According to Media Screen, interest in the products and brands advertised on smaller sites is actually higher than on larger sites: 42 percent versus 38 percent.
While this is not a big margin, it is enough to make you think really hard about why a whopping 66.6 percent of online media budgets are spent on the top four portals, according to eMarketer.
The top portals have sophisticated selling operations that make it seem to advertisers that they are getting comprehensive market coverage with a portal buy, when in fact the portals, which have good deal of email and other unattractive inventory, simply don't reach the passionate enthusiasts who visit niche sites. And neither do the horizontal networks, which rep hundreds of sites with a variety of different audiences.
To truly connect with the audiences of the smaller niche sites, marketers need to understand how to engage with these loyal but particular users on a site-specific basis, and horizontal ad networks selling on a RON and ROC basis are not uncovering these hidden and highly lucrative opportunities.
In short, horizontal ad networks sell their network (or part of it), but to get true value out of these niche site audiences, marketers need to buy the site or engage with a particular community of sites, not simply RON.
RON network buys hurt both the advertisers (because they don't get true audience value) and publishers (because they don't make the most out of their ad space.)
It takes seasoned media professionals who truly understand an industry category and who have deeply integrated advertising opportunities that they can leverage across related sites to make this level of connection with these target audiences. It is only then that advertisers get the type of value out of their branding dollars.
When vertical networks connect with these loyal target audiences, it is as rewarding as the performance metrics show: 0.8-1.5 percent CTR on banners and 5-10 percent on rich media (vs. an industry norm of 0.1-0.2 percent on banners). This is what has been missing from horizontal ad networks, and it is the very reason that while they have an even higher reach than the big four portals, they only attract a fraction of online marketers' overall budgets.
Horizontal ad networks are built for consumer-targeted, direct-response campaigns, while vertical media networks are better suited for branding and B2B initiatives due to their high audience composition, integrated advertising opportunities, inventory control and strong ties with their publishers.
Horizontal ad networks are about any and all eyeballs, while vertical networks connect with very specific target audiences that have a demonstrable affinity for the kind of messages they will get, which is effective for advertisers at both the consumer and the B2B levels. By representing a variety of content-specific sites, at least in the technology space, we can reach higher-level IT executives as well as tech early adaptors and enthusiasts. Furthermore, by controlling all of the inventory in the sites we represent, we can offer brand awareness B2B or consumer campaigns that create a big buzz (around a product launch or a particular event) using a wide variety of ad units and integrated content sponsorships that are coordinated to engage with the target audience.
By being experts in technology media, we can help advertisers engage audiences at every stage of the technology-adoption process, including consideration, evaluation and implementation. For example, for an IT security company, we created a Security Solution Center on the largest IT site on NSBN and drove traffic to it from 20 top security sites. The campaign had all the components needed: co-branding to ensure engagement, the education to ensure proper and well-guided evaluation and the banners for brand awareness by creating huge buzz around the product and getting a viral effect going. Furthermore, we've created discussion forums and a live webinar around the product and are promoting it both through heavy-use banners and rich media on other NSBN sites.
Vertical networks are publisher driven, where content is still king. In a similar way to publication networks, vertical networks integrate advertising programs into their sites and engage the brand with the site's audience and content. In the technology vertical, we tie the brand into the content around big product launches, industry conferences such as CES and CeBIT and seasonal sales events such as "back to school" or holiday shopping. This is the type of integration that brand marketers look to execute online, but which is completely missing from horizontal ad networks due to their direct-response, CPA-oriented business model.
As brand marketers shift their budgets from TV to online, they will continue to expect the same level of transparency and safety from their media partners. While horizontal ad networks simply cannot offer this due to the core nature of their business, vertical networks can. This means letting the advertiser know on a site-specific basis where their ads are running as well as ensuring them that the content they are targeting is "safe" and their ads won't appear alongside something like a blog entry from an unsatisfied customer. We do this through site audits, full inventory control and strong ties with our publishers.
Peyman Nilforoush is co-CEO, head of agency relations for NetShelter Inc. .