In Focus

A primer to navigating the ad network landscape

Robert Moskowitz
Ad Networks Posted on October 29, 2008

Geographic and pricing model networks

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.

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Comments

Andy Atherton
Andy Atherton October 31, 2008 at 7:00 PM

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.