While industry estimates continue to project modest growth for digital media, and as marketers demand greater accountability and performance, ad networks are outperforming the category as a whole. One primary reason for this is obvious: pricing. It is well known that ad networks generally offer a significant price advantage over buying from sites directly. Last year's Bain/IAB Digital Pricing Research study found that average realized CPMs on ad networks were just 6-11 percent of direct-sold rates.
But for marketers, a push toward value translates to more than lower CPMs. Cost efficiency must be met with quality, scale, targeting, reporting, and service in order to extract full value from the online channel.
In an effort to gain CPM efficiency without sacrificing quality, many marketers are finding success by developing deeper relationships with fewer network partners. Whether you are considering working with networks for the first time, or reevaluating existing partnerships, here are a few ways to better qualify your network partners.
Access to better inventory
The recession has increased both the number of publishers that sell through networks and the amount of their total inventory they sell in this manner. Today, most high-quality publishers generate a significant portion of their revenue through networks. When Martin Nisenholtz suggested during a January earnings call that as much as 50 percent of The New York Times' digital inventory may be sold through networks, many brands took notice. Leading networks take site quality very seriously in recognition of the need to offer truly brand-safe environments for even the most cautious brands.
Growth in cost-per-action opportunities
When ad networks first became a significant media channel for online budgets, their focus was on cost-per-thousand (CPM) models. Today there is more flexibility among the largest ad networks in developing hybrid, cost-per-click (CPC) and cost-per-acquisition (CPA) programs to give advertisers a greater assurance of cost certainty and ROI. Some publishers are also moving in this direction.
Brand safety assurance
Years ago, some ad networks had a spotty reputation because a few of the sites they worked with weren't up to the quality standards of major advertisers. In response, many networks have made a concerted effort to better screen their publishers. For most networks, this involves both manual human inspection and automated tools that analyze site content before ads run. Additionally, the most reputable networks offer complete site transparency, thereby letting advertisers identify the list of sites outside of which their ads will never appear. Some also report results on a site-by-site basis.
Targeting and optimization
The ad network space began as a means of buying and selling inexpensive remnant inventory. But today, many of the major networks have access to premium inventory, and targeting improvements make each impression yield more performance for advertisers. Additionally, the largest networks offer campaign optimization technology that helps refine the mix of placements, ad sizes, and sites more quickly. Such methods don't diminish the value of expert media planning by agency teams, but they do help improve response times and results.
Behavioral targeting advances
In the past, one of the big issues with ad networks was that at some point the number of actions or purchases achievable through the channel plateaued -- there was only so much business achievable through efficiency-oriented run-of-network schedules. In part as a way to address this, ad networks have been the most active innovators in behavioral targeting. From the ability to retarget consumers who have recently visited an advertiser's site, to more complex "predictive" BT, these methodologies are helping networks deliver more performance by focusing on identifying the consumers most likely to be interested in a particular offer, not just the sites they are most likely to visit. By amassing data directly from partners, these network BT solutions avoid the latency inherent in buying data and media separately to deliver the desired results at an improved ROI.
Bringing solutions together
As networks mature, they are expanding the ways they deliver improved performance and offering a combination of these solutions. Technology doesn't replace the efficiency of networks, it simply enhances it. Nor does it go without stating the role of service. The best networks employ account management teams to ensure the right mix of solutions is in place to meet advertisers' performance expectations.
ROI has always been at the center of the ad network model, so greater advertiser interest in performance has boded well for leading networks. But advances in brand safety, technology, and targeting can also make a great deal of difference for brands.
To capitalize on these opportunities, open a genuine dialogue with leading players to see what they can do for your objectives. There are lots of networks out there; be sure to select partners that are likely to be around for the long haul, so the investment of your time and resources can yield benefits long into the future.
Bill Todd is general manager at ValueClick Media.
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