Commentary

We're All Fruit

In the movie "My Big Fat Greek Wedding" the father of the bride, Gus Portokalos, takes a moment during a pre-wedding feast to wax philosophic about the differences between the Portokalos family and the groom's family, the Millers. He explains that Portokalos means orange (like the fruit) in Greek, and the root of the word Miller means apple in Greek. The conclusion he draws from this nugget of Grecian trivia is that "We're different, but in the end, we're all fruit." Classically brilliant.

While attending the OMMA AdNets conference last week, I was reminded of the simple truth of Gus' words as I tried to discern the differences between the ad networks represented there. There were vertical networks, horizontal networks, behavioral networks, mobile networks, networks that collect and sell audience data, display networks, search networks, network exchanges and even networks that don't call themselves networks because they prefer to be known as "platforms" (as in the Disney advertising platform -- aka, an ad network). There was talk of agencies trying to become ad networks and ad networks trying to act more like agencies.

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Whatever niche, category or business model a network fits into, at the end of the day, they are all very similar. They are all fruit -- in that they are all in the business of capturing online advertising dollars, directly or indirectly.

This fact was pointed out by the conference panelists, who agreed that ad networks have become a commodity. Jordan Rohan, Founder of Clearmeadow Partners, noted that when he conducted a search on Crunchbase for ad networks that have raised over $2 million since 2005, there were 27 pages of results. While that statistic highlights the oversaturation of ad networks in the market, it also points out the market demand for ad networks that led to the infusion of investment dollars in the first place.

I'm confident that a large percentage of those networks initially listed in the 27 pages of results, no longer exist, However, due to their ability to offer advertisers increased efficiency, reach and targeting, ad networks as a whole have become a significant link in the online advertising ecosystem.

After listening to a full day of panels and presentations from experts representing most every corner of the ad network industry, there were a few key points that I came away with. First, each network needs to differentiate itself in a sea of sameness among all of the other fruit, which is getting more and more difficult as competition increases and competitive advantages can disappear overnight.

Second, the industry must continue to build upon the foundation of superior technology and data gathering capabilities that set it apart from traditional media. Several panels discussed the shift from advertisers targeting content or specific publisher Web sites, to targeting specific audiences based on behavioral and demographic data. Ad networks that aren't investing in technology and audience data are going to get left in the compost bin.

The final takeaway from the conference relates to the tenuous relationship between ad networks and agencies. As advertising budgets began to shift online, agencies have had to play catch-up in the digital space. As a result, they have had to rely on ad networks to supplement their online media buys, which cuts into the media buying fees that they charge their advertisers. Many of these same agencies are moving quickly to recover lost ground, potentially cutting out ad networks and reclaiming their media buying profit margins. As this tug-of-war continues, ad networks must continue to find new ways to add value to the process or risk being replaced by a new breed of digital agencies.

We're different, but in the end, we're all fruit. The question is, can the advertiser vine that we are attached to support us all?

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