As we near quarter 4 of 2008, the frothy ad network business is undergoing a significant shift. In the minds of the publishers they support, there is a feeling that ad networks are either undercutting them in front of the same advertiser or not giving them the best ads possible. In the minds of the advertisers, the demand for cheap reach is being offset by the growing insistence that quality controls be in place to make ad networks, as currently defined, a safe place to do business.
The ad network landscape began to bifurcate in late 2007. The very large performance ad networks consolidated through acquisitions by Google, Microsoft, Yahoo!, and AOL. In 2008, they continue to dominate the revenue landscape by delivering tons of impressions (if you could weigh them) and performance-based results. When you mix portal, comScore 300, and exchange inventory, the chances are pretty good that you can find inventory to match the tight CPA goals desired by direct marketers.
On the flip side, the brand advertisers are gravitating towards transparency, trackability, and accountability. This flight to quality is delivered by two types of firms — vertical ad networks and ad representation firms. The latter represents sites completely, helping them get in front of advertisers and fill the sales role for the publisher on an outsourced basis. Rep firms do well because they have a number of products in their portfolio that could be of interest to the advertisers they call on. The direct relationship they enjoy with these publishers requires that they can make and keep promises, report on where the ads show, and respond to issues an advertiser may have regarding a placement or a content concern.
The vertical ad networks and transparent ad networks, which include Burst and a handful of other companies including Tribal Fusion, provide a middle ground for both advertisers and publishers. The advertisers get a brand-safe solution for reaching ten, hundreds, or even thousands of high quality web sites, but don’t have to contact and negotiate with each property. The publishers get representation in front of the largest spenders on on-line media, but do not have to build a sales force to gain that visibility.
This “flight to quality” is emerging in a number of ways:
- Better data reporting. comScore is revising the way it accounts for ad-focused traffic to separate media buying networks who report “potential reach” from ad networks running real traffic or “actual reach” numbers. Brand advertisers who want to know precisely what they are buying will gravitate toward the latter – and direct response marketers to the former.
- Documentable distribution. Ad networks were recently called out by a major brand on the issue of transparency. Brands rightfully demand to know where their brand impressions are showing up online. Expect sensitive advertisers – those with reputation to uphold and shareholders to please – to continue to press these issues going forward.
- Privacy concerns, part 2. Remember when DoubleClick tried to buy Abacus and everyone got nervous about the connection between online and offline data? The whipping boy for the latest round of privacy issues has been NebuAd. The truth is, every company has to consider their privacy policies in the face of ads that follow consumers around the internet. Whether or not they have your phone number in the real world, it feels like they do online.
This shift in values will lead to more distinction between what I call “traditional ad networks” – those that serve the needs of advertisers looking for broad, affordable reach – and “web site networks” – where representation of high quality, brand safe sites in a reportable, measurable way provide advertisers a well lit way across the Internet.
