Who is to blame for falling CPMs, and which ad network gives marketers the reach they crave? Those questions and a stunning hiccup from Google dominated the top stories this week.
Two years ago ad networks, which accounted for a meager 5 percent of the online ad inventory, didn't garner much attention from buyers, sellers or the press. But today, with ad networks accounting for 30 percent of the web's inventory, the story has changed. So it's little surprise that a recent study from the IAB and Bain & Company has attracted comments from a slew of interested parties.
At the heart of the issue is Bain's finding that ad networks -- particularly secondary and tertiary sellers -- have driven down CPM revenue on premium content. According to the study, publishers selling their inventory through ad networks are getting CPMs between $0.60 to $1.10 -- a shockingly low number compared to the $10 to $20 the same websites get by selling their inventory directly to advertisers.
But whether ad networks or a surplus of inventory are to blame for the decrease in prices remains a subject of some debate. According to the study, ad networks have largely driven down prices for advertisers, and it will be up to those same networks to help publishers increase value vis-à-vis improvements in targeting. However, Peyman Nilforoush, co-founder and CEO of NetShelter Technology Media, sees it differently.
"Horizontal ad networks are doing a complete disservice to their advertisers and publishers by creating a commodity ad brokering business that undervalues publishers' inventory and doesn't take into consideration marketer branding goals apart from bulk pricing," Nilforoush says. "Media companies such as CondeNet, Forbes, ESPN and others have realized the value of the vertical media network model and are firing their horizontal ad networks.
According to Nilforoush, who runs a vertical ad network, the study's findings could be a harbinger of an ad network evolution that will see a shift away from massive horizontal players like Google and AOL toward hyper-focused networks.
But not everyone agrees with that assertion. Unsurprisingly, many horizontal networks have been quick to cite the study's own finding that publishers may have ramped up the supply of premium inventory, which has caused the drop in price.
That means we could be in for a long debate, with horizontals and verticals pointing fingers at each other as publishers worry about dropping CPMs.
So which ad network is best?
As for marketers working with ad networks, the news may be a little brighter in light of a new product from comScore that enables buyers to better measure reach across ad networks.
The new metrics will track both actual reach and potential reach -- the latter referring to the unduplicated visitors to each site in the network. That figure will be determined by looking at written documentation provided by comScore and confirmed by the network.
But for Sean Cheyney, VP of marketing for AccuQuote, the idea of basing a buy on potential reach smacks of the difficulties he's encountered when buying print media. According to Cheyney, while the data is nice and the improved transparency is more than welcome, the addition of metrics such as potential reach could be a case of too much information.
"Buying on potential reach sounds like a very speculative way to buy in the end," Cheyney says. "Overall, it's nice to see a reputable source like comScore measuring this, but actual reach is what matters."
ComScore plans to roll out the product by mid-September.
Twitter: Google where are you?
Those who think the vaunted Google is invulnerable got a rude awakening Monday when Gmail, the search giant's email service, inexplicably went down for several hours. According to widespread reports, more than 20 million users were left without access to their emails accounts.
So far, Google has been relatively quiet on what caused the problem, but the crash was a boon for at least one internet company -- Twitter, which logged more than 100 tweets per minute as its users spread the word of Gmail's temporary collapse.
Michael Estrin is deputy editor, iMedia Connection.