Collective Media
Cup of Joe
Ad Network Trends to Watch...
Forbes, IDG, BET, and MSNBC, among others, have proven that you don’t have to be a start-up to throw your hat in the ring and capture your fair share of this fast growing display advertising market. What's interesting is that many of these leading brands are focusing on extending their audience reach by networking the innumerable number of independent, topical blogs rather than band together similar appeal vertical sites to grow their reach and market share beyond their wholly owned site(s).
While blogs present a great, under-monetized inventory base, they have largely proven to be a tough sell to Fortune 1000 advertisers looking to diversify their media buys beyond recognized portal and publisher brands. As a point of fact, in Collective’s 2008 Ad Network Study, blogs rank second to user-generated video as a 'no-no' for interactive agency/advertiser campaigns (39% of respondents place blogs on their 'do-not-buy' lists). In fact, social media sites, which have carried the burden of convincing advertisers to run with them, have a better standing among these online media buyers (with only 27% of agencies/advertisers having them on their 'do-not-buy' lists).
While vertical networks will continue to garner a lot of attention and market share in 2008, we saw a major shift in the market's perception of ad networks and the primary drivers influencing usage by agencies and advertisers. When comparing 2007 to 2008 results, the market now values audience targeting (45% increase in targeting as the reason for ad network usage) and inventory quality (up 61.8% as a main ad network differentiator) far more than gross reach and efficiency as benefits of working with ad networks. I think this is largely due to the fact that brand advertisers are now selectively buying ad networks where they were never a material component of the average media buy in the past. Certain ad networks are no longer solely relegated to direct response initiatives. We now complement buys that previously only included premium publishers and portals.
Ad exchanges have been a hot topic in the market as well, but adoption and usage by agencies and advertisers is lagging (only about 10% of those surveyed had tried ad exchanges in 2007). The 'automation' of online media buying/selling is definitely technically feasible, but I think ad exchanges, unlike stock exchanges, can't factor in the nuances of how media, not just online media, is bought and sold. Online publisher and agencies alike have an enormous investment in their people and services. Their ability to think strategically and offer/evaluate the value and differentiation of one ad impression compared to another is critical to the process. This is much more complicated for a brand advertiser or a direct marketer that values its brand, beyond how it performs on a CPA basis. For these advertisers, many of the buy criteria take center stage and today ad exchanges can’t adequately consider: editorial environment, transparency, share of voice, audience targeting, etc. So, I don't expect ad exchanges to quickly marginalize premium ad networks and publishers where brand advertisers are concerned.
Not surprisingly, the industry predicts more agency spending on ad networks in 2008 (40% of respondents plan to increase spend on ad networks by 10% or more this year). Moreover, we'll see a stratification of players emphasizing their core focus and benefits. Many will stay committed to the pure blind, performance market while others go vertical, video, exchange or premium. There is just one thing for sure – more choices for buyers and sellers. Let's hope this comes with greater innovation and value for all stakeholders.
Sincerely,
Joe Apprendi
Chief Executive Officer