What is the role of an ad network today?
After reading the recent post by David Kortez, "Ad Networks are for Idiots," I got really excited and terrified at the same time. After working for ad networks and related technology companies most of my adult career, I wondered if I was some sort of hypocrite.
Networks now control nearly 25 percent of display revenue, and that number is likely to increase this year given the dark days of the recession that are upon us. My new role focuses on helping premium publishers sell smarter, which has put me on what some would call an "anti-network tear."
Ad networks definitely serve a purpose: They give long-tail publishers access to ad dollars and provide scale and targeting for a wide variety of advertisers. However, they have also commoditized the online inventory by making every impression worthless and cranking every type of offer under the sun through the same set of inventory, regardless of its adjacency, size, position, context, and ultimately, value.
This began a backlash among the largest media organizations and, some could argue, the industry at large. Networks are losing their luster with publishers and were really the first step in automating the buying process for agencies. We now have a series of new technology companies truly automating the process by partnering directly with the agency to drive efficiency into the ecosystem (read: eliminate the sellers).
Brand publishers have a responsibility -- not only to their shareholders, but also consumers -- to drive the most value for their inventory in order to maintain a profitable and growing business, and thereby continuing to provide the services we all enjoy. When ad networks were originally conceived, they were more like a traditional rep firm, and not a mass aggregator or wholesaler of homogenized inventory like they are today.
In those days, networks added value to the publisher by extending the reach of the sales force and enabling the publisher to approach marketers outside their core focus. There are still a few of these networks around, like Travel Ad Network and upstart ShortTail Media, that exclusively sell inventory on behalf of publishers, providing real revenue and value to the publisher.
Publishers need to do the math on their own business to understand where the real drivers of their revenue and value are coming from. I guarantee they will find it is in their direct sales efforts. They need to take a few bold steps to reduce their dependency on ad networks and take back control of their future.
Here are a few recommended steps for publishers that are not simple to do, but will ensure a business is profitable and respected.
- Reduce the clutter. One is not the loneliest number. Get rid of as many unsold, non-standard ad sizes (you know the ones) that are not requested by marketers as you can. This will do a few positive things, such as increase page share-of-voice for the advertisers, increase the likelihood a consumer will interact with the ad left on the page, reduce ad serving expense, and, most importantly, limit the available inventory to sell, creating scarcity
- Understand your metrics. Implement reporting and tools to accurately measure the health of your business. There are companies that are focused on this specifically and will help identify the inventory that has the most value and then package and price it successfully.
- Focus on your core. Much like a good exercise plan, you need to focus on your center. Eliminate all the non-essential projects, programs, and cool fringe applications that are whiz-bang but don't actually contribute to the bottom line.
- Innovate. This seems counter-intuitive to point No. 3, but you need to innovate on the products and packages that are working. You cannot rest on your laurels and assume that because you are No. 1 in your category, you always will be. Consumers and advertisers alike need to know that you are smarter than they are and you are educating them about how to be the best at whatever they do.
Good luck.
Larry Allen is president of Yieldex.
