Ad network execs explain why networks saw explosive growth in 2005, and predict increased value in 2006.
Executive Editor Brad Berens has conducted thoughtful interviews with a number of executives from top ad networks lately. Among the questions asked: what happened to the ad network landscape in 2005, and what's in store for 2006?
Following is a compilation of answers to this inquiry. Bottom line-- growth and prosperity for the networks, added value for marketers:
Gurbaksh Chahal, CEO of BlueLithium: Today, some of the best performing inventory for advertisers is out on the fringes on social networking sites, user-generated content sites, video, multi-media and photo community sites and other places that didn't exist two years ago. Ad networks like BlueLithium give agencies and advertisers a safe, efficient way to access this content for their campaigns. Networks are the best way for advertisers to get at the juiciest, fastest growing parts of the internet. Of course, all ad networks are not created equal. Advertisers want to look for networks that invest in their own ad server, together with sophisticated optimization technology and targeting tools such as behavioral and semantic. I predict that as the web continues to expand and fragment, the ad networks that provide these capabilities will become increasingly strategic to agencies and advertisers.
Read the complete interview with Gurbaksh Chahl.
Jacques Hart, VP, ClickDario: Ad networks are proliferating to keep up with the demand from publishers and advertisers for their services.
For instance, many website proprietors and executives want to solely dedicate themselves to their content and do not want to be actively involved in sales. Simply put, they are subject matter experts and their passion is content and editorial versus sales and commercialization. Ad networks can quickly help them monetize their properties, enabling them to focus on their content.
Conversely, advertisers -- both direct clients and agencies -- are asking for help to find the best distribution for their marketing messages. They cannot afford to sift through thousands of sites and negotiate terms with each one of them. Ad networks play a critical role in providing them significant, yet targeted distribution in one media buy.
Advertisers and media planners need to balance the size and reach of the network with both the customer service and creditability. Aligning advertisers with networks that have strong distribution can offer economies of scale; however, in many cases, the network's growth feeds bureaucracy which can impede their customer service. Additionally, the code of ethics and credibility is important when selecting a network.
Read the complete interview with Jacques Hart.
Tim Vanderhook, CEO, SpecificMEDIA: I have a two-part answer.
Part One: In 2005, there was an explosion of new companies in the ad network space, an explosion that, I feel, was due to a few contributing factors. First, the investment community gave a lot of interest to this type of business model, which naturally attracts entrepreneurs to create new businesses. Second, advertisers and agencies are looking for ways to reach specific audiences with large scale, and that can only be found in a few places online, primarily with the big portals and ad networks. Lastly, publishers are always looking for partners that can help them monetize their ad inventory.
The above factors caused a lot of new ad networks to appear and have shown that anyone can rent a third-party ad server, place a remnant media buy on a few sites and slap themselves with an ad network label; however, this doesn't make them any different than the next guy. In order to succeed as an ad network, you must be able to differentiate yourself from the rest of the pack.
Part Two: Predictions are always tough to do, but here it goes. Marketers will continue to focus on using ad networks that offer behavioral, contextual and/or demographic targeting technology. The top ad networks (those that have a truly differentiated product offering) will start to leave the others in the dust by means of their advanced targeting technologies. Advertisers and agencies will continue to be educated on who the "real" ad networks are and naturally gravitate to them. The true benefit that the ad network brings to the marketplace is the targeting technology they have created; those that have it will rise to the top, those that don't will have a tough road ahead.
Read the complete interview with Tim Vanderhook.
Jarvis Coffin, president and CEO, BURST: It is very hard for me to separate our own business from predictions for 2006, because this is the time of year, of course, when we are caught up with predicting 2006 for our business. I would tell you this: We think it is going to be a robust year for the advertising network space. And, we think that critical drivers of success in 2006, for networks, are going to be some of the things that we have talked about-- the ability to provide advertisers with transparency.
I think that it is generally recognized that a big driver of advertising growth online is coming from brand marketers. And, brand marketers are a discriminating set. And, while they have critical performance metrics against which they have to evaluate the success and the strength of their advertising program, baked into that consideration set is, "are we talking to the right people? Are our messages showing up in the right place? Are we supporting the brand proposition that is already out there?" I think networks are going to be called upon to help distribute their messages. And, that is going to require control, accountability and transparency. So, I think you are going to see a lot of pressure on that.
Additionally, it has been interesting to read the headlines in the last couple of months, in iMedia and elsewhere, about top websites being sold out of inventory. That bodes well for the network space, generally; because that is absurd-- that the internet is sold out. And, the notion that it is sold out is reflective of some kind of crisis of value that we have online. Because if all of online media and advertising is essentially about, oh say 50 pieces of real estate online, then that is a complete disconnect from how consumers see the marketplace. So, in 2006, I think that -- after a decade of nurturing this industry along -- people are going to be talking more and more about why people use the internet, and how people use the internet. We have really only scratched the surface of that, and that is called paid search.
We've got five years into it (paid search), and we have seen how explosive that can be, and how lucrative that can be. But, really, that is only the surface of the internet space, and it is only the basics of how the internet gets used. Ultimately, it is about what is underneath those searches. It is about the 10,000 returns that Google or Yahoo will provide you when you type in, "cheddar cheese." And, I think advertisers will be looking to exploit how people use the medium, as distinct from how they use other media, trying to reach them now at the places where they are most predisposed to their messages-- those vertical environments. That is distributed media. Networks, I think, are going to enjoy then a very busy -- and hopefully a very prosperous -- year, because they are the ones that can enable that kind of connection.
Read the complete interview with Jarvis Coffin.
Dawn Anfuso is senior editor of iMedia Connection.