Publishers and advertisers can both benefit from taking a vertical -- rather than horizontal -- approach to ad networks. Jumpstart's CEO explains where their strengths and differences lie.
As more money flows into online advertising, there has been a renewed debate about the value of ad networks. I personally have no doubt that leading "horizontal" ad networks, such as ValueClick and Burst Media, provide tangible benefits to both advertisers and publishers. Large ad networks aggregate and sell remnant publisher inventory; providing a valuable revenue stream to many publishers, as well as convenience and scale to advertisers. But there are limitations to the horizontal model.
In a recent iMedia article, Two to Tango-- Publishers and Ad Networks, Doug Weaver states, "I can't tell you that I've heard a publisher rave about the business they get from a network. You won't hear them gushing about the level of individual service or the whopping CPMs they're getting. But I think most publishers understand that, in the end, it's a relationship of convenience."
This isn't the case with a vertical ad network. Unlike horizontal networks that collect a wide variety of sites from different categories into a network, a vertical network consists entirely of sites within a specific industry category. In our case, it's automotive, but it could also be healthcare, technology or even weddings. Ad networks that focus exclusively on one industry can create significant scale of a highly desirable audience across many strong publishers. This results in characteristics not found with horizontal ad networks, and significant benefits to both publishers and advertisers.
From the publisher's perspective, while a larger horizontal ad network might provide the opportunity to monetize some of its unsold/remnant inventory, a vertical network partner delivers complete inventory management, solid sales representation, strong ad ops and industry expertise. Most importantly, because the vertical ad network can aggregate a highly desirable audience into significant scale, it can generate a higher CPM for its publishers than if they were to leave the network and go it alone. Publishers in a vertical network can generate lucrative and immediate returns without the financial or management burden of staffing and managing a sales, account management and ad ops team.
Another important distinction between the vertical and horizontal network is the depth of the relationship with publishers. Most vertical networks, Jumpstart included, end up being true business partners with their publishers, helping with site design, content development and ad program development, among other roles. Further, the relationship between the vertical ad network and a publisher is typically long-term and exclusive. In the Two to Tango article, John Rogers of Advertising.com points out that there aren't too many exclusive relationships between networks and publishers out there; most publishers use a multitude of ad networks. This isn't the case with the vertical ad network, whose focus on one specific industry allows them to have a much deeper and closer relationship with their publisher partners. For example, at Jumpstart we've been working closely with NADAguides for more than five years, with Vehix for more than four years and with eBay for more than three years. These are valued business partners with whom we speak daily.
From the advertiser's perspective, a vertical network can cater to its specific needs with a greater amount of expertise and intelligence, as opposed to purchasing an endemic "channel" on a broader network. With the vertical network, an advertiser can get scale and access to many great publishers through one source-- making life easier for the already overworked media buyer.
A vertical ad network also brings intelligence to its advertisers. In our case, we understand the automotive industry completely-- from supply chain to dealer relationships to residual values and flooring costs. This industry knowledge allows us to bring solutions to complex marketing problems and bring a consultative approach to our advertisers. Sara Nelson, senior media planner for Saatchi & Saatchi LA (Toyota) says, "A vertical ad network brings reach, industry expertise and transparency to where the ad is running. Rather than having to develop relationships with many publishers who may not be experts at selling and managing digital ad campaigns, I can work with one company who knows what they are doing and who helps me deliver results."
Growing prominence of the vertical ad network
With the ever-growing number of publishers and audiences that are becoming increasingly fragmented, there is a need for the horizontal ad network. They provide an important revenue stream to many publishers, as well as scale and convenience to advertisers. But a new business model is emerging among these aggregator networks. The vertical ad network, especially in key advertising verticals, brings considerable benefits to its publisher and advertiser partners. Rather than being "a mile wide and an inch deep" like the horizontal networks, a vertical ad network's approach of being "an inch wide and a mile deep" brings focus, industry expertise and best practices that translate to higher revenue for publishers and better results for advertisers.
Joe Medved from Softbank points to mobile as another particular area of "discovery" that could prove a hurdle for Facebook. According to Joe, "Social networking services focused on discovering others, where you can build a somewhat virtual persona, or better yet an embellished version of your real persona, have potential. Ninety percent of social networking users in Japan don't use their real name, which is why there are 3 social networks, 4 if you count Twitter, with around 20 million users, as opposed to one dominant player like Facebook. The vast majority of social networking activity in Japan is on mobile phones. As smartphone penetration goes more mainstream in the US, mobile centric social networking services leveraging smartphone capabilities have the potential to take share from Facebook."
Need to motivate human contact
With the rise of digital over the past decade, the definition of "friends" has certainly changed. While Facebook was started with the intent of being only focused on real relationships, the site has evolved to the point where your social network is much broader. At the same time, you could argue it is really not enough to have an online only relationship or even one that is primarily digital (i.e., the folks from high school you haven't seen in over a decade but are "friends" on Facebook.) This has left the door open for companies who motivate in person interaction. One such company that capitalizes on this inherent Facebook weakness is Meetup, whose mission is to "to revitalize local community and help people around the world self-organize." It is a mission that is definitely working, with over 250,000 monthly Meetups in over 46,000 cities worldwide.
While Meetup was one of the first to recognize that digital could actually be an enabler of human contact, many more have followed suit. For instance, Skillshare allows you to "learn anything from anyone" by connecting with folks in your community who have a skill to share. GrubWithUs tackles the problem of meeting new people in the years after college by "building friendships over food." Wednesdays takes a similar approach of meeting over food, but is instead focused on coordinating lunches within an organization. All of these companies are capitalizing on the basic need for human interaction, but using digital in new and unique ways to do so.
Consolidation, curation, and control of entertainment
On the backs of social gaming companies like Zygna, Playdom, and Playfish, Facebook has emerged as a major player in the world of gaming, helping invent a new category along the way. But outside of "social games," Facebook has been slow to capitalize on entertainment as an overall vertical. This was one major reason that Myspace briefly attempted to rebrand as a "social entertainment" site focused on sharing and finding music, television, games, and movies. And in a more successful example, this is why services like Pandora, YouTube, and Hulu have been able to flourish in their respective spaces.
Given the size of the entertainment vertical and its importance to consumers, it is somewhat surprising that Facebook is still largely ignoring the space. This opens the door for additional companies to move into the consolidation, curation, and control of entertainment. For instance, Rovio was able to create its Angry Birds franchise without overreliance on the social graph of Facebook, instead focusing on iOS and Android. This move towards mobile also opens up new opportunities to monetize entertainment leveraging platforms like TapMe. Outside of gaming, you have other start-ups combining elements of social networking with entertainment. As an example, Spotify has 10 million subscribers -- one million of which are paying subscribers -- in Europe that have created 200 million playlists. Spotify specifically calls out "social music" as a feature that makes it easy to share everything you listen to on Spotify with your friends including tracks and playlist.
Conclusion: Facebook is the suburbs
There is no question Facebook will continue to dominate the digital landscape in the coming years. But there is a very real chance that alternatives will emerge reflecting the evolving needs of our population. As Phin Barnes from First Round Capital stated when I asked his opinion: "One argument is that Facebook is the suburbs and we need to see networks that more closely resemble the diversity of dense urban living and the trust/community of small rural towns." In this regard, Facebook's biggest threat might just be the needs and wants of the same constantly evolving community that built it in the first place.
Old Spice is a brand that dates back to 1934. But until recently, the key word in the brand's name was "old," as in, "doesn't grandpa wear Old Spice?"
Here's an Old Spice ad from 1990, which pretty much explains why the brand failed to capture the attention of the young men of the era who were setting their preferences for a deodorant.
Here's a cooler, more up-tempo ad from 1993. Once again, not exactly the kind of brand that screams cool.
But with the help of Wieden+Kennedy, Old Spice managed to transform itself from a crusty old brand into a social media juggernaut. Here's the ad that kicked off the brand's modern image.
Interestingly, the brand never really abandoned its jingle or its nautical connection. But it did find a way to take those old concepts and, shall we say, spice them up for a new generation.
Pabst Blue Ribbon
Call it a consumer-generated comeback. Pabst Blue Ribbon is an old beer brand. It actually dates back to the 19th century, as fans of the brand know from the bottle's labeling, which references an award from the turn of the previous century. But for most of the last two decades of the 20th century, PBR was stuck in a serious sales slump.
Then, in the early 2000s, for reasons that weren't entirely clear, PBR became fashionable with hipsters, despite the fact that the brand wasn't doing anything special in terms of marketing. Our guess is the beer's cheap price probably had something to do with its resurgence. But there's also the theory PBR drinkers perceived it be just autonomous enough from the mainstream beer brands to achieve a cool factor, which may explain why hipsters selected that particular cheap beer. It probably didn't hurt either that PBR's resurgence coincided with a renaissance in all things retro; if old is what's in, there's no better label than one that references an award won more than 100 years prior.
As for PBR's marketing team, while they didn't initiate the comeback, they certainly deserve credit for spotting the early trend and marketing to a new audience of advertising-adverse hipsters. Our personal favorite pitch to that hipster audience? How about sponsorships like a bike messenger rodeo? Yeah, you'd never see the Bud or Coors doing that.
Back in 2009, Domino's Pizza ran into a buzzsaw of bad PR when a video of two misbehaving employees surfaced online. The video, which showed the two employees doing disgusting things as they prepared food in the store, didn't sink the brand, but it did open up a larger conversation about just how bad the Domino's Pizza experience had become.
But rather than simply apologizing for the bad behavior of a few employees and pretending like all was well in pizza world, the brand chose to face the problem head on. At the heart of the Domino's Pizza turnaround was a brutally honest campaign called "Our Pizza Sucks."
There was a time when Twinkies were so iconic that the cream-filled cakes had a role to play in major Hollywood films like "Ghostbusters."
However, like everything else, Twinkies weren't exempt from changing tastes. In 2012, Hostess, which owned the brand, announced that it was filing for bankruptcy. But about a year after announcing the end of the Twinkie, Hostess brokered a deal to sell the brand.
So what did the new owners do? For the most part, their "miracle comeback" was about capitalizing on the wave of popular outcry when news broke that the brand might disappear forever. The new owners modernized production facilities, found a more efficient distribution method, and leveraged all the free media they could get to spread the word that Twinkie's were back. Beyond that, the comeback was really just about reminding people that they once loved to eat Twinkies.
Michael Estrin is a freelance writer.
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"A logotype collection of well-known world brands printed on paper" image via Shutterstock