In early fall of 2007, much of iMedia's commentary on the ad network space focused on the battle between ValueClick and Advertising.com and whether or not folks should use more than one ad network. The consensus from across the industry was a resounding yes, which is a good segue into a new trend that seems to be emerging -- the launch of the publisher ad network.
So while everyone outside of Advertising.com agrees that you need to use more than one ad network, I think some publishers have taken that sentiment a little too far. In the past few weeks, Martha Stewart Omnimedia announced that it is launching an ad network to complement its vertical inventory; additionally, a newspaper consortium of Cox, Tribune, Gannett and others has all but announced it is launching a newspaper ad network to compete with the Yahoo group formed late last year. (For some perspective on this announcement, check out a 1998 BusinessWeek article on the New Century Network, formed by newspapers nearly 12 years ago. If you haven't heard of this group, it's no surprise: the operation had already disbanded by the time the article appeared.)
Lastly a rumor is floating around that Fox Interactive Media (FIM) is planning to launch an ad network. FIM certainly brings tremendous scale to the table with all its properties, but I do not think media buyers are going to be too enthusiastic about running ads across a network consisting of MySpace and Fox News inventory.
Networks today are driving about 15 percent (rough estimate) of the display marketplace. Publishers are trying to figure out how they can capture some of these dollars, which is understandable. However, at the end of the day, these organizations are so much better at focusing on their strength of owned and operated sites than trying to partner with lots of third-party content providers.
When I worked at About.com in the late 1990s, one of the ideas that emerged was the Luna Network. The goal was to bring additional reach to About's specific guidesites, like Pregnancy, Italian Cooking and Computer Networking. By having more inventory, the sales team could garner more budget from advertisers. While this idea looks great on paper, it actually achieved limited success because the About.com inventory is so much more valuable than the inventory from these second- and third-tier sites. How do you price these other sites, manage the inventory and give the advertiser the results they need while managing your publishers? The network business is frankly more complicated and involves more moving pieces than I think many outsiders realize, especially publishers.
One of the reasons networks are so effective is because they employ a more innovative, hands-on approach to campaign set up, management and optimization. Clients also expect more from a network than a publisher, such as various levels of targeting that go beyond what many publishers can currently offer.
The network consolidation we have been seeing in the marketplace continues to be a good development. Long term, the industry cannot support hundreds of players with such similar offerings. Having new networks launch is not a step forward in the goal of making the network landscape more effective for advertisers. I watch with interest to see who will emerge next and how these publisher networks will take shape, although I remain skeptical on what, if any, success they will achieve.
What are your thoughts?
Michael Cassidy is CEO of Undertone Networks. Read full bio.
