Use of "Ad Networks" Surges Six-Fold

The Interactive Advertising Bureau has released findings of a recent study stating that online publishers and websites have been placing their unsold inventory in the hands of "ad networks."

As online publishers continue to experience growth rates of 20-30% in ad revenue, the race to create new advertising opportunities has left publishers with an excess of inventory which they are selling through ad networks at up to 90% discounts versus direct sales rates.

These networks are able to acquire unsold inventory from hundreds and hundreds of premium and non-premium websites and create package deals for advertisers. Also:

“Online publishers are producing more inventory than the market demands, and risk devaluing the premium nature of their brands, particularly in light of ad networks growth and their dramatically lower pricing,” said John Frelinghuysen, a partner in Bain’s Global Media Practice and study author. “Building more effective relationships between publishers and ad networks is critical. In the longer-term, both parties will benefit from gains in ad network CPMs.”

But many advertisers want to be associated with big-name, tier 1 sites. They want the branding and the affiliation with the premium names out there. What they forget is that it's not the website that's buying their products and services, it is the actual user of the website. Chances are good that the user is visiting multiple websites during any given online session. And if it's the users you want to reach, shouldn't you focus on the sites they are actually visiting as opposed to the sites you think they'll be visiting?

Jim Meskauskas of iMedia Connection agrees:

...what needs to be understood is that the audience is what matters most-- more than where the audience is found. And if where these audiences are found are places where those audiences have chosen to be, even if it is a place you haven't heard of, what's wrong with that?

We all know that an ad in a bad place can have a negative impact. But does being on a site the advertiser is familiar with versus one it has not, so long as the audience is right, have a more positive impact?

None of this is to say that buying within ad networks is better than buying a highly branded single site. It is to say, however, that advertisers need to think more seriously about ad networks in addition to those sites.

The best thing about some of these ad networks is that they offer behavioral tracking, so when your target user moves from one site to another, the ad can follow them and show up on additional sites, whether or not the newly visited site has anything to do with the original ad. Depending on the network, you can optimize your impressions to show more on the sites that are receiving the most response.

As Meskauskas notes, it's finding a way to add networks to existing single site placements that will provide the largest gain.