The Social Web Economy: Ad Networks & Sales Teams

This is a continuation in the series “The Social Web Economy

Ad networks are the primary source of revenue for most of the product companies on the social web. While some companies have their own internal sales team, the majority of the product companies rely on these ad networks to manage most of their sales. They are too small to handle this part of their operations. Smaller media companies also frequently outsource their ad sales to an advertising network.

Distribution companies and social web agencies typically have their own in house sales team and as such they are not in need of outsourcing their sales operations. Frequently distribution companies and agencies will build their own advertising networks to manage their advertising distribution. Sales teams are important because they are able to negotiate higher CPMs.

For product companies, advertising dollars are redistributed from the advertisers through the sales teams to their companies at lower rates since the ad networks/sales teams have taken a cut. On the social web the majority of companies generate their revenue through advertising. I am regularly critical of the lack of traditional business models on the social web. Regardless, advertisers continue to put advertising dollars into this space.

Each product company and platform in the social web economy tends to have their own type of advertising which ultimately conflicts with one another. For example, some chat platforms provide advertisers with the ability measure the conversational impact of an advertising campaign run on their platform. Facebook measures conversations as well in their new video advertising solution.

There’s feed advertising and other forms as well all which in my own opinion end up confusing the advertiser more. Back in August when I wrote about the state of social advertising, I highlighted the challenges presented by inconsistent offerings among these companies. While social advertising cannot currently compete with search, an increasing amount of advertising dollars continues to pour into this space.

A substantial portion of this money is going directly to the sales teams and ad networks. Not such a bad place to be!

Next in this series: “The Social Web Economy: Analytics Companies”