Ad networks are one of the most confusing areas of the digital industry. Here are the answers to seven of your most pressing questions.
An ad network can be fully transparent in the sense that it passes on the exact information it receives from a publisher, but that information is often not complete information. Publishers drive the level of transparency; the ad network does not. If a publisher is selling its premium inventory through a direct sales force at $18 CPMs and that same inventory is available on an exchange or an ad network for $2.00, cannibalization will occur, which is why some publishers choose not to disclose complete information.
But there's more to transparency than just a site URL. Real transparency extends to the frequency and placement of both the user and the ad being acquired. Unlike DSPs and ATDs that focus on exchange and RTB inventory only, high quality networks stand to gain the most as advertisers get more sophisticated with regards to transparency. These networks leverage higher funnel, higher quality inventory acquisition techniques -- focusing on inventory before its gets to the exchanges, SSPs, and RTB marketplaces.
Networks generate profit margin from the inventory they buy and sell. These margins vary on a macro level from network to network, and on a micro level from impression to impression. Ad networks really can't operate at high margins given the performance standards they are generally held to. If they charge too much, advertisers won't buy; if they charge too little, publishers won't leverage the ad network.
For advertisers, it's important to keep in mind whether the network is passing on this "margin" to them in the form of ROI or not. Do the campaigns they run on the network meet their goals? What kind of data and technology does the network provide to help drive performance? More times than not, buying directly from all the publishers that the network works with would not drive performance on par with the network buy, and would create massive operational costs that are entirely eliminated by working through the network. This is the value that the network passes on to an advertiser.
Because of the many layers of fees that DSPs add on, in addition to the direct cost of an impression (publisher fee, advertiser fee, exchange fee, data fee, etc.), the actual margin generated from these fees can become greater than the "margin" that a network generates from the sale of an impression.
In general, if you are defining metrics and establishing goals (CPA, CTR, engagement, reach, etc.), you should be able to evaluate success based on those metrics. If your programs are not hitting your goals or are less defined in terms of objectives, you may wind up overpaying (and this is not limited to networks, DSPs, or publishers, but all forms of marketing).
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Greg, It is very confusing to some media buyers identifying whether a network is a actually network or an exchange,Whether they have proprietary relationships with publishers or are simply purchasing through other networks/etc., Is there a resource a media buyer might turn to?Thank you,A
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