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A primer to navigating the ad network landscape

Robert Moskowitz
A primer to navigating the ad network landscape Robert Moskowitz
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Quick! Name all the good online ad networks you could use for your next campaign.


Actually, that's a triple-trick question for the following reasons:



  • First, because there are far too many good online ad networks to name.

  • Second, because the specific website availabilities they represent are constantly shifting, so a top network for a campaign this week might be a second choice network for the same campaign next week.

  • Third, because the barriers to entry have sunk so low that new online ad networks are popping up regularly, proliferating faster than desirable website advertising opportunities.

Ten years ago, online ad networks were relatively new and relatively scarce. At the turn of the century, there were only about a dozen online ad networks. Today, there are hundreds (as many as 400, by one count), no one of which can satisfy all the needs of a sophisticated advertiser.


So which networks should you use? The answer is about as complicated as a good response to the question, "Where should you shop?"


Obviously, no single store carries everything you're likely to want or need. And while you might get most of your food and household supplies from a large supermarket, you'll likely continue to patronize a few smaller, more specialized stores that offer certain delicacies and boutique items. What's more, your choice of exactly where to do your spending will vary, day to day and week to week, depending on myriad factors, including price, availability, convenience, your changing tastes and preferences, occasional special needs and many more.


Compared with your personal tastes for everyday food, drink and other items, advertising campaigns often present even more complicated requirements. So it's important to understand where and how to shop the full range of networks for the particular campaign results you seek.


To help you save time and get the most from your online advertising spend, here's a brief rundown of key ad network models.

Category: Geographic networks
Although the internet is decidedly international, most consumers and many advertisers are not. Even when national boundaries don't hinder buying and selling online, time zones, language, local laws and customs, local currencies and exchange rates can add major difficulties. Understandably, certain networks are better at targeting advertising geographically.


Where they fit: Geographic networks can help you focus on neighborhoods as small as a single ZIP code or markets larger than a continent. They allow you to map your sales region very precisely against product or organizational strengths and weaknesses.


Category: Pricing model networks
Advertisers first came online being comfortable with CPM pricing, but have lately recognized and appreciated the importance of other models that leverage the unique advantages of computer-controlled advertising and sales. For example, cost-per-click (CPC) allocates the risk of campaign underperformance between publishers that want a fixed fee for advertising and advertisers who want to pay only for conversions. Cost-per-action (CPA) and cost-per-engagement (CPE) pricing models offer sophisticated ways to limit the costs of underperforming ads.


Where they fit: CPM networks, which usually offer premium inventory, are best for specific placements and formats, and can be used with confidence for branding campaigns. CPC networks, which tend to emphasize performance, are a good choice for direct marketing campaigns seeking immediate conversions, or those aimed at driving traffic for specific purposes, including lead generation. CPA and CPE networks are also good for direct marketing, but generally require advertisers to understand advanced analytics that accurately reveal the net acquisitions actually achieved.

Category: Vertical networks
At first, ad networks grew horizontally across many industries primarily because no single vertical could offer advertisers enough reach or inventory. Today, the fragmentation and huge number of consumers on the internet, coupled with the proliferation of specialized websites, have made a variety of vertical ad networks eminently viable. As a result, advertisers now have opportunities to focus on women, sports, automobiles, healthcare, technology, pets and many other verticals.


Where they fit: A good choice for campaigns seeking to create significant entry into a new segment of the market, vertical networks also work well for advertisers with niche products and services. The better you know your prospects, the more you can benefit from a narrow-cast campaign into carefully chosen verticals.


Category: Format networks
As the internet has developed, so has the advertising it carries. With recent upgrades in content, credibility and consumer attention, brand advertisers now find they can make cost-effective buys online. Coupled with steadily advancing technologies, this inflow of money has led to new advertising opportunities at the richer end of the media spectrum, including video programming supported by video advertising.


Where they fit: Networks that offer rich media availabilities can work well for branding campaigns and for delivery of product demos or samples of entertainment experiences. Display and text oriented networks, meanwhile, offer contextually relevant ads that still work well for such purposes as lead generation, customer acquisition, immediate revenue generation and lead-ins to more sophisticated branding campaigns.

Category: Behavioral networks
Behavioral targeting networks are the current incarnation of the internet's vaunted promise to facilitate one-to-one connections between consumers and advertisers. Using clever technology that tracks individual consumer behavior across all their affiliated websites, these networks allow advertisers to target segments by their online activities and presumed intent. Going beyond commonplace contextualization of advertising and relying on past activity, these networks are capable of serving highly relevant ads, entirely irrespective of the content a consumer is currently viewing.


Where they fit: Advertisers that have an in-depth understanding of their target markets and can pinpoint the consumer intentions and behavior patterns commonly leading to a desired consumer decision can often generate big lifts in their results through the adroit use of behavioral targeting techniques.


Category: Big media networks
As the lines between publishers and ad networks blur, large-scale media "destination" sites are augmenting their strong relationships with advertisers by partnering with like-minded websites and morphing into the centerpieces of niche-oriented advertising networks. For example, Lifetime is doing well with its Glam network, CBS has launched a "local station oriented" widget advertising network, and BET's ad network seeks to transition established TV advertisers to the web. Meanwhile, Warner Brothers' TV group is betting on its network built around its MomLogic.com property, and Martha Stewart's website is now aligned with the Martha's Circle collection of high-end lifestyle sites.


Where they fit: These networks tend to offer rich media opportunities, which can work well for branding campaigns and for delivery of product demos or samples of entertainment experiences.

Category: Mobile networks
This newly emerging opportunity for advertisers is considered by many to be the wave of the future, and by some to be viable and exciting even today. Says one expert: "You always carry your wallet, your keys and your phone. And you pull out your phone far more often than the other two for doing email, searching the web, sending and receiving messages, making calls, storing and retrieving data and maybe even playing games. Advertisers need to be on mobile devices, and someday soon they all will be." With built-in GPS, mobile phones have potential much beyond just extending conventional online advertising.


Where they fit: Mobile networks can be used for targeted location campaigns (where the prospect is near a specific store or even in a specific aisle of a super-store), as well as for interactive campaigns that ask consumers to send in a message and instantly receive a coupon or other benefit.


Category: Ad exchanges (used as if they were networks)
Ad exchanges sprang up with the promise of automating ad buys and driving out anomalies and unwarranted premiums in the prices of online availabilities. But exchanges have proven themselves to be only as good as the inventory they offer, driving advertisers to work with several exchanges at once. Now exchanges are seeking to earn a preferred seat at the table by offering advanced reporting capabilities, more-advantageous pricing and higher quality inventory. However, ad exchanges typically do not guarantee flight times, target audiences or even campaign launch dates, making them too unpredictable for many advertising campaigns.


Where they fit: Advertisers who are reaching out to a large market over a long period of time can feel less concerned about the details of each availability they buy and may choose to use ad exchanges to lower their total spend.

Of course, with networks developing so rapidly, these categories are by no means mutually exclusive or set in stone. How you break down the categories depends on your intended outcome. In fact, Michael Katz, president of interCLICK (the fastest-growing ad network, according to comScore), says, "I think you could make the argument that some networks are segmented by the pricing they offer, like CPA versus CPM versus CPC, but that's not really a determining feature. I think it's more accurate to remove geo-networks and the pricing model, and add in... transparent versus blind networks, and premium versus remnant networks, along with possibly even contextual networks."


Katz suggests advertisers use networks to find the right balance between granular targeting and run-of-network reach, building brand awareness and generating immediate response. For example, reaching in-market buyers -- in categories like automotive, financial services, travel and retail and shopping -- via behavioral targeting can be tremendously beneficial to a campaign. It enables direct response message delivery to an exact core audience, which can then be supported by a branded push using rich media like video. The specifics, of course, will depend on your product, your campaign goals and other parameters.


Susana Tsui, regional managing director of [email protected], a division of OgilvyOne Worldwide, says, "Although every campaign should have a media mix, larger brand advertisers would not usually rely exclusively on ad networks. However, some SOHO [small office, home office] businesses that have different requirements than brand marketing may benefit greatly from network buys, which tend to be very performance based and can work very well for direct response."

Whatever you're trying to accomplish, remember to keep the following five things in mind when selecting and working with any online ad network:


1. Overlap. "The main concern that most advertisers have is overlap," says Katz. "Since most large networks do overlap with one another due to the nonexclusive nature of the relationship that they have with most major publishers, the advertiser's goal is to determine which type of network can reach their target audience in the most cost-effective manner."


2. Competition. The large number of online networks vying for business places these organizations under extreme competitive pressure. While each one tries to portray itself as different, their similarities are often much greater. Rather than simply accept a network's claims of difference, ask for proof: proof of transparency, proof of technology, proof of performance, proof of whatever other claims are being made.


3. Price pressure. Because online ad networks are so similar, website publishers feel very little loyalty and regularly reshuffle their unsold inventory among the various outlets. With so many networks offering the same inventory, they tend to compete for advertising dollars mainly on price.


4. Transparency. It matters greatly. Although networks promise to get your ad delivered cost-effectively on a large scale, their ability to do so requires more than just running ads on brand-friendly content. It's important to know which sites are delivering what audiences, and how much those audiences cost. When networks keep advertisers blind, they encourage a cycle of inefficiency and withhold the data necessary to make effective long-term marketing decisions. According to Greg March, digital group director of New York ad agency Weiden + Kennedy, "Without transparency, it's difficult for me to know the details, such as exactly where and how often my ads are being run. Without 100 percent network transparency, I've got to trust somebody."


5. Competing interests. Ad networks are intrinsically torn between two masters. The website publishers that supply their inventory are interested in maximizing revenues, while the advertisers and agencies that provide their revenues are always looking for lower prices. Ad networks must walk the line between these competing interests. It's a zero-sum game unless the network can add value or grow. Fortunately, advertising dollars are currently trending online, so networks have been able to carve out slices of a rapidly expanding pie.


The bottom line is that the best networks for your campaign will vary with your key performance indicators: Are you more interested in clicks or customer acquisitions? Brand awareness or deeper engagement? Or something completely different? It's a difficult puzzle to solve, but look at it this way: If one size were to fit all campaigns, advertising wouldn't be as exciting, challenging and rewarding as it is.


Robert Moskowitz is a consultant and author.

Comments

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Commenter: Andy Atherton

2008, October 31

I enjoyed this article and have a few points to add, referencing specific points you made:

"However, ad exchanges typically do not guarantee flight times, target audiences or even campaign launch dates, making them too unpredictable for many advertising campaigns.”

>>This is a great observation and an important point. Too many of the solutions on the market - particularly exchanges - do not accommodate forward planning and other important requirements for Brand (non-Direct Response) campaigns.

"For example, reaching in-market buyers -- in categories like automotive, financial services, travel and retail and shopping -- via behavioral targeting can be tremendously beneficial to a campaign. It enables direct response message delivery to an exact core audience, which can then be supported by a branded push using rich media like video.”

>> This is also very insightful. You are one of the few folks that I have seen come out and say BT is primarily a DR tool. Lots of networks position BT as a tool for branding.

"Transparency. It matters greatly. Although networks promise to get your ad delivered cost-effectively on a large scale, their ability to do so requires more than just running ads on brand-friendly content. It's important to know which sites are delivering what audiences, and how much those audiences cost. When networks keep advertisers blind, they encourage a cycle of inefficiency and withhold the data necessary to make effective long-term marketing decisions.

>> I disagree with this point though, for 2 reasons:

1) Transparency to individual sites limits the operational efficiency and therefore scalability of a network and those are two of the reasons folks buy from networks in the first place. Metrics on audience composition, reach and frequency are very important and can be shared without visibility to individual site delivery.

And, more importantly,

2) Transparency to individual sites creates channel conflict. Top quality publishers will not take advertising from top quality advertisers through a network that is transparent – this would undermine their direct sales efforts. Site-level transparency creates a situation where the only buyers and sellers are of lower quality and the high-quality players stay away from the market. Blindness is necessary to make sure all players can participate without generating channel conflict. The trick is specifying rigorous standards and metrics such that transparency isn't necessary.