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An ad model poised for a comeback

An ad model poised for a comeback Tom Hespos

It's challenging for media buyers to differentiate among ad networks. From the network side, it's difficult to develop a product positioning that is truly ownable within the space. In an era where anyone can start an ad network, virtually overnight, any networks getting traction with ad buyers quickly find themselves swimming in a sea of "me too" imitators.


On the publisher's side of the equation, it's even more difficult to tell which networks to use. It's one of the primary challenges of the chief revenue officer to balance direct sales forces, ad networks, exchanges, and new ad platforms in such a way as to deliver a maximum return from month to month on a site's pool of available ad inventory.


There's a check that comes in from each network partner each month. From a CPM standpoint, the price paid is abysmally low when compared to deals struck by the publisher's direct sales force. But it's a check nonetheless, and most publishers choose to get a check for the incremental sales, rather than rely completely on direct sales channels and risk lower overall returns.


Simply put, two ad revenue streams are better than one, even if one undercuts the pricing of the other one, and publishers are unsure what's being done with data collected from network and exchange campaigns. Even though many would see it as short-sighted, short-term revenue, pressure usually makes the publisher take the check rather than cut the channel to support the direct sales channel.


Looking at the difference in the revenue generated by the two, though, most CROs wish that they had another channel whose numbers more closely resembled those put up by their direct sales force.


Now, if you're a media buyer who buys more premium placements and branding-oriented activity than transactional placements and direct response, you're generally not looking to networks and exchanges. Direct sales forces are what you primarily do business with, but if you're dealing with small- to mid-size sites, where's the scale?


My best guess is that what is old might become new again. That is, it used to be en vogue for ad networks to model themselves after rep firms, with exclusive representation deals inked with publishers. When DoubleClick was in the ad sales business, this was its model. Some smaller firms have latched on to this model and kept with it over the years, but most networks have moved away from it.


Is it time for direct representation to make a comeback? Networks are looking for a differentiator, and this could be it. Brand advertisers and their agencies are looking for scale with a human touch. And publishers are looking for a more lucrative revenue stream that isn't cannibalizing every other ad sales channel in the name of short-term revenue growth.


Could this be the time to resurrect the rep firm model?


Tom Hespos is the chairman and president of Underscore Marketing and blogs at Hespos.com.


On Twitter? Follow Tom at @THespos1 or @_MarketingLLC. Follow iMedia Connection at @iMediaTweet.

Tom Hespos is President of New York agency Underscore Marketing. He is a frequent contributor to industry trade publications and has been writing a regular column about online marketing and advertising since March of 1998. His clients include Wyeth...

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Comments

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Commenter: Steve Hamkins

2010, November 16

At Aderati, we believe its about more than scale - its about engagement. Networks serve a specific purpose for both the advertiser and publisher and they work well for efficient IAB unit delivery. However, networks are not able to deliver the value, to either party, of high engagement with a consumer. A rep firm can deliver the high-touch sales approach that is necessary to facilitate custom solutions that truly work.

Steve Hamkins
CEO
Aderati

Commenter: Kevin Hicks

2010, July 23

Tom - this is very well said! It's the scale issue that is one of the main points here ... with more than 2,000 sites vying for attention, most buyers/planners don't have the time to sit down with a salesperson from each site individually, especially smaller sites outside of the "Top 50". However, if a rep firm can come in and present maybe 4 or 5 properties/publishers that fit a client's campaign objectives, now you have a model that works for both the buyer and the seller: it optimizes the planner/buyer's time and gets the smaller publisher in front of potential media plans.

It works!

Kevin Hicks
SVP, Savio Media
"A boutique Ad Representation Firm"