Publishers and Ad Networks: Can This Marriage Be Saved?
The newly appointed co-CEO of Martha Stewart Living Omnimedia was back yesterday in a less confrontational role, moderating a panel titled "Publishers and Ad Networks: Can This Marriage Be Saved?"
The answer to that question, among a group of executives representing publishers, ad networks and agencies, seemed to be a qualified "yes." Millard herself summed up the discussion at a later point by declaring that there was "a lot of room in the marketplace for ad networks."
She noted, however, that publishers and advertisers still had to sort out how best to take advantage of ad networks, as well as newer online ad exchanges, to get the most of their inventory and ad dollars, respectively. She pointed, in particular, to the need for ad networks as a means of disposing of what she called "disposable goods," or unsold inventory.
That role has become especially important in the last couple of years with the rise of social networking sites and user-generated content. "There's a lot of inventory flooding the marketplace, and we haven't necessarily found a way to monetize that," said Millard. "If you can do that through ad networks, that's a good reason" to use them.
Ad networks also make sense as a convenient alternative for any publishers that lack an ad sales force to go out and directly pitch advertisers and agencies, she said.
Not surprisingly, panelists representing Burst Media and ValueClick Media championed a more prominent place for ad networks in the online ecosystem. They emphasized the relationships their networks maintain with premium publishers, and the advanced targeting they can provide via sophisticated analytics, as well as reach.
Jarvis Coffin, co-founder and CEO of Burst, emphasized the company's ability to hyper-target audiences across its network of 6,600 sites. In the last year, Burst has also launched a series of vertical networks around specific categories including video games, sports, family travelers and trendsetters.
"Brand advertisers especially have been looking for opportunities to find their best customers" while eliminating wasteful spending online, Coffin said.
Noting that advertising is a relationship-driven business, ValueClick Senior Vice President Matthew Boyd said it's up to publishers and ad networks to sit down and hash out how they will work together to avoid crossing territorial lines. In particular, networks don't want to conflict with Web sites' internal sales operations, he said.
A growing number of big-name publishers are putting sales staff to work on their own vertical networks, aiming to charge higher CPMs for targeted buys. Among them is Forbes.com, which recently started a vertical network bringing together content from more than 400 business and financial blogs.
"We aggregate sites appropriate for our brand and then use those sites and that inventory to extend buys around the Forbes brand to provide value for our users, advertisers and publishers down the long-tail," said Jim Spanfeller, president and CEO of Forbes.com.
He added that as more ad dollars flow online, publishers will increasingly reevaluate how inventory is packaged and sold.
Where does the fast-shifting online ad landscape leave agencies? Answering a question from Millard about the impact, Ed Montes, an executive vice president and managing director, North America, at Havas Digital, admitted all the changes were "wreaking havoc" on media buying and planning. "I don't think I've been home in three weeks," he said.
Agencies' reliance on ad networks stems partly because the traditional agency model wasn't set up for a 200-Web site buy. "That's one of the reasons ad networks are so popular," he said. "Because of the efficiency they bring in terms of aggregation and one-stop-shopping."
That relationship may be starting to change as ad networks are increasingly viewed as competitors to agencies. "They have a tremendous amount of information about the sites they represent...and they're going directly to clients because they don't want friction with the agency," said Montes. "What are they but a planning group that buys?"
At the same time, traditional ad networks such as ValueClick are facing growing competition from the likes of Yahoo, MSN and AOL. With a slew of ad-related acquisitions over the last year or so including Microsoft's $6 billion purchase of aQuantive, each has positioned itself as a publisher-cum-ad network.
Montes described Yahoo as "the world's largest ad network," after snapping up the Right Media ad exchange and behavioral targeting firm Blue Lithium, among other ad technologies. Facing declining traffic, the portals are bent on doing a better job of monetizing their own properties as well as those of partner sites.
Burst's Coffin suggested that portals will continue to play an important role in aggregating the broadest audiences online, but wouldn't figure in the trend towards more specialized, vertical networks. "They're not what we're all doing here," he said.