Stop Saying Ad Networks Are Dead Or Dying - Just Stop

by , Dec 2, 2013, 1:25 PM
  • Comment (2)
  • Recommend (4)
No matter how an S-1 reads, no matter who goes premium or programmatic direct, this much is true: ad networks are not dead. Not only are they not dead -- they are some of the healthiest businesses in the digital advertising ecosystem.

There are plenty of examples that point to this fact. This has become the year of ad networks on Wall Street. This past May, Tremor Video first went public (granted, they have struggled in the market since). In August, video ad network YuMe made its initial public offering. In September, ad network Rocket Fuel had the most successful adtech IPO of the year. Then in October, Criteo went public and its stock jumped 30 percent. Need I say more?

You might try to argue that these are not technically ad networks, and you would be incorrect. An ad network is a company that aggregates inventory from many publishers, adds value with technology, and makes that inventory available to advertisers for purchase. Although they all do it in different ways, utilizing assorted media is what all of these companies do. 

Even without those newly public companies, there is a cornucopia of thriving networks in the industry today, including ValueClick, Collective Media, Specific Media and Exponential, to name just a few. This doesn't even include the many supply-side platforms (SSPs) and demand-side platforms (DSPs) that serve as networks, as well.

So why are we so concerned about the death of the ad network? A few major media companies pulling their inventory in-house can't kill this thriving corner of the industry because major publishers can't sell their entire inventory in-house. It is just not possible as there is too much inventory to deal with. It is also too costly to sell directly to advertisers because this would require selling ads at exorbitant prices, which would just result in advertisers taking their business elsewhere.

There are not enough hours in the day for ad sales guys to sell every single ad that a major publisher's site is capable of serving. It would not work. Scale cannot be achieved without help from an ad network. If publishers were to entirely cut out ad networks, then they would lose money -- it is that simple. Publishers are fighting to bring in revenues in every way they can, and there is no way that they are going to abandon ad networks altogether. If they did, they would be leaving money on the table.

There are enough niche publishers to keep everyone happy. Niche publishers have even less ad sales man-hours than larger publishers. With smaller audiences, most are supported by niche advertisers that don't have the budgets to pay for the premium CPMs that would be required if there was no ad network involved. Millions of niche publishers online depend on ad networks to keep their businesses running.

In addition, there are enough top-tier publishers that look at the exchanges to make up for what others are taking away. Even if News Corp. has moved away from working with external ad networks, there are plenty of other large publishers that turn to ad networks to help sell remnant inventory.

It's time to stop pronouncing the death of the ad network and realize that not only are they here to stay -- these companies provide a valuable service to both advertisers and publishers. These businesses continue to evolve and have even proven their value with Wall Street investors. So stop saying that ad networks are dead or dying. Just stop.

 

2 comments on "Stop Saying Ad Networks Are Dead Or Dying - Just Stop".

  1. Matt Cooper from Addroid
    commented on: December 2, 2013 at 4:15 p.m.
    Oh, and while we're at it can we stop saying that banners are in effective and will soon be replaced whatever ever product some random overfunded adtech company on it's 3rd pivot has cooked up?
  2. Jeff Pugel from Vladimir Jones
    commented on: December 2, 2013 at 8:34 p.m.
    I see one big issue here and that is considering networks to be the same as DSPs which I feel that they are not. The traditional definition of a network is something that arbitrages upfront inventory and resells it in packages to advertisers. DSPs on the other hand leverage technology, only buying inventory oh the exchanges. The definition you listed above sounds much like DSPs, not networks. The bigger thing is that the traditional network like a Collective, Specific, 24/7, etc. is morphing into a hybrid network/DSP since so many of them buy additional inventory, as needed, on the exchanges.

Leave a Comment

Sign in to leave a comment. Don't have an account? Join Now

Recent RTM Daily Articles

» RTM Daily Archives