Why The Penny Hoarder Ditched Display Advertising (and the Money That Comes With it)

As of May 2017, The Penny Hoarder no longer has display ads on the site.

It wasn’t because the ads weren’t generating money. In fact, we were actually seeing an uptick in revenue from them. And it wasn’t a decision thrust upon us. Believe it or not, the suggestion to drop display actually came from the advertising department, the team I lead.

Display advertising is big business for many publishers. Here’s how we were able to justify getting rid of it, and what we’re doing instead.

Not Familiar With Display Advertising?

You probably are. Even if you don’t know display ads by name, you know them when you see them.

Display advertisements are typically banner, text or video ads. Or what ClickZ refers to as “boxes on websites that are obviously advertising.”

These types of ads can be found all over a website -- at the top, within text, on the side or at the bottom of a page. Unlike native advertising, display is seen as more disruptive to user experience.

A bottom ad unit on People.com, August 2017

A bottom ad unit on People.com, August 2017

The vast majority of publishers depend on revenue from display ads. And the investment they make into display advertising is pretty incredible -- they implement data gathering, use a robust ad server, sign up with exchanges, and hire ad sales teams to sell and fill the ad space. (By comparison, we used one ad exchange and didn’t have a whole sales team built around it.)

For five years, we worked with Google and content recommendation units like Outbrain and Revcontent. In February of this year, we ended our relationship with Google. Three months later, we cut out our remaining ties to these types of ads.

Why We Dropped Display Ads

Our CEO, Kyle Taylor, had a conversation with another media executive several months before we pulled the plug. The exec was stunned we would voluntarily give up that revenue. Truthfully, a lot of people we talked to were surprised.

But there was one thing central to the decision to remove ads from The Penny Hoarder: user experience.

1. We Wanted to Create a Better Space for Readers

The move to drop display ads intentionally coincided with the launch of our site redesign. The new design debuted May 9; we removed ads two days later on May 11.

The redesign was fueled by a desire to make the site more modern and reader-friendly. User experience and user interface are very important to us, and ridding the site of slow-loading, intrusive display ads was a necessary step in the right direction.

2. We Wanted to Give Readers More of What They Wanted

Roughly 80% of our traffic is mobile. The amount of real estate on a smartphone is minimal -- we’d rather give readers more of what they want, rather than filling that small space up with advertisements.

We did this in two parts:

  • We removed ads from the middle of our articles. This created a continuous stream of content and a better flow for the reader.
  • We removed display advertising from the bottom of the page. Instead of suggesting links to content off our site, we offered readers other Penny Hoarder articles as recommended reading.
The Penny Hoarder, Aug. 2017

You know what happened after we replaced that bottom ad with our own content? We started outperforming the old ad unit by 3.5x!

3. We Wanted to Cut Out What Wasn’t Working

In an age in which the term “fake news” gets tossed around a lot, there’s a lot of pressure on publishers. And rightfully so.

We have high standards for our content on the site. For instance, if we write about a product or service, someone on the editorial team test-drives it first. We provide an honest look at the pros and cons, which helps us build trust with readers.

With display advertising, you don’t always get that same level of control.

Earlier in the year, a reader contacted us because he ordered a book “featured on our site” that turned out to be a scam. After reaching out for more information, the reader sent us a screenshot of a display ad that mentioned the book on our site. Not good.

By removing these types of (sometimes crappy) ad units from our site, we keep readers on The Penny Hoarder, where we can stand by our own content.

4. We Wanted to Focus More on What Was Working

Which is performance marketing.

Benjamin Mullin at Poynter wrote up an excellent breakdown of what that is and how we do it:

“Say General Mills has a $500,000 advertising budget. They could go to The New York Times and purchase a full-page ad. Or, if they wanted to market a specific product — a new cereal, for example — they could ask The Penny Hoarder to write a post about a new deal for potential customers involving five new coupons. Because The Penny Hoarder can track its readers, the company can tell how much of its audience actually took advantage of the deal by downloading the coupon, for example, or plugging their email addresses into a signup field. The Penny Hoarder then gets a fee for every user who takes those desired actions.”

Our current business model helps us understand our advertisers’ goals and needs well. With display ads, it’s all about trying to get the right person at the right time -- guessing, for the most part.

The majority of our revenue comes from this type of marketing on the site. We also do some branded content: According to AdWeek, “brand recall is 59% higher for branded content than display and native ads,” and consumers are more likely to stick around for additional content.

Overall, these changes make for a better user experience and happier reader. We find it much more valuable when people hang around, can find what they want and stay on the website longer.

It all goes back to our mission as a company: helping readers put more money in their pockets.

Vishal Mahtani is vice president of business operations at The Penny Hoarder. He’s a senior digital marketing executive with over 15 years of experience. In Aug. 2017, the Inc. 5000 named The Penny Hoarder the No. 1 fastest-growing private media company for the second consecutive year.

startup lifeVishal Mahtani