Commentary

Top Online Publishers Losing Battle With Ad Networks

In today's market, publishers are challenged to find ways to expand beyond their organic growth to keep up with increased competition for marketing dollars. More inventory to sell means a greater share of the advertising spend. Unfortunately, publishers are losing a battle with large ad networks for market share, precisely because the networks can grow faster and bigger by aggregating thousands of other sites.

Ad networks control significantly larger amounts of inventory in core verticals than do large publishers, which equates to a greater share of advertising dollars for the networks.

If you asked the average person to name which property is the top online sports source in the syndicated research rankings, you'd expect to hear answers like ESPN.com or FOX Sports. What you wouldn't expect to hear is an ad network like Google AdSense, Advertising.com or Gorilla Nation. But the reality is that in top verticals like sports, automotive, real estate and entertainment, the big ad networks consistently beat out top Web publishers in terms of online traffic.

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The most recent Web traffic data from comScore's reports reveals that ad networks commanded most of the unique visitors in April 2007. In some cases, the networks had twice the number of unique visitors than the sites usually associated with that vertical. Who would think that ESPN.com isn't the largest sports property?

Sports: Unique Visitors and Percent Reach

Unique Visitors (000)

% Reach

Advertising.com Sports

23,508

13.2%

ESPN

17,689

9.9%

Yahoo! Sports

15,382

8.6%

Source: comScore Media Metrix; April 2007

Entertainment: Unique Visitors and Percent Reach

Unique Visitors (000)

% Reach

Gorilla Nation Media Network*

60,103

33.8%

IMDB.com

20,796

11.7%

Disney Online

19,626

11.0%

* Advertising network

Source: comScore Media Metrix; April 2007

The list of top 50 most visited Web properties continues to include more ad networks, and large publishers need to take an aggressive stance against Google and the other advertising networks to wrest control over their inventory.

Ad networks are successful because they can manage and maintain strong relationships with lots of partners and advertisers. The fact that they have the flexibility to be more aggressive and the single-minded focus to build scale quickly puts the traditional publisher at an immediate disadvantage.

So the question remains: How can large publishers take control and gain immediate access to more inventory than they rightly deserve?

One solution is for publishers to create their own ad network. Large publishers have the brand recognition, resources and advertiser relationships to create their own networks. They uniquely offer a compelling solution for any smaller site.

These sites, that now feel captive to the likes of AdSense, can join a new network for access to not just cost-per-click dollars, but CPM and video and other branded content.

The largest publisher in any given vertical has the deepest relationships with endemic advertisers because their content resonates with users. As such, they can sell inventory at higher rates than anyone else. By creating a vertical network, the large publisher can syndicate content and tools to each member site and link to them to increase their own inventory. Quite simply, the Web's best sites can beat the networks at their own game because, with a vertical network, they have the resources to do so.

It's a win-win-win situation: Large publishers gain immediate access to inventory they can sell; member sites who join a branded network have the opportunity to align with a larger, respected brand in their category to add more advertising revenue, access engaging content to enhance their site and increase their traffic; and advertisers have even more opportunities to find and target their customers online.

It's time for publishers to step up and own what should be theirs.

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