• by Rob Rasko , July 28, 2009

Premium online publishers are spreading a gospel throughout the online advertising space that is both misguided and could be destructive to the future of online advertising. In calling for the elimination of Ad Networks, they are disregarding the well being of both advertisers and mid-size publishers. In defending their position, they make arguments that serve their own short term interests, but harm the long-term interests of the industry as a whole.
 
Their arguments tend to fail the collective online advertising landscape in three distinct ways:
 
1) In an industry otherwise dominated by players with the largest bank account and profile, Ad Networks serve to ‘level the playing field.’
 
2) In an industry desperately trying to come to terms with brand protection and content regulation issues, Ad Networks may be the only third party players positioned to facilitate these changes.
 
3) In an industry evolving faster than the speed of a Google search, Ad Networks provide both advertisers and publishers a single point of entry and management. 
 
Leveling the Playing Field
A currently unregulated online marketplace allows premium “marquee” level publishers free reign to charge advertisers whatever CPMs the market will bear. Advertisers with hopes of cashing in on these publishers’ enormous audiences are shelling out more money than they should be, in a falsely inflated market, where premium publisher sales teams continue to drive up the price. With this type of monopoly over inflated advertising dollars, it is not hard to see why premium publishers are fighting against inevitable CPM regulation, and waging a public relations war against Ad Networks.  
 
Further participation of all partners, large AND small, will drive price transparency and will lead to a smoother market pricing cycle. Currently, mid-size publishers who have valuable audiences, but who lack the cache of premium publishers, are selling their inventory short due to lack of proper representation. Selling under market value is just as harmful to the industry as selling far above market value. It drags down the entire industry and creates an atmosphere where mid-size publishers are not growing at the rate they otherwise could be.  
 
Meanwhile, advertisers are left confused by seemingly random pricing structures and only engage the industry with trepidation. A consolidated market, where Ad Networks move publisher revenue more towards a priced middle, and therefore regulate pricing structure, will create a reasonable across-the-board expectation of what ad space is actually worth. This will create the stability advertisers need to fully embrace the industry.
 
Brand Protection and Content Regulation
Centralized standards and practices continue to elude the online ad space, causing advertisers to continue to place the majority of their advertising dollars into traditional media. Even with the knowledge that people are increasingly spending more time online than they spend watching television, listening to radio or reading print periodicals combined, some advertisers are still opting for safety over increased potential brand exposure. Grabbing a larger share of advertising dollars requires trust, and trust is earned through proven content regulation practices. Ad Networks hold the key to this kind of regulation through their ability and power to create online standards and practices.  
 
Because they ‘touch’ a myriad of both advertisers and publishers, Ad Networks have the third party objectivity necessary to establish a code of conduct and ratings for online inventory. The continuous auditing and rating of online content will provide greater transparency for the advertiser, stricter content regulations for publishers, and a system of deterrents that will discourage violations. Organizations like the IAB (Interactive Advertising Bureau) and IASH in the UK are already collaborating with Ad Networks to propose ideas for best practices in the online advertising space, using other media regulatory ratings systems as established models from which to work.
 
Looked at with an open mind, then, Ad Networks could hold the key to ushering in a new era of online advertising security.
 
Ease of Use 
Providing a single point of entry into a space that not only contains multitudes, but continues to evolve at a breathtaking pace, Ad Networks have the ability to deliver true ‘ease of use’ for both advertisers and publishers. Advertisers enjoy pricing of scale, reaching a large audience within their demographic, and the convenience of spending their advertising dollars quickly and simply without the complications of speaking with thousands of publishers. When it comes to media buys, advertisers are accustomed to speaking to one, two or maybe three outlets to get all of their planning done. Advertisers do not want to take the time to go hunting for quality inventory nor do they want to haggle over pricing with thousands of publishers who can’t seem to agree on a set market price structure.  
 
Publishers should not get bogged down in the business of advertising sales. They are  most productive and most consistent  to their audience when they are free to focus on quality and growth of their content. While the highest profile publishers (those that are household names, for example) may be able to afford an internal sales team, for most rank-and-file publishers devoting resources to the ad sales process means taking resources away from what they know best.  Publishers should want to plug into the richest pool of advertisers possible and through the largest Ad Networks, serving hundreds of advertisers at any given time, are going to have the most advertisers to offer them.
 
Premium publishers can also benefit from the ease of use associated with Ad Networks.  
 
For every dollar premium publishers generate through in-house sales efforts, they are also hindering their ability to conserve revenue. Their profits are being undermined by paying for in-house salespeople whom require training, management, salaries and commissions. These expenses raise the stakes and perpetuate the cycle of inflation. Outsourcing their inventory to an Ad Network allows premium publishers to move their asking price more towards the middle, but allows them to continue to be profitable by streamlining their payroll, and focusing their efforts on content.

In industry that features a level playing field, strong brand protection through content regulation and single points of entry into a fragmented landscape is, in fact, an industry that can weather these harder economic times and provide a rising tide capable of lifting all boats. While the mammoth publishers may prefer that these reforms do not take shape, leaving them to prosper in an every-man-for-himself environment, the truth is that a stronger online advertising industry is a benefit to all and Ad Networks have a role to play in achieving that goal.
 
The question is not, “Do Ad Networks have a place in the online ad space?” but rather, “If Ad Networks are the future of the online ad space, how can we open up a discussion that will allow for a united industry where everyone grows together?”