How Networks Are Staying In The Ad Business

by , Jun 11, 2012, 9:56 AM
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The traditional wisdom has been that all the ad networks were doomed. Whether it was trading desks, demand-side platforms -- or the fact that there were just so many of them -- by now every ad network should be out of business.

That hasn’t happened. Sure, the herd may have thinned a bit, but in my informal surveys of companies, I found networks alive and well, with the largest doing the best. Some are experiencing truly impressive growth, upwards of 30%, while many traditional publishers are muddling along at far more modest growth rates.

How on earth can this be? Shouldn’t the agencies, with their trading desks and technology partners, be crushing every ad network by now? Weren’t publishers going to build private exchanges and cut the networks out? There are half a dozen factors that explain why the top networks are doing so well:

Balance. Networks have cracked the code on delivering just the right amount of technology, execution and analytics to prove their worth to clients. Some of the networks have become so adept at this balance that they have begun to manage all digital media planning and buying for some smaller brands. It’s easy to forget that there is a whole world of marketers beyond the top two or three in each category that need to be serviced.

Sales. Networks have blown away traditional media agencies in the quality and sophistication of their sales teams. Performance-based commission plans and tracking software like Salesforce are foreign concepts at most ad agencies. The sales-driven culture of the ad networks is a big reason why they are growing so fast.

Adaptablity. Networks have found a way to play nice with a range of agencies, marketers, publishers and ad tech companies. One day they can be helping an agency team execute a plan, the next they can be working directly with a client. They can provide revenue for many publishers that is almost impossible to resist. As long as they control demand, the networks will be relevant.

Human touch. What made networks valuable a decade ago is the same today: They make it easy to buy a lot of inventory across a range of environments where people spend their time. No matter how powerful the exchanges become, at least in the near term the majority of marketers won’t have the time or inclination to manage their own buys.

Talent. The networks have selectively recruited some great agency talent in recent years. Erin Matts, by way of Anheuser-Busch and OMD, is now the chief digital marketing officer at Glam Media. Alan Schanzer and Patrick Cartmel, former MEC vets, are at Undertone. The agencies’ loss has been the networks’ gain.

Leadership. Many of the large networks are still private and led by savvy founders who know the ad game from the inside out. The founders have been at it for at least a decade and can move their businesses forward through sheer force of will.

While most networks are excellent at proving their value to clients, the category as a whole is more challenged when it comes to proving its worth. Pure ad tech businesses tend to get a higher valuation. But thanks to continued innovation and growth, the networks appear to be doing just fine.

1 comment on "How Networks Are Staying In The Ad Business ".

  1. Walter Sabo from SABO media
    commented on: June 11, 2012 at 11:16 a.m.
    tragic and accurate. a whole industry with no sense of humor is thriving

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