• ClickZ, Friday, December 12, 2008 11:45 AM

Ad networks have become a "blessing and a curse" for advertisers and publishers, says ClickZ writer Kate Kaye. While they offer advertisers better targeting and broader reach, ad nets are also supposed to help publishers monetize the pages they can't sell directly. Trouble is, "there are more Web pages than ad sellers and buyers know what to do with." The result is a glut of inventory, which drives prices down.

Kaye says the culprits are social media inventory, which command extremely low CPMs, and in some cases, ad network efficiencies. "No one would have predicted that better tools would produce a lower yield for publishers, and that is exactly what has happened," J. Moses, co-founder of Hearst's Ugo Entertainment said recently at a UBS Global Media and Communications Conference in NY. In fact, he blames networks for bringing "an enormous supply of inventory" into the marketplace. "The eCPMs across our business have gone from about $2 down to about 40 cents," he said, "and I imagine within the next year, two years, it will continue to plummet."

Ad network efficiencies aren't always great for advertisers, either. As Mark Karlin, associate media strategy director at Lowe New York, explains, "Your targeting can get really, really good. But you can be in some of the poorest inventory, in front of the best person, and it's kind of a balancing (act)." Indeed, the more accurate the targeting, the higher cost, and the fewer people who fit the criteria. This means as an advertiser, "You're limiting yourself in what's available, plus increasing costs," Karlin says.

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