• by Masha Geller , June 21, 2002

Online advertising networks are here to stay. Here's how to tell them apart--and decide which ones work best for you. No matter what you may hear about the future of online advertising, advertising networks are here to stay in one form or another. The whole concept, however, can be very confusing—there are so many of them, and all of them are different (see chart on following spread). Some offer CPM pricing, some offer CPC pricing, some offer both. Some represent websites exclusively, some sell remnant inventory. Some will let you try a campaign out before full launch to see what works, with others you may not know where your banners will run until after the fact. Some accept animated banners and rich media, some don’t. Banner sizes and sponsorship opportunities are anyone’s guess, and if that weren’t confusing enough, most networks are now jumping into the field of email marketing, trying their hand at wireless services, and the list goes on and on.

To avoid biting off more than we can chew in trying to figure out which type of network you should work with, let’s limit our consideration to banners (forgetting for the moment both sides of the banner effectiveness argument—a subject for another time). The first and foremost reason for the above limitation is fairly simple—most ad networks won’t talk to you unless you can say ”468x60 pixels” three times fast. Almost all networks today can handle half-banners and some buttons, but larger websites are increasingly making the move toward in-house sales forces to handle sponsorships and other more expensive deals, and most networks are left to monetize the rest of the web’s ad inventory0úfÞ

That said, a bit of history. Online ad networks took their cue from traditional media rep firms. In traditional media, advertising rep firms have been around since the beginning of time (or so it seems) and it was only natural that the rep firm concept was quickly adapted for the web. Initially, the larger branded websites, instead of maintaining in-house sales departments, signed exclusive representation agreements with the likes of DoubleClick (the granddaddy of all online ad networks) and gave up 30-50% of their ad revenue to have DoubleClick fill the empty spaces on their web pages with banners. Networks also organized their client websites (hundreds of them) into categories (automotive, women, health, finance, etc.) and advertisers jumped at the chance to buy fairly targeted campaigns without having to contact each site separately. In the past few years, DoubleClick emerged as the leader in the field, followed by Engage Media (formerly AdSmart and Flycast) and 24/7 Media, all three now offering sponsorship opportunities, odd size banners and rich media campaigns on their top branded (most popular, and most likely exclusively represented) sites.

Then, possibly after someone started the rumor of nearly 80% of online inventory going unsold (although no one has stepped forward to explain how that number was actually arrived at), many website publishers began gravitating away from exclusive representation, and non-exclusive and remnant networks started to pop up like mushrooms. We counted at least 30 to date.

These networks partner with thousands of websites who are either looking to complement their in-house sales force or simply prefer turning over all of their inventory to one or more ad networks to be sold to advertisers who may not even be aware of that particular site’s existence. This doesn’t mean the inventory is inferior by any stretch. The concept here is actually fairly simple. Networks generally partner with reputable websites—checking for content, traffic and other parameters to ensure value to the advertisers—and pool prime and remnant inventory of different sites into clear categories or channels. Advertisers still make one buy across multiple websites.

Because of this centralization, advertisers can track campaign performance in real time, and adjust their site selections based on click-throughs without too much trouble. Both of the above capabilities used to be a novelty with ad networks, but no more—if you can’t track your banner’s performance in real time and adjust your site selection on the fly, walk away.

Speaking of click-throughs, the purpose of your campaign has a lot to do with your network selection. Depending on what your goal is—branding or driving traffic to your client’s website—the question of pricing models will undoubtedly be top of mind and you may have to make the choice between traditional cost-per-thousand impression buys (CPM) and cost-per-click or cost-per-action (CPC/CPA) buys. As you know, CPM buys (based upon the number of impressions served and the level of customer-service follow-up required) are still the norm for branding campaigns, but when it comes to driving traffic, many advertisers prefer to minimize the risk with CPC buys (or hybrid CPM/CPC). If the network serves your banners on the wrong sites, where no one clicks on them, you don’t pay for the impressions.

Obviously, if it’s branding you’re after, no network in their right mind will sell you a CPC campaign, so be prepared for scrupulous review of your campaign goals and creative. Nevertheless, pay-for-performance networks like Advertising.com, ValueClick and Flycast CPCNet (now part of Engage Media) are becoming more popular with media buyers.

Also, with all the recent talk of rich media generating higher click-through rates, most networks now accept rich media banners. But, not all of their member sites do. According to AdKnowledge, only 31% of ad-supported websites accept HTML banners and only 25% take Java.

When evaluating which CPC network to work with, experts recommend you ask about their average campaign renewal rate (what percentage of customers come back to work with them again). While some firms claim theirs are as high as 87%, a worthwhile bet would be anything above 60%.

Above all, don’t sink your entire online ad budget into one network and don’t be fooled by ”watered down” proposals. Oftentimes, websites will sneak in low-cost run-of-site or run-of-network CPMs to dilute the cost of targeted CPMs. Don’t let network reps sell you untargeted inventory you don’t really want. And make sure you choose a network that allows you, once your campaign is up, to run performance reports as often as possible (at least 3 times a week, preferably every day). Kill placements that aren’t performing as quickly as possible. But be careful of jumping to conclusions too soon. Let your placements run for at least 20,000 ad views before you start shuffling.