a third party, they quickly changed their tune to, “Oh, but we have to have this clause to protect us because we’re building value in your site.”
Uh, YOU’RE building value in my site? I was born at night, but I wasn’t born last night. We got them to remove the clause but when they re-sent the revised contract, it contained new restrictive clauses that we had never discussed. Yes, they tried to slip these clauses in through the backdoor. One of the most important things I learned in Real Estate school was to read any contract before you sign it — and then read it again. Most people in life never bother to read the contracts that they sign and ad networks bank on that fact.
We never did end up doing business with the site. Turns out we asked too many questions and they stopped returning our calls and e-mails. However, we did end up signing with a different exclusive ad network and I learned the hard way how harmful giving away exclusive ad rights to your site can be.
Looking back, I can’t believe I fell for it. It’s almost like I was seduced. They came to me and essentially told me I was a moron and that someone else running my site with the traffic I was generating should be making 5-10 times what I was generating in ad sales. They told me that they could solve all my problems and I was feeling so overworked and so underpaid that I listened to them.
Not only did they fail to even come close to their promises, we actually ended up earning less money than we were earning before. Five Ounces of Pain is not the only MMA site to fall victim to false promises by an ad network but legally, there was nothing we could do. Unless you have the guarantees in writing, you’re S-O-L.
However, this lovely company took the liberty of placing some ads on our site that only paid through direct sales referrals. Normally an ad network pays you per impression (the amount of times someone views an ad they place on your site). But no, this company was placing ads in premium spots that only generated revenue for us if someone clicked on the ad and went to the site and bought one of their products.
How did I learn that my ad inventory was being used in such a manner? No, they didn’t come to us and tell us that they were going to begin to use our ad inventory in such an unconventional manner. We only found out because I asked how much an ad had generated after I got curious since it was such a major brand. I was dying to know how much money it was generating and started to imagine some pretty big numbers. However, I was told we wouldn’t know until the revenue report came out on the 15th of the month (which was another area where they failed to deliver, as they had promised reporting no later than the 10th of each month).
Finally the report came in and the total was a whopping $44.13! I was in disbelief. I immediately began asking questions and it was only then I was informed it was a sales referral ad. I was furious. Compounding matters even further was the fact that the so-called major brand just happened to be the parent company of the ad network that had been representing us.
It was at that point I realized I had to get out of the contract in order to ensure the survival of my business. Any company that would do something like that is simply not an honest one. A conference call was arranged with the CEO of the ad network in an attempt to talk me off the ledge. They talked me off the ledge aright but instead, I wanted to throw him off of it. His pre-arranged rebuttals and used cars salesman persona began to wear on me. Finally I snapped when his response to my complaint about the sales referral ad was, “Let me ask you this Sam, have you ever tested anything on your site?”
I couldn’t believe the response. How did this clown get to become the CEO of a major ad network? Do I do tests on my site? What!? So what you’re telling me is that my site is so meaningless to you that it’s being used as a guinea pig?
I’m just thankful that my chief of technology, David Andrest was on the line and cut me off because otherwise I might have said something that could have gotten me arrested on grounds of terrorist threats. I really consider myself a mild-mannered guy but one of the fastest ways to press my buttons is to answer my question with a question. I guess it’s a major flaw in my character that I’m incapable of respecting people who answers questions with questions. In spite of my obvious frustrations, we couldn’t get a straight answer out of the guy.
These ad reps pull these shenanigans with no compunction because they’ve been conditioned to believe that most people running a website do it as nothing more than a labor of love and are clueless when it comes to the business of the Internet. To be honest, they are right. If they weren’t able to make such a lucrative living praying upon the ignorant, then there wouldn’t be so many of them. But I am writing this article to help educate independent site owners out there so that maybe we can take a stand together and force these companies to change the way they do business.
Making a go of it in the online sports content industry isn’t what so many of our readers think it is cracked up to be. A lot of people see the site and the exclusive interviews, breaking news stories, the professional looking design, and the multiple ads and they assume that I possess a license to print money. This couldn’t be further for the truth.
Look, I’d love to be thought of as a successful entrepreneur. But I’m an honest guy and I can tell you that while Five Ounces of Pain has achieved a lot of great things, monetizing its traffic isn’t one of them. I can’t speak for sports content sites outside of the MMA industry, but I can tell you that only a handful of MMA sites are money makers and my site is not one of them. Every day of my life is a struggle to change that painful fact. Does Five Ounces of Pain generate gross income? Sure. But there are a lot of costs involved and the net income is practically nothing. The site has been around for two years and I still don’t draw a salary.
You might be asking yourself, why do so many people operate MMA businesses then if they aren’t making money? And the answer is because we’re all passionate about MMA and we’re all chasing the American dream: the ability to earn a living doing something you love.
But for some of your favorite MMA sites that you read on a daily basis, a lot of the existing exclusive ad networks out there are turning what had started as a dream into a nightmare. Most of these ad networks couldn’t care less about their clients because they ask for the world and offer little in return. They operate in a parasitic manner. If they cause one site to go under because of their failed promises, they’ll just move on to another. After all, I think a new MMA content site is created every 30 seconds. In the time you’ve read this, 50 new MMA websites have been created.
So if you’re just breaking into the MMA content industry with the hopes of being able to work in MMA on a full-time basis, let me educate you on the dynamics of what an exclusive ad network is essentially asking for when they begin to come at you with double-speak:
1) For you to assign YOUR traffic to THEIR company. When an exclusive ad network recruits advertisers they need to claim their network is generating a large amount of traffic each month. You’re going to have to sign a waiver that allows the ad network to claim your traffic as theirs. This is not a horrible thing to ask for from a client because they have to be able to represent traffic when pitching advertisers. However, it’s something of great value that you’re providing to them and you should be getting something tangible in return. After all, without traffic, they can’t sign up advertisers.
2) To represent your site on an exclusive basis. Unless you’re working with a non-exclusive ad network such as Google Ads, Tribal Fusion, Burst Media, or DoubleClick, you’re going to have to surrender the right to sell ad inventory on your own site. Once you sign with an exclusive ad network, your inventory is no longer your own. This means that if a new MMA apparel company e-mails you and wants to purchase advertising on your site, you can’t sign them up. Instead, you have to refer them to your ad network contact, which pretty much kills the possibility of a deal getting done because it’s going to be too cost prohibitive for the MMA apparel company to buy impressions through a major ad network.
We lost a potential major account because they approached us and when we referred them to our ad network, the ad network dropped the ball and didn’t bother to respond. While said company would have been a huge client to us, they were small potatoes to a major ad network.
So you can’t sell your own ad inventory because your new ad network represents it to the marketplace on an exclusive basis. They retain the right to use your site’s brand to market to advertisers in hope of signing them up.
3) 50% what they tell you they’ve generated. If you hired a sales representative to be an exclusive employee of your site, you would have to give them a percentage of whatever sales they generated. That percentage would not be 50%. However, these ad networks aren’t asking for 20, 30, or 40% of the ad revenue they generate for you — they want half! You do all the work by busting your ass writing articles and interviewing fighters and they slap a few ads on your site and get half. Doesn’t seem fair, huh? But almost in every situation, an exclusive ad network will never negotiate or back down on the demand of 50%. 50% is pretty much industry standard.
But you only receive 50% of what they tell you they’ve earned. Transparency isn’t something you’re going to experience much of when you deal with an exclusive ad network. Do I have any reason to believe the exclusive ad networks are being less than honest in their reporting? No. But do I have any reason to believe they are being totally forthright? No. In most situations, you will never have a right to an independent audit. You have to place complete faith in what they tell you. You have to trust that there isn’t some sort of fine print clause that entitles them to take more than 50% through surcharges or bonuses that work in their favor.
The thing that really irks me is the lack of real-time reporting with so many of the exclusive ad networks. Every non-exclusive ad network I’ve dealt with such as Google Ads and Tribal Fusion offer very powerful real-time reporting tools. Every morning when I wake up, I can sign on and see how much income my site generated the day prior. However, ask an exclusive network if they have real-time reporting and they will tell you that they currently “don’t have the technology to offer real-time reporting.”
Yes, it’s true they don’t have the technology but they don’t have it because they don’t want it. By keeping you in the dark as much as possible, they make it almost next to impossible for you to evaluate the results of your relationship with them. You can’t complain about their failure to live up to their sales guarantees if you don’t know what your sales are.
4) A long-term commitment. The ad networks not only want exclusivity, they demand a long-term commitment. Some sites have asked us for as much as two years. We usually talk them down to a year, but not before they try to include some automatic rollover clause that essentially gives them the two-year guarantee in the first place. And by signing a long-term deal, you lose the ability to hold them accountable. Not happy that your calls and e-mails aren’t being returned? Tough. Not happy that your monthly revenue is going down while your traffic goes up? Oh well. You’ve signed a binding agreement that gives them exclusive rights for a year and you cannot get out of the contract unless they are in material breach.
Where it gets tricky is that even if they are in material breach the onus is on you to hire a lawyer to have the contract voided. If you decide to tear it up yourself and walk away, be prepared for them to come after you legally. And chances are when they file a lawsuit, they will do it in their home state, forcing you to hire out-of-state attorneys.
But of course, the commitment is not mutual. In most contracts I’ve read, there are plenty of escape clauses that allow them to drop you as a client if they feel you’re not producing. It’s a one-way guarantee.
So you’re giving them a lot. You might be thinking: “Wow, I am probably going to be getting a lot in return.” Well Johnny, here’s what you’ve won:
1) 50% of what they tell you you’ve earned. That’s it. There’s no signing bonus for giving away your exclusive rights. There is no guaranteed monthly revenue. There is no marketing money offered to help grow your brand and generate more traffic for your site. These ad networks will claim they are helping you grow your business and your brand but the reality is that it is YOU that are helping them grow their business and brand.
In Part I, I’ve identified the problems of working with MMA ad networks. In Part II, I will outline how to successfully navigate the murky waters of working with exclusive ad networks; how we can bring about change; and what I consider to be the future way for MMA sites to sell their ad inventory.
Sam Caplan is the founding owner and publisher of FiveOuncesOfPain.com. He is also a contributing writer for CBSSports.com and FIGHT! magazine. He can be contacted at SCaplan8@gmail.com.