Storied retail giant John Wanamaker best summed up the paradox of advertising a century ago: "Half the money I spend on advertising is wasted; the trouble is I don't know which half."
Little did he know how unfortunately evergreen his frustration would be; although we'd like to think that advertising has evolved into an exact science, it's often relegated to a haze of random guesswork. It is becoming a matter of survival in today's uneasy economic climate for ad networks to provide greater value to their clients instead of merely acting as an arbitrage broker.
As we discuss the value of ad networks, let's first take a step back to look at the evolution of "transparency." The term was a foreign concept to most ad networks as recently as five years ago, as most networks were merely inventory brokers. Providing true transparency would have compromised the nature of how these networks made money and jeopardized their one true asset: the relationships they provided.
As networks have evolved into a scalable solution for advertisers by focusing on optimizing reach and efficiency, transparency has become an important issue facing agencies and advertisers alike. Often, ads networks were able to provide great results with significant scale, but "magically" the client would be alerted that one of its ads appeared on inappropriate or pornographic content. Disaster would ensue.
Naturally, advertisers started to ask where their ads would be running to avoid such situations up front; after all, they still relied on the cost-efficient scale being provided by their network partners. The widely adopted solution offered by many ad networks was to provide the advertisers with the least amount of information required to keep them out of trouble. This evolved into a site list -- a list of sites on which a client's ads may or may not run.
Today, sophisticated advertisers understand that the value of transparency extends far beyond merely keeping their brands away from inappropriate content and out of trouble. Transparency isn't just a defense mechanism; it's about providing data necessary to help empower advertisers to make better business decisions and spend money more efficiently. By gaining more actionable insight into which audiences responded best to their messages -- and which didn't -- advertisers can improve ROI and spend their budgets more efficiently. Without this "in-buy" and "post-buy" understanding as to where the best results originated from, advertisers can become stuck in a cycle of inefficiency by paying networks to provide a series of consecutive short-term fixes.
While many ad networks have the technology to provide in-depth data associated with campaign performance, few are willing to do so. This is extremely short-sighted in an ultra-sensitive business environment where advertising and marketing spend is under intense scrutiny. By providing transparency that does not end when the campaign begins, ad networks are able to form longer-lasting partnerships that go well beyond short-term solutions. Ad networks need to take advantage of the data they collect and "lift the veil," so to speak. They need to provide advertisers and agencies with the data necessary to make the right business decisions in real time, as well as post-campaign performance data that will help determine future budget allocations.
We're at an important turning point in the online advertising market where the networks that are not providing a differentiated value proposition will succumb to ad network Darwinism. We've already started to see what happens when ad networks attempt to stay afloat by offering run-rate services and give minimal attention to transparency. Over the past few months, we've seen several high-profile ad networks impose sweeping layoffs, while others have closed their doors permanently.
If you are wondering if you've partnered with the right ad network, here are five questions you should ask your sales rep:
- Can I choose the exact sites where I want my ads to run before the campaign begins?
- During the campaign, will I be able to see each site where my ads are running and the performance associated with each site?
- Can you show me the demographic composition of the audience of people who saw my ads?
- How much better could my campaign have performed by eliminating inefficient traffic?
- What recommendations can you make so that I can spend my money more efficiently across all my ad buys?
Ultimately, the success of an ad network is inextricably tied to how much support it provides you before, during and after your campaign implementation. If you're in doubt as to whether you've gotten all the information you can from your ad network provider, it's time to consider a switch.
Michael Katz is president of interCLICK.
