Economic Crunch, Ad Network Boom
Increasingly, marketers are looking to ad networks-vertical, behavioral and otherwise-to buy more targeted advertising. That could be a boon to the likes of AOL and Yahoo, which recently scooped up a series of ad networks and exchanges in their bid to become one-stop-shops for marketers. Imran Khan, an Internet analyst at JPMorgan Chase, said that ad networks "are growing much faster than the general graphical advertising industry." Khan estimates that the top 20 ad networks earned around $2 billion in 2007, which accounts for 14% of the display market.
Why are ad networks thriving? Cheap, targeted advertising. Networks charge much lower CPMs (as low as $4) than giant Web portals like Yahoo and MSN ($40 and up). It's no surprise, then, that ad growth on premium sites has slowed compared to the overall Web economy. Margaret Clerkin, the chief executive of Mindshare Interaction, said it's about efficiency. "While the home pages (of premium sites) are still very effective media buys, the price tags on them have become a little outrageous for many advertisers...there are other ways to amass that type of audience fairly quickly that are more efficient," she said.