A Collective Media study reveals why advertisers buy, or don't buy, into ad networks, and how they incorporate them into a media plan.
In 2006, Ad networks captured approximately $1.5 billion of the $9.75 billion spent on online display media, according to Collective Media, making them the second largest recipient after the Big Four portals. And based on a new survey out by the ad network, they'll gobble even more this year.
According to the Collective Media "2007 Ad Network Study," 77 percent of U.S. agencies/advertisers buying online media used ad networks in 2006. In 2007, this is projected to reach 88.3 percent (up 14.6 percent year-to-year), with 66 percent of agencies/marketers reporting that they will increase their spending on ad networks.
Collective Media suggests this positive shift in usage and spending is most likely the result of a number of trends in overall online media spending:
- Rising CPMs on portals and publishers
- Growing online advertising budgets
- Adoption of rich media and alternative ROI metrics, boosting usage of online ad networks among brand advertisers.
Crucial selling points
Survey respondents cited reach (at 52 percent) and efficiency (66 percent) as the key drivers as to why they include ad networks in their media plans. Conversely, they overwhelmingly (71 percent) buy into specific publishers for the targeting.
"I believe reach and efficiency are definitely two of the selling points for networks in general," says Tom Hespos, CEO of Underscore Marketing. "I also agree that rising costs on high-reach portals contributes to increased use of networks."
Hespos believes that another factor not mentioned in Collective's survey is the ability for networks to roll up smaller sites within a given content niche.
"Content-specific networks are on the rise again, and I see the need for efficient buying of contextually appropriate environments as another plus for networks," he says.
The turnoff
What turns agencies and advertisers off of ad networks is lack of editorial control, with 59 percent of respondents citing this as the greatest factor for not using ad networks. Additionally, 38 percent claim audience duplication affects their decision against putting their dollars into ad networks. These barriers contribute to why 33 percent of respondents say they will decrease ad spend on ad networks this year.
Joe Apprendi, chief executive officer of Collective Media, says managing editorial control sits solely with the ad networks.
"When it comes to editorial control, a lot of this boils down to publisher and inventory acceptance standards and practices on the part of the ad network," Apprendi says. "For many ad networks, there are inconsistent policies relative to what types of sites/content are included as part of a specific content channel or across the ad network overall. In fact, the sheer number of sites and placements for many ad networks is simply unmanageable. Some of the largest ad networks have 30,000 to 50,000 individual sites to monitor and an automated publisher sign-up process, making it a very difficult proposition to meet the editorial guidelines of Fortune 1000 brands."
On the other hand, he says that reducing audience duplication is largely in the hands of online publishers and advertisers, who can simply reduce the number of ad networks with which they work.
"This will minimize overlap and provide greater reach and frequency control overall," he says.
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