As the ad network market matures, consolidation is inevitable. ICON's Jocelyn Griffing tells us how the market is likely to shake out and where the most value currently lies.

Although the woes of some online ad networks have been well-publicized in recent months, few would dispute that such networks remain an indispensible component of online media planning and buying. In this interview, Jocelyn Griffing, senior vice president and director of online marketing at ICON International, an Omnicom company, discusses the current shape of the ad network landscape, as well as the biggest challenges facing media buyers today.

iMedia: There's been a lot of talk surrounding the proliferation of ad networks in recent months. How has the market fragmentation affected how you conduct business?

Jocelyn Griffing: The impact on business practices is most evident in the form of the increased options available. There are many more choices and nuances within the ad network world now than there ever has been before. There are more planning buckets within the ad network space than there used to be. Or, maybe better said, more planning buckets are being articulated and differentiated from one another in subtle ways. The emergence of "vertical" ad networks has done a lot to focus on the long tail, the self selected and targeted audience.

However, broad reach "horizontals" continue to bring forward more opportunities to reach smaller pieces of audiences that are found in more places. They use their massive reach to bring those little pieces of audience together to deliver a scale that is meaningful to the advertiser.

The definition of an ad network has changed, too. Now, the term "ad network" is used for not only verticals and horizontals, but also, in some cases, to refer to rep firms, DR one-stop shops (co-reg and lead-gen aggregated sites), emerging media technologies like multiple blogging sites that have come together or video opportunities, mobile networks, ad networks for certain creative types only, like pops -- you get the idea.

iMedia: There have been hints that the current number of ad networks in the marketplace cannot be sustained, though some industry players are arguing otherwise. What are your thoughts on how the playing field is going to evolve over the next few years, and what implications will that have for you and your clients?

Griffing: Consolidation is inevitable. Market maturation always brings consolidation. This should lead to getting more of what you want, but having to go to fewer places to get it. If the market is working properly, there will be fewer players on the field, but that field will be more level, consisting of better technology, service, performance and pricing.

iMedia: Where are you currently finding the most value in ad networks? What ad network models are most appealing to you and your clients, and are there any types you think are underutilized?

Griffing: We are finding the most value in two kinds of ad networks. The first is big guys with lots of audience targeting capabilities but reasonably low costs. This bucket is also useful for mass reach and tonnage goals, yet with a level of targetability and other technological capabilities and goodies... all still at efficient rates with no under-delivery issues. The second kind is the vertical ad network that is really focused on a niche affinity group.

The value proposition of ad networks, regardless of how they position themselves, continues to be their ability to aggregate audiences that are not very large in any one place. But when brought together, those audiences provide scale that can move the needle on one's business while at the same time delivering the efficiencies that come from aggregation.

The models that are more appealing are those that can give broad reach within a niche or specific affinity. Direct-response pricing against tonnage buys is also attractive.

iMedia: In your opinion, what's the biggest challenge facing online media buyers today, and how are you coping with that challenge?

Griffing: The biggest challenges for media buyers are related to how to do the big idea, develop sexy creative, and test emerging media technologies while dealing with shrinking or flat budgets and tightening ROI, all while establishing and meeting performance benchmarks.

The biggest challenge facing ad networks is the need to be able to accommodate out-of-the-box creative across the entirety of their networks. The explosion of widgets and their use, and the ease with which they can be distributed, will help some to address this, but it still isn't, say, doing a homepage takeover across an entire ad network. The short-tail ad networks, like Collective Media or ShortTail Media, stand a better chance of executing on this sort of thing.

iMedia: How has the current state of the U.S. economy affected your media buys in recent months? How has it affected what your clients are doing online?

Griffing: So far, the state of the economy has led to minimal budget cutting. We saw more cut back in the middle of the year with our food clients, when fuel and commodities prices were so high. As of now, there's been more talk of delaying some budgets that remained for end-of-year '08 and using them in Q1 '09 to see if there are greater efficiencies to be had. I continue to hear about some level of budget shifting from traditional media platforms to online due to digital's ability to be so nimble in all respects, ranging from creative to cancellations, pricing efficiencies, data feedback, etc.

iMedia: Where do you see the greatest confusion among your clients when it comes to media buying? Or, similarly, is there a popular media-buying myth out there that you think needs to be dispelled?

Griffing: Greatest confusion among clients is when it comes to understanding where search fits in with the rest of their online efforts. Search used to be part of the standard online media practice. As soon as it became "technologized" and we moved to CPC link placement from keyword-triggered banners, search was separated, specialized and mystified. Clients need to be led to a clear place where they can see everything they do in the same light. The relationship between search, display and testing new emerging media still has a fragile balance.

Lori Luechtefeld is editor of iMedia Connection.