Ad Networks: The Real Advantages

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Sponsored by 24/7 Real Media
BY Tessa Wegert | March 3, 2005

An ad network is to a media buyer what Netflix is to a movie-lover; it makes life so convenient. It's great to know, then, there's no shortage of ad networks in interactive advertising. The past few months alone have seen several new networks emerge, from a new collection of blogs, to the first network for podcasts.

The contextual marketing space has plenty of networks to choose from, including Google's AdSense, Overture's ContentMatch, and the new adMarketplace, launched by Conducive Corp. in December. If behavioral targeting is what you're after, Tacoda Systems' AudienceMatch Network (AMN) has been up and running since late last year.

Even business-to-business (B2B) advertisers have occasion to take advantage of all ad networks offer. ThomasB2B.com's ad network, launched in September, distributes its pay-per-click (PPC) ads through PRWeb's free news releases and hundreds of B2B sites, which encompass about 10,000 product categories.

As many ad networks as there are, some advertisers remain unsure of how to tap their potential. Can network buys provide access to the same targeted audiences advertisers get from a big-name portal? Where do the real advantages of a network buy lie?

Before such questions can be answered, there's an important distinction to be made: not all ad networks are created equal. Most either resell inventory they have purchased, acting as media brokers of sorts, or partner with sites to handle their media sales and represent them to advertisers.

The former network type, such as Claria's upcoming BehaviorLink, certainly has its benefits. Such networks are usually performance-based, have a very broad reach, and provide a great return on investment (ROI). The latter type specialize in customizing ampaigns. The network's usually more than willing to tell you exactly where your ads will appear. And because it works closely with its sites, it knows its audience inside out.

Just ask Jarvis Coffin, president and CEO of BURST! Media, an ad network representing 1,850 sites. "Say an advertiser wants to reach left-handed Canadian carpenters and comes to us," Coffin said. "We don't have a Canadian carpenter channel, but we can make one, depending on the sites in our network that correspond with that target."

According to Coffin, the benefits of ad networks like his are manifold. Like BURST!, many offer contextual advertising and behavioral targeting capabilities through partnerships with technology providers, support standard IAB ad sizes, are rich-media enabled, and can target via geography and daypart.

"Ad networks aren't just about a 'cheap reach,'" Coffin said. "There's nothing you can't do, and probably more that you can do relying on a network than a major portal."

Another benefit network advertisers enjoy is site lists are always expanding. Likely in an effort to stay competitive with broker-type networks, networks such as BURST! are eager to keep their offerings fresh. In January, BURST! added a sub-channel that consists only of blogs -- 22 to start, including those belonging to Gawker Media. Similarly, blog ad network Blogads just began offering "mini networks" created by bloggers that provide deeper targeting capabilities (the company expects to offer hundreds of them within the next 18 months).

Networks' most obvious advantage of all is they make buying so darned simple. To reach the targeted users in one network channel, you'd have to establish relationships with dozens of individual sites. You'd negotiate rates with each, send each one ad material and tracking codes, monitor and manage your campaign on each of their campaign management systems, and dispatch payments to each individually.

Run a campaign with an ad network and the work you and your team do is drastically reduced. Network buys are cost-effective and just plain smart.

"We've reached a point where marketers are latching on to the idea that there's a world outside of MSN, AOL, Yahoo!, and search," Coffin said. "And it's populated by countless independent content producers that attract audiences demographically and psychographically right on track for advertisers."

Once, I too reserved network buys for clients who weren't particularly discriminating, just so long as their campaigns produced results. Today, ad networks make sense for most every advertiser. And they're only getting better.

Online Advertising's Tipping Point Approaches
› › ›   ClickZ News
By Kevin Newcomb
December 8, 2005

The "tipping point" for offline ad dollars moving online may be here in the second half of 2006, according to a report by Piper Jaffray analyst Safa Rashtchy.

The speed of online advertising's growth, its benefits to offline campaigns, and recent online ad spending increases from major marketers all seem to be converging, according to Safa Rashtchy, senior research analyst at Piper Jaffray.

"We believe online media now receives about 5 percent of total marketing spending, up from 3 percent two years ago. However, online is on its way to a 10 percent share much faster then we anticipated, and we believe we are now approaching an inflection point when spending growth could accelerate," Rashtchy wrote in a newly-released report. "This point is likely to be in the second half of 2006, as the full impact of some of the recent allocation increases from major marketers becomes evident and creates a momentum that will attract more spending by advertisers who are on the sidelines now."

Rashtchy's "conservative" estimate is that online advertising will exceed $55 billion globally by 2010, a 27 percent compound annual growth rate (CAGR) over 2005. He points to large advertisers like Absolut Vodka, GM and Ford, all of which plan to spend 20 percent of their marketing budgets online next year, he said.

"These allocations are now creating a new momentum in the online advertising space which we believe will be most evident in the first half of 2006, creating the background for the inflection point in the second half of 2006," Rashtchy said in the report.

At Piper Jaffray' Online Advertising Search Symposium last week, Rashtchy said attendees made it clear that search and online advertising are becoming increasingly intertwined, and benefiting each other instead of competing.

"Advertisers are interested in enhancing the effects of both display and search advertising by creating a coherent campaign that reaches the consumers in various types of inventories," Rashtchy said.

Similarly, Rashtchy said nearly 10 percent of search spending is done for its branding impact, with agencies increasingly being able to tap into the client's branding budget for search spending.

Rashtchy also found that an online inventory shortage was not holding anyone back, since networks, remnant space, and contextual search all continue to expand, even if inventory on large portals is sold out.

"While the effectiveness of these additional inventory types do not match the premium inventory that is often sold out, as one panelist noted, 'there is no such thing as bad inventory,' and advertisers are able to effectively use various types of inventory at the appropriate price and effectiveness levels," Rashtchy wrote.

The big winners in the shift of ad dollars online will be Google and Yahoo!, he said, but additional spending will be made with networks and smaller vertical sites, such as ValueClick and 24/7 Real Media. Rashtchy also predicts that agencies and intermediaries like aQuantive, Marchex and Digitas will see growing demand for their services, because of the growing complexity of search campaigns and the increasing reliance on technology in buying online advertising.