Editor's note: The difference between ad networks and rep firms is a hotly contested topic, one that we plan to continue covering in the months ahead. If you have a perspective that you'd like to add to this discussion, please contact me. And stay tuned for our upcoming In Focus on ad networks and branding by ValueClick's Dave Yovanno, coming on August 28, 2006.
In the past 12 months, online spending from brand marketers has increased and will continue to do so. Intensified demand for premium inventory on the major portals and prime destinations has caused CPMs to escalate. As a result, brand marketers are looking for additional outlets from which to buy media more cost effectively.
As they increasingly look across the long tail of the internet, they are finding that buying media on larger, high quality sites within the mid-section of the tail can be more cost-effective (lower CPMs) and provide better contextual relevancy with creative integration and customized ad placements.
However, the mid-tail represents an especially challenging area in the digital jungle.
If you're a brand marketer or an agency, then you can either research the landscape and buy media directly across multiple sites or you can work through a third party. Buying direct can be a time consuming and frustrating process (dealing with small webmasters with no media experience can try anyone's patience). In deciding to work through a third party, it's important to fully understand their role, capabilities, strengths and weaknesses so your experience is positive and your results are maximized.
The two major types of third party resources are ad networks and rep firms.
Ad networks generally represent thousands of websites and have little to no relationship or control over publisher inventory. They are great for plans that demand reach and pure performance, with few other considerations. Rep firms, on the other hand, represent fewer sites and are an outsourced extension of a site's internal sales efforts. They understand and have control over each publisher's inventory so they can offer guaranteed share-of-voice (SOV), total ad placement transparency and creatively integrated media and promotional opportunities.
Recently, some ad networks have been attempting to rebrand themselves as quasi-rep firms in an effort to garner brand dollars as they move down the tail. This is often not the case.
This article hopes to dispel this confusion by describing seven key considerations that determine what defines a rep firm versus an ad network.
1. Site Representation: Ad networks aggregate fragmented online audiences by assembling as many sites as they possibly can to create a channel, and there's considerable overlap as many networks work with the same sites. A rep firm's focus is on the exclusive representation of a set of quality sites that comprise a desired vertical market or audience segment. Look for the number of exclusives to determine whether a service is an ad network or rep firm.
2. Decision-Maker Relationships: Ad network salespeople rarely have any personal contact with individual web publishers. They can't afford to, since they're generally focused on volume. Historically, ad networks have focused on arbitraging media across a wide reach platform, with an emphasis purely on performance. Media buying and planning is therefore formulaic and does not require the experience of working hand-in-hand with media buyers/planners to develop and execute media strategy. Conversely, rep firms are heavily invested in face-to-face contact with individual decision makers on both sides of the fence, since matching medium with creative execution is paramount.
3. Marketing Message: Brand marketers are concerned with the quality of the association between their brand message and website context. Some ad networks lump sites into broad channels and may have little knowledge of each site's content and whether it is relevant to, or even safe, for a particular brand. A rep firm focuses on identifying sites that are a contextual fit for the brand's messaging and can make educated recommendations concerning individual sites that may or may not be right for a brand initiative.
4. Ad Placements: Ad networks usually rely on fully automated programs to place and rotate standardized ads through unsold/remnant publisher inventory. This means that they have little to no knowledge about each site's total inventory and no control over the rotation of ads through various spots within a site. Working more intimately with fewer sites, a rep firm has the knowledge and control over publisher inventory to guarantee certain ad placements, at a specific frequency (SOV), thereby providing total transparency of all ad placements.
5. Creative Integration: Ad networks, being automated, are generally limited to the standard set of Internet Advertising Bureau (IAB) units. And, many websites themselves don't have the experience to implement rich media ad units and customized creative placements. A rep firm can not only utilize all IAB units, but can deliver on all rich media ad units as well as more customized, out-of-the box placements/integrations. These can include skinnings, microsites, blogs, co-branded navigation bars, promotions, contests, sweepstakes, custom video games and advertorial support.
6. Ad Serving: Publishers generally turn to ad networks to fill unsold/remnant inventory, and they generally "daisy-chain" multiple ad networks together. From any one ad network's perspective, however, there is little visibility into the type and volume of ad inventory a publisher will decide to default through to an ad network. A rep firm, through its exclusive relationships, obtains priority access to key website positions through primary inventory deals, allowing a rep firm to guarantee placements and frequency.
7. Customer Service: Born out of an arbitrage/performance model, ad networks have not had to develop the personnel and skill set required to work one-on-one with brand marketers to develop, plan and execute site-specific media buys. There are many inherent issues in selling integrated placements across multiple websites, and it's imperative that the company and people with whom you work have the experience to execute on what they sell.
So, who's king of the digital jungle: an ad network or a rep firm? The answer depends on the nature of your brand, your marketing objective and creative strategy. Ad networks and rep firms will both continue to evolve and adapt to an online advertising environment where survival of the fittest is a function of both quantity and quality.
But... I think Darwin would go with a rep firm.