More Narrowly Tailored Ad Networks Gain Favor

Despite a recent backlash, three-quarters of brand advertisers and direct marketers plan to spend more on ad networks this year than in 2007, according to a new study.

The increase can be attributed to targeting--suggesting a shift toward more narrowly tailored networks. Inventory quality and site transparency are also increasingly important to advertisers.

The findings are contained in a survey conducted by Collective Media--itself an ad network--based on responses from 200 brand marketing and agency executives.

Nearly 60% of advertisers are using networks for both branding and direct marketing this year, compared with about 40% in 2007. And 91% say they are safe for brand advertisers.

"The conventional thinking is that ad networks are for direct marketing only," said Joe Apprendi, CEO of Collective Media. "I think this study has shown that's not the case anymore for a growing segment of the market."

The report comes in the midst of a growing debate over their value sparked by ESPN's recent decision to stop working with Specific Media and others that, in ESPN's view, devalued the brand and undermined its own premium ad sales efforts.

That move followed a warning from Wenda Harris Millard, president of media at Martha Stewart Living Omnimedia, at the Interactive Advertising Bureau's annual meeting in February, against selling Web inventory like "pork bellies."

The Collective Media study showed that 62% of those surveyed think there are too many ad networks. Almost three-quarters of advertisers work with only one or two on an average media plan.

Lack of site transparency and control over ad position ranked among the top reasons that advertisers limited their use or didn't use them at all.

Even so, Apprendi said the proliferation of premium and vertical ad networks gives advertisers more alternatives to those aimed mainly at providing reach. Martha Stewart is among the Web publishers that have recently started their own targeted ad networks.

"It's up to each publisher to find a good ad network partner that doesn't have the same level of downside that ESPN experienced," Apprendi said.

Among other findings, the study found three-quarters of agencies and advertisers plan to spend 5% or more of their budgets in 2008 on ad networks. More than a quarter plan to spend 15% or more.

Globally, advertisers are expected to spend more than $3 billion on ad networks, according to a 2007 study by JP Morgan and comScore. About $2 billion of that amount is estimated to come from within the U.S.

The Collective Media study was conducted from Jan. 22 to Feb. 18 and included responses from marketing executives from Fortune 1000 companies and media directors, as well as media planners from top interactive agencies.

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