Commentary

In Defense of Ad Networks

Go ahead and Bing the phrase "ad networks are bad." You'll see 33,300,000 results.

Now, Bing "ad networks are good." As you were expecting, far fewer results. Right? No. 86,300,000 results with the words "ad networks" and "good" in close proximity.

Why? Because although it is in vogue to  trash the ad network business, networks play a crucial role in the advertiser/publisher ecosystem. This is particularly true in the video space.

The benefits to advertisers are generally agreed-upon: good networks help advertisers efficiently execute buys across a select group of well-branded sites.  The haters tend to argue that networks have a deleterious effect on publishers. This is far from a universal truth, but it's important to work with networks that will respect your business and seek to create long-term value by partnering with you.

Myth #1: Networks lower CPMs for everyone. It is tempting to point the finger at networks for causing an overall decline in CPMs. However, the advertisers are the ones who drive price. Network relationships are generally structured on a revenue share basis, so networks are incentivized to achieve as strong a CPM as possible. In most cases, advertisers are going to optimize their campaigns to come close to their client's ideal cost-per-event: if publisher-direct pricing makes that impossible, smart publishers can still win the campaign by accepting it through a network. Far from lowering the CPM, the presence of a network enables the publisher to profit from a buy they otherwise would have completely missed.

Myth #2: Networks will bring you scraps. To a large extent, it depends upon whom you decide to work with, but this statement is generally untrue. Networks -- the good ones, anyhow -- know that in order to maintain strong publisher relationships, they must bring appropriate, high-quality advertisers to the table. More importantly, sometimes an advertiser will choose to execute an entire buy exclusively through a network, offering a significant value-add for publishers who work with that network.

Myth #3: Networks devalue your brand. Again, this myth is quickly short-circuited if you're working with the right partner. Ask questions upfront to determine if a potential network partner will be a good steward of your brand. Things you'll want to know: How will you represent my site in the market? Do you ever sell site-specifically? Who are some of your advertiser clients? What sort of publishers do you work with? Do some of your publishers have more favorable deal structures than others? Starting from a position of trust and keeping the lines of communication open will greatly increase the likelihood that you'll have a strong, mutually profitable relationship with your network partner.

As common sense dictates for any industry, look out for the bad apples, but don't believe that networks are inherently harmful; they're not. In most cases, networks can fill the gap between your site-sold inventory and house ads and, on their best days, they will bring you campaigns that no one else is able to capture.

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5 comments about "In Defense of Ad Networks".
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  1. Jim Burnette from FreeAllMusic.com, June 8, 2009 at 3:55 p.m.

    Lewis, thanks for starting off the week with another analysis of the ad network debate. Your first point is interesting. "It is tempting to point the finger at networks for causing an overall decline in CPMs. However, the advertisers are the ones who drive price."

    The MARKETPLACE determines CPM, which always starts with supply & demand first. The advertisers will always drive down a CPM based on a "Buyers Market". In this ad recession if an advertiser is not negotiating a favorable CPM and added value (skins, roadblocks, sponsorships, etc.) they are not taking advantage of the marketplace.

    Ad Networks will continue to be a viable option if they can clear "The Three Hurdles": Content, Transparency & Scale. RFP submission, Custom media paln & CPM negotiation will follow if the hurdles have been successfully cleared.

    Enjoy the week.

    Jim Burnette: jburnette@optonline.net

  2. Chris Morgan from Publicitas, June 8, 2009 at 6:09 p.m.

    When I am thirsty, during the long, hot Summers that we always enjoy in the UK, I sometimes go to the store and buy a can of Diet Coke for myself.

    If I am really thirsty, or if I know that some of my colleagues back at the office might want a drink, I buy a pack of 6 cans.

    During all these years, I've never gone down to the store and asked the manager to mix me up a case of cola-flavoured beverages in a sealed box. I've never asked him to sell me a "lucky dip" bag of cola drinks, some of which may or may not be Diet Coke.

    Imagine if I accidentally served up some supermarket brand cola to one of my colleagues - he'd be so disappointed and he'd think I was a cheapskate. Even worse, imagine if one of my clients was visiting the office and he told me to go out and buy some Cokes to keep us all refreshed during a long, heavy-duty meeting. If I served up some fake Cola after I'd told him that we were an upscale classy kind of outfit, he'd surely be concerned about our brand management credentials.

    In my defence I could say "I bought loads of it and it was really cheap..." but I think he would mentally be half way out of the door already.

    Why risk leaving a bad taste in everyone's mouth? Publicitas - it's the real thing.

  3. Gregory Johns from Initiative, June 8, 2009 at 6:45 p.m.

    Most interesting (apparent) ad buy from Microsoft...asking us to "Bing" a search rather than Google it (or just search for it).

    If we were doing the searches properly using whole phrases, "ad networks are bad" returns 100 results in Bing, while "ad networks are good" returns 21.

    Plug that into Google and you interestingly enough get 31 results for "ad networks are bad" and 13 for "ad networks are good".

    Either way, the data in the opening paragraph is misleading.

  4. R.J. Lewis from e-Healthcare Solutions, LLC, June 8, 2009 at 7:48 p.m.

    Lewis,

    Based on the first four comments, you seem to have touched a nerve and are catching some heat.

    I have to applaud (at least the attempt) to defend the Ad Network, which has been dragged through the mud lately. I agree with your myth busters, but would like to point out that what you are really referring too, sounds more like a "Rep Firm" than an Ad Network.

    Rep firms like ours are often put into the category of "Ad Network" simply because the scale of the web has most firms representing many sites, not just a few. But rep firms are transparent, they put their publishing partners brands first, and focus on defending a premium rate, while still satisfying the advertiser. I think many blind networks who play on blind "volume" rather than "quality" have tarnished the better ad networks and rep firms alike.

    Either way, kudos to you for sticking up for the lowly ad network.

  5. Norm Page from Grapeshot, June 10, 2009 at 2:38 p.m.

    Let's not forget the differences between A). sales rep firms who represent a "portfolio" of media properties, B). ad networks (in the historical sense defined as aggregating audiences/impressions across many sites in order to create ease of use, 3rd party audited measurement, and proof of performance for buyers), and C). data-driven ad networks which - for simplicity only - I'll call "adnets". They each provide the media buying and selling communities distinct advantages and services

    For the publisher, the trick is to strike a balance of sales channels: in-house direct sales servicing endemic and/or strategic advertising partners (for example); indirect sales channels like ad network(s) who (should) have highly-trained and skilled sales people on the street talking to agencies and brands about their media buying needs; and then data-driven or performance based networks who deliver advertising volume and round out the revenue opportunities for a publisher. I might even throw in a specialty rep firm like those only servicing fairly specialized "niche" (don't take that too seriously everyone) markets like video-only or mobile-only or social/apps-only. In the end, the publisher is balancing all of the above to get as close to 100% sell-through as possible, and then to inch that eCPM ever higher in an effort to ... build better and better content, service your reading audience, and survive!

    For the advertiser, she gets a good blend too. The sales rep firms represent the "diet coke" brands in the analogy below by another contributor. The well-trained and respected ad networks can create custom programs with out-of-the box concepts, at scale, with measurement and analytics across all partner sites - or channels - within a network. Ad networks usually have solid targeting capabilities as well. And the data-driven "adnets" who use audience data, profile data, behavioral data, contextual data, etc., or cost per whatever analyses can bring massive efficiency for the buyer against any number of media buying objectives from branding, audience reach, and/or DR.

    Good, well-trained rep firms, ad networks, and adnets who all understand their value proposition and deliver are good. Fly by night "we'll deliver whatever you want us to" media hucksters are bad. Just be able to ask intelligent questions regardless of what side of the buying table you sit on and set clear expectations ahead of time.

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