Ad Networks – On The Verge of Extinction?

by Phil Buckley on May 15, 2008

in Media

There has been a lot of conversation around ad networks since ESPN decided to pull inventory from Advertising.com. I’ve been reading the articles, listening to the comments and thinking about ad networks from a media strategy perspective. Conclusion….they are a “necessary evil” in order to run successful, scalable direct response campaigns. Let’s take a look at some things:

Efficiency:

While one article I read touted that in a media-agency buying group each buyer is supporting as many as two publishers during the course of a year. I beg to differ on this one, or we here at MediaTwo are superhuman. It’s not unlikely to work from 10-50 publishers at a time per campaign.

A recent study by Collective Media (a New York-based ad network) found that over 95% of media buyers said that they would be working with ad networks this year, while 75% said that they planned to increase their ad network spending from 2007. No surprise here – it’s the easier route for a lot of advertisers new to the online space, thus will definitely catch the “new-comers” . However, ad networks are also needed for direct response online – which, in my opinion, is what we are going to (or should) see a majority of online advertisers migrate to during the “economic shakeup”.
Mark-up:

It seems that one of the issues being talked about is margins that networks are adding to the cost of media. While from the outside it seems that this could cause the media to having a weaker chance of success – I think that depends on some factors. Many times going straight to a publisher instead of through a network causes the CPM to increase to a figure that kills the chances of the ROI working out. There’s also instances where the sales reps at the individual sites aren’t allowed to sell the remnant inventory at the same discount rate. So, when your held to certain metrics in order to obtain your goals, the network route is sometimes the best.

Technology:

Optimization can make or break a network. Let me rephrase that..technology AND account management can make or break an ad network in a Direct Response model). Too many times I’ve been promised that a network will optimize to the CPA, only to be 10x my CPA goal within days and then the account manager says they will begin optimizing. Well, 99.9% of the time the CPA is so deep in the abyss that there is not a rope (or optimization) long enough to pull the CPA goal out at that point. So, account management and optimizing before things get out of control are a must for ROI. So, what if the direct placements had the technology to optimize against the CPA goals? That would be wonderful, but I’m not finding that to be true. I can think of at least 5 publishers of great scale that I’ve spoken to in the past 2 weeks that cannot place a conversion pixel on my confirmation page and then tell me where exactly on their property my ROI needs are being met, let alone optimize the inventory to funnel the impressions toward those areas. Until this is established, it’s going to be tough going on advertisers to carry this burden.

Wrap Up:

I wouldn’t start building “ad network museums” or anything…they are evolving and will continue to evolve as online advertisers become smarter and expect more from the publishers. Hmmm…I did learn something from the 8 am Economics class I went to a couple of times — it’s a simple case of – Supply and Demand

Reference Articles:

http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=82362&Nid=42581&p=106607

http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticle&art_aid=82353&art_type=13

http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=82262&Nid=42517&p=401699

http://www.clickz.com/showPage.html?page=3617001

http://www.imediaconnection.com/content/19337.asp

Similar Posts

No related posts.

Leave a Comment

Want to add a picture to your comments here on Media Two Point {OH}? Upload your picture at Gravatar to make it happen.

Your comment may be nofollow free.

Previous post:

Next post: