Ad Networks And How To Choose Them
07-08-2008Download Whitepaper
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Ad Networks And How To Choose Them
Written by Robert Tas
Founder, President and CEO: Sportgenic, Inc.
July 2008
SUMMARY
The purpose of this white paper is to provide the digital media professional with a comprehensive introduction to digital advertising networks.
It explains what ad networks are, the roles they play for advertisers, and the key market segments of the business. We will review how advertising networks have evolved from the remnant inventory clearinghouse model of the late 1990s to a preferred digital media channel of "first resort" with leadership in the areas of reach, targeting, user involvement, and creative flexibility. Because "vertical networks" are the truly key growth area of the category, we focus particular attention on that segment and the role they play in connecting advertisers to their core target audience.
Finally, we offer advice and a simple check list on what to look for in an ad network partner.
INTRODUCTION
With The New York Times reporting that there are over 200 ad networks operating in 2008, and other Internet sources putting the number closer to 400, it is clear that an advertiser has a wealth of options from which to choose. But the mere availability of choices does not necessarily mean that all of these options have a distinctive reason for being. You need to be able to find the right networks for you. Helping you do that is what this white paper is about.
WHAT ARE AD NETWORKS?
Advertising networks aggregate online advertising inventory from a variety of sites and provide a single vendor solution for advertisers. Brands work with ad networks to buy advertising across some or all of the sites they represent. See the schematic below:
From Cheap Tonnage and Bad Reputations to High Quality Inventory and Industry Leadership
Historically, networks were a source of cheap tonnage - and there was a reason why so much ad network inventory was cheap. By aggregating pages across huge numbers of not-well-vetted sites, advertisers had little or no control over where their messages ran or if they appeared on inappropriate content. Thus advertisers placed minimal value on networks as a whole, or were simply unwilling to run messages on them.
Naturally, networks took notice of all this advertiser angst about their inventory and made critical changes.
The first step was a dramatic improvement in the quality of sites that were represented by networks. Good networks dropped dodgy sites, and began offering contextual channels that represented far greater value to marketers. You can still get low cost inventory from many networks, but as the network business has expanded so too have networks' ability to offer other benefits to advertisers.
By mitigating quality concerns, ad networks gained the trust of even the most conservative advertisers. They also made incredible advances in technology, including leading the behavioral targeting space. Now advertisers look to networks for a host of value added benefits:
1. Behavioral targeting and re-targeting.
2. Easy to reach "vertical" targets like auto buyers, or women, or sport enthusiasts.
3. One-stop advertising on mid- and long-tail sites.
4. Connection to the passionate - people who demonstrate energy and loyalty that can be channeled toward brands.
5. Large amounts of inventory on short notice.
6. Broad reach and heavy frequency beyond the reach of the portals.
Publishers offer ad networks some of their best inventory because ad networks add value in many ways.
Different Kinds of Networks
Years ago, there was really only one kind of network, a "general interest" or horizontal network that aggregated content from thousands of small sites across categories and targets. Buyers could select a broad reach "run-of-schedule" buy, or focus on a particular demo.
Some examples of the largest horizontal advertising networks include:
1. Platform-A
2. BlueLithium
3. ValueClick
A more recent development in the area that is driving such rapid growth in terms of category revenue are vertical ad networks. Verticals specialize in a particular type of content or audience, and represent only sites related to that "vertical."
The growth in vertical networks is the result of burgeoning consumer interest in niche sites. Dollars are following consumers. Lehman Brothers reported 43% growth in overall ad spending on vertical categories in 2007, versus a 5% decline in spending on the portals. Consumers are spending a greater proportion of their Internet time on specialty sites.
Some examples of vertical ad networks:
1. Glam Media represents sites targeting women 18-49.
2. Sportgenic targets sports enthusiasts, be they participants or fans.
3. Jumpstart Automotive aggregates auto impressions across auto sites and its behavioral targeting network.
A third set of networks have arisen to aggregate ad opportunities in emerging digital platforms like mobile and console gaming. Many people call these platform networks. A few examples:
1. Ad Infuse aggregates mobile ad opportunities across mobile sites.
2. AdMob also aggregates mobile impressions across mobile sites.
3. Double Fusion brings together ad opportunities across XBOX®, Playstation® and Nintendo® console games.
In sum, as the number of ad networks has increased, so too has the degree of specialization in the category. But the basic concept - aggregating impressions across sites so that marketers have an easier way to reach consumers and avail themselves of better targeting and executional knowledge - has remained the same.
THE VALUE OF VERTICALS
It is important to better understand the value that vertical networks provide to many publishers and marketers.
Benefits for Advertisers
1. Quality content. The best sites join vertical instead of general interest networks to benefit from the domain expertise that the network provides.
2. Passionate audience. Marketers who choose vertical networks can capitalize on the mid- and long-tail sites that have the most passionate audiences. Brands who run within this content can leverage the relationship the audience already has with the topic or content.
3. Custom programs and unique insights. The specialized nature of vertical networks means that they can work with their sites to build custom media programs that help marketers better reach consumers and convert them into loyal evangelists.
Further, some verticals have amassed huge audiences that help mitigate the reach advantages of horizontals. For example, Sportgenic reaches 20 million people monthly, and for an average of 120 minutes per month each.
WHAT TO LOOK FOR IN AN AD NETWORK
There are a number of factors that separate great networks from the rest of the pack.
Ad Network Checklist - The Long Form
As a way of making it easier to make the right decision regarding what ad networks to engage, we offer the following "checklist" of questions to ask as you consider your options. You will find a short crib sheet on the last page of this white paper as well.
1. What are the site quality standards of the network? How do they decide whether a site is good enough to run my advertising? The network you choose should have impeccable quality standards to ensure that your ads run in high quality, brand-enhancing environments. Running next to the wrong kind of inventory can do significant damage to a brand.
2. Is the network willing to share its site list, as well as the actual site list on which my ads will run? You have the right to know where you will be advertising. At a MINIMUM, you should see the site list of your buy.
3. What is the reach of the network into my target audience? While reach isn't everything, working with larger networks will make the job of buying, reporting, and optimization easier. Larger networks are also likely to have better technological resources and more creative options.
4. How robust are the targeting options available? Can they truly pinpoint my audience? Can they make it possible for me to segment my audience and offer tailored creative? Digital advertising is getting increasingly sophisticated, and the ability to offer tailored targeting and creative will become increasingly important over time. You should begin to create relationships with networks that will be able to provide those essential services.
5. Does the network offer me opportunities to develop programs across digital platforms? Specifically, do they have offerings in mobile, widgets, social media, and gaming? Digital audiences are fragmenting across platforms. Having a network that can offer you platforms beyond PC-based web pages will make it easier for you to migrate more and more of your buy to follow your audience onto these platforms in the near future.
6. Is the network growing? Are the sites within the network growing? Network health will give you a sense of the passion that the audience feels for the media properties, and, by extension, the advertisers.
7. Does the network have a lot of exclusive representation agreements with its sites, or are they primarily focused on selling remnant inventory? Exclusive representation means you will be getting the best ad placements available. While remnant isn't necessarily bad, there are sometimes reasons why certain kinds of network inventory cannot be sold by publishers.
8. What are the reporting capabilities of the network? Can I see the reporting systems before I buy? Can the network be fully integrated into my current reporting platform (e.g., DFA)? Reporting and optimization are cornerstones of digital. The network you choose should make it easier to fulfill these critical tasks, not harder.
9. Is the sales rep I would be working with responsive? Do they strive to meet reasonable requests and deadlines? Do they have ideas and knowledge that will help make our brand efforts more effective? The people you work with are a critical component of an effective ad network solution. Good people make your job of planning, buying, trafficking, reporting, and optimizing easier. They can also bring you ideas that will lead to improved programs and innovation in the future.
FINAL THOUGHTS
We hope that this white paper provided you with the information and perspective to make the best possible choices in network partners. With hundreds of networks to choose from, there is no reason why you shouldn't be able to find a partner or partners that will serve you well.
It's also important to recognize that the same forces that are driving the growth of networks are changing the face of media as a whole. If you ask a question about the future of the web, you can get a dozen pundits arguing convincingly for opposite predictions. But the direction everyone agrees will be central to the future of the web is consumer control, and the recognition that reaching passionate consumers when they are receptive to messages will make an enormous difference in the success of marketing programs. Ad networks, especially vertical networks, are centered around this critical insight. Capitalizing on user passions has been and will continue to be central to the growth and success of verticals.
If you have questions or comments, you can contact me at Robert@sportgenic.com
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