• by Laurie Sullivan  @lauriesullivan, May 4, 2009

Interactive ad agencies and advertisers plan to tap online ad networks this year despite the economic downturn. In fact, 89% of the nearly 500 survey respondents intend to work with ad networks in 2009, up 5% from 2008, according to the third annual Collective Media study.

Conducted by Sterling Research Group, the "Ad Network Study 2009" reveals that more than half of ad agencies and advertisers expect to spend up to 15% of their online budgets with ad networks, while another 24% report that the amount allocated for this year represents 30%.

Slightly more than 70% of agencies and advertisers use one or two ad networks on average, and 29% work with three or more. This has changed slightly during the past year, when nearly 75% of respondents used one or two ad networks for an average media plan and approximately 25% used three or more.

Joe Apprendi, CEO at Collective Media, New York, said the study confirms that ad exchanges will not replace ad networks, and that the economy has assisted in lifting interest and sales. "Agencies and advertisers aren't using ad exchanges in an automated way to target audiences and access inventory," he said. "It's not addressing their needs for display media planning and buying. If you look at the study the results are shockingly low. Only 15% have every worked with an ad exchange."

About 4.5% more agencies and advertisers said they will or plan to work with ad exchanges this year, compared with those answering the same question last year. When asked "Do you believe ad exchanges will replace ad networks?" 7% of survey respondents said "yes" and 93% said "no."

Among agencies and advertisers, 72% said "efficiency" is the number one reason they will use an ad network this year, compared with 30% in 2008 and 67% in 2007. "Reach" follows at No. 2 with 68% in 2009, 26% in 2008, and 53% in 2007. And "targeting" comes in at No. 3 with 61% in 2009, 28% in 2008, and 36% in 2007.

Originally working at an ad network, Forrester Research's Emily Riley can see the benefits of companies that monitor and serve-up advertisements online. "Many small publishers rely on ad networks because they don't have the required sales support," she said. "Large publishers still struggle with their display advertising strategy and need direction, so it's almost like they are addictive to the ad network."

Demographic and behavioral targeting continue to gain acceptance. After slow growth for several years, the use of behavioral targeting rose from 16% of interactive marketers doing it in 2007 to 24% in 2008, according to Forrester Research.

Interest in retargeting also has increased significantly in the past few years. Site retargeting based on Web-page visits has become the most common type of retargeting used. Survey respondents reveal that 66% show an interest in 2009 -- up from 54% last year. Search retargeting based on paid search clicks has also increased, at 31% versus 29%, respectively. Ad retargeting based on ad-placement location declined to 31% from 42%.

More than 50% of respondents participating in the Collective Media survey said they will continue to work with ad networks for both their branding and direct marketing plans. Twenty percent of agencies and advertisers use ad networks for direct marketing efforts and 23% use them for branding only, a slight increase from 2008. Combining categories with those who use both show 96% of agencies and advertisers work with ad networks for their branding, direct marketing or both.

User-generated video is still most cited by respondents as being the media they would most likely not buy. Sixty-three percent of respondents cited blogs and 24% cited social media. However, social media and user-generated content is garnering greater acceptance across the board, with all categories improving.