Ad Nets to Proliferate

NEW YORK Sometimes, it seems like everyone has an ad network. That won’t change anytime soon, as more specialized networks pop up to help advertisers reach consumers dispersed across the Web.
That’s the conclusion of an evaluation of the ad network landscape by The Rubicon Project, a company that helps publishers manage their ad network relationships. While ad networks now top 300 by its estimate, the Rubicon Project expects that number will grow more still, particularly among specialized networks that cater to brand advertisers.
Until recently, brand advertisers tended to shy away from broad-brush ad networks that typically sell to performance-based advertisers. Yet as more brands look to move budgets online — General Motors has said it plans to spend 50 percent of its marketing budget online within three years — this will lead to the rise of networks that give them the type of control and access to quality content they demand, said Frank Addante, the Rubicon Project’s CEO and a former executive at early Web network L90.
“The barrier to entry to becoming an ad network is fairly low,” he said. “You can differentiate by technology. Some are differentiating by better customer service. It’s not like an ad network has to be 1,000 people.”
The need for ad networks will grow as people spend more time online, but also visit more sites. The Rubicon Project estimates publishers as a whole sell just 20 percent of their inventory through their direct sales force.
ESPN recently said it would cease using ad networks, out of fear low-quality placements are degrading its brand. The network also plans to start its own network.
Such moves will remain distinctly the exception to the norm, Addante said.
In fact, he can see online advertising moving closer to the software
industry, which prefers to sell through its partner channels than directly.
“If we can provide ad networks with greater visibility, we could see that model flip over the next few years,” he said.
The biggest growth areas: ad networks focused on a specific lifestyle or psychographic that would appeal to brand advertisers. Media companies like Martha Stewart Living Omnimedia have recently started ad networks to extend their audience reach. Adify is assisting in the creation of at least 90 niche networks for categories such as sports, women’s and gay.
“We’re going to see a less and less horizontal plays and more vertical plays, whether content verticals or audience verticals,” Addante said.
Michael Hayes, managing director in North America of Initiative, said many of the me-too broad performance-based networks would struggle to add inventory from top portals, which in the past year have all bought their own networks. What’s more, they are unable to provide the kind of transparency needed to attract big brands, he said.
“There’s just too many of them,” Hayes said of the networks.