Ad Networks - On The Verge of Extinction?

There has been a lot of conversation around ad networks since ESPN decided to pull inventory from Advertising.com. I've been reading the articles, listening to the comments and thinking about ad networks from a media strategy perspective. Conclusion....they are a "necessary evil" in order to run successful, scalable direct response campaigns. Let's take a look at some things:


Efficiency:

While one article I read touted that in a media-agency buying group each buyer is supporting as many as two publishers during the course of a year. I beg to differ on this one, or we here at MediaTwo are superhuman. It's not unlikely to work from 10-50 publishers at a time per campaign.

A recent study by Collective Media (a New York-based ad network) found that over 95% of media buyers said that they would be working with ad networks this year, while 75% said that they planned to increase their ad network spending from 2007. No surprise here - it's the easier route for a lot of advertisers new to the online space, thus will definitely catch the "new-comers" . However, ad networks are also needed for direct response online - which, in my opinion, is what we are going to (or should) see a majority of online advertisers migrate to during the "economic shakeup".

Mark-up:

It seems that one of the issues being talked about is margins that networks are adding to the cost of media. While from the outside it seems that this could cause the media to having a weaker chance of success - I think that depends on some factors. Many times going straight to a publisher instead of through a network causes the CPM to increase to a figure that kills the chances of the ROI working out. There's also instances where the sales reps at the individual sites aren't allowed to sell the remnant inventory at the same discount rate. So, when your held to certain metrics in order to obtain your goals, the network route is sometimes the best.

Technology:

Optimization can make or break a network. Let me rephrase that..technology AND account management can make or break an ad network in a Direct Response model). Too many times I've been promised that a network will optimize to the CPA, only to be 10x my CPA goal within days and then the account manager says they will begin optimizing. Well, 99.9% of the time the CPA is so deep in the abyss that there is not a rope (or optimization) long enough to pull the CPA goal out at that point. So, account management and optimizing before things get out of control are a must for ROI. So, what if the direct placements had the technology to optimize against the CPA goals? That would be wonderful, but I'm not finding that to be true. I can think of at least 5 publishers of great scale that I've spoken to in the past 2 weeks that cannot place a conversion pixel on my confirmation page and then tell me where exactly on their property my ROI needs are being met, let alone optimize the inventory to funnel the impressions toward those areas. Until this is established, it's going to be tough going on advertisers to carry this burden.


Wrap Up:

I wouldn't start building "ad network museums" or anything...they are evolving and will continue to evolve as online advertisers become smarter and expect more from the publishers. Hmmm...I did learn something from the 8 am Economics class I went to a couple of times -- it's a simple case of -- Supply and Demand



Reference Articles:

http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=82362&Nid=42581&p=106607

http://publications.mediapost.com/index.cfm?fuseaction=Articles.showArticle&art_aid=82353&art_type=13

http://publications.mediapost.com/index.cfm?fuseaction=Articles.san&s=82262&Nid=42517&p=401699

http://www.clickz.com/showPage.html?page=3617001

http://www.imediaconnection.com/content/19337.asp

Web 2.0... really?

I first heard of the internets when I was in college, around 1995. At first I ignored all the hype as I was just too cool to find anything “cool”. All the students I had seen in the school library were looking at professional wrestling pages, This is the south after all and it was important to know what the Nature Boy Rick Flair was planning. Thank goodness the 4 horsemen had long since retired.

Fast forward a few short years later and the dot com boom is in full effect. I started working with computers creating short animations, recording lectures and working with Real Player. I remember the hype of this new medium and the mantra was “everyone can create a web page”. While this was true for a select few, the only “people” who could really take advantage of this new format were corporations who could afford to employ the army of people to code HTML (keep in mind HTML was cutting edge technology in 1998). Dreamweaver and other HTML editors were not user friendly and you had to know how to code javascript by hand to accomplish anything “cool” like an animated .gif. Money was thrown around and given to anyone who could code a hyper link and those people spent the money on launch parties for sites that had yet to be completed. Of course, most of these sites never got completed and the industry went bust. Web 1.0 was built on a promise that was more a sales pitch then a reality of the medium. Slowly though, the web evolved and an industry matured eventually delivering on that promise.

Now, when I turn on the news or surf the net, I hear a new buzz word.. Web 2.0. This time, it’s all about social networking. But really… isn’t this just what the initial Web 1.0 promised us? Finally now, everyone CAN make a webpage and they do on MySpace and Facebook. You don’t really need to know much code and you can “pimp” your page, with a little effort, express your personal style and actually fulfill the promises of Web 1.0. Today MySpace has even beaten the original web pioneer Yahoo! in popularity, blogs have truly taken hold and everyone can easily customize a personal corner on the web to share their life experiences with friends, family and the random web surfers who might have a pregnant wife or chocolate lab mix who obsessively chases his tail. It took a little more then 10 years, but web 1.0 has arrived… finally.

So what is Web 2.0? According to Wikipedia, web 2.0 is “web-based communities and hosted services, such as social-networking sites, wikis, and blogs”. Isn’t that already here? Isn’t this just what we were promised the first time around? Is Web 2.0 nothing more then an industry invented term to create a new buzz? What does the future bring for the real web 2.0 or 3.0?

The main difference I see between the realities of web 1.0 and the promises of web 2.0 is streaming video. Video is, at its core, a series of 30 images per second, just like an animated .gif. The first animated .gif, sent over the web in January 1995, sounded the opening bell of the first dot com boom and I hear those sirens singing again with video as their tune. Just like the .gif fueled web 1.0, video might drive this next online economic boom, but it’s not in the hands of the public… yet. If you look closely, most of this new content is powered by corporate America, driven by the industry and consumed by the public. This mirrors most industries in America and throughout the world, so it’s not surprising. But as the public becomes more empowered by technology and connected to one another, change is bound to happen and quicker then ever. As future generations age while being connected with each other and highly mobile (along with the popularity of the consumer camcorder, cell phone cameras and websites and blogging) little brother is watching Big Brother and that’s something no one expected, not even George Orwell. Maybe web 3.0 will usher in greater freedoms for everyone through government and corporate transparency. No longer can China squash peaceful protests with violence or American police beat suspects without us seeing. No longer can a radical preachers preach hate or a news anchor melt down without us seeing. Perhaps this is the real web 2.0… the world looking at itself truly creating a global community. Perhaps the revolution is here.

According to Wiki, Guerrilla warfare is “unconventional warfare … with which a small group of combatants use mobile tactics… to combat a larger, less mobile formal army.”

The internet is dead… long live the internet!

Ad Networks a Thing of the Past?

Today I read with one part joy and one part sadness the MediaWeek article titled “ESPN Turns Off Ad Nets to Protect Brand, Content”. The joy is very obvious here at Media Two: Stripping the ad networks of some of the larger sites will now “un-muddy” the waters with the placements and only interactive firms with the best capabilities and know-how will now be equipped to handle strategic online media buys (that was a much longer sentence than what I saw in my mind). Some of the advantages that come from bypassing networks include:

• Knowing that your ads aren’t appearing repeatedly on the same site when you buy more than one ad network. The top two networks make up something like 170% market penetration, and yes, we currently buy on both of them – and no, we don’t ALWAYS know if our ads are appearing on the same page at the same time.
• Traditional agencies that are trying to make a splash into interactive will now have to completely jump in instead of just dipping their toes in the water. Part of the problem we have right now is trying to explain interactive to new clients who have had other agencies do a half-ass job with their campaign.
• Optimization can be brought back in house instead of waiting for the networks “super secret optimization tools”.
• Buying direct always gives you better placements and rapport with the publishers themselves, therefore, hopefully allowing for better brand and position control – and always opening the door for more creative placements that can help advance the industry.
• If a network lowers your campaign exposure because a larger opportunity comes along, it doesn’t force you to frantically find replacement buys.

But with the good, comes the bad…

• Large sites like ESPN are probably going to ask for top dollar, when the networks have already proved we shouldn’t pay that much for them on a straight banner placement.
• Your buying clout and testing capabilities pretty much goes out the door. Has anyone else noticed that there’s no such thing as buying clout online anymore? Not to date myself too much, but I remember the days of placing ads in traditional mediums and the sales reps were willing to give me better rates for my Joe Blow client because they knew that we also worked with Gateway, Bose and others… But I digress.
• If we do want to ramp up our buys in categories we’ve found successful, we can no longer do it as quickly as the one call to the networks.
• More paperwork! You now have to contact 500 sites with orders that you could have gotten previously with just one IO.

Trust me, there’s a lot of good and bad to both routes, but I really think that the more the publishers take back control of their “A” Inventory, the more it will help interactive shops such as ourselves differentiate from the newbies in the industry.

The Tangled "Web" We Weave...

I was going to call this blog ”How Uncreative and NOT Fun Writing Can Be When Prompted Repeatedly", but as I was getting ready to start my day this morning, a different topic entered my mind. How my interactive career has become entangled with my personal life.

Not to say that it's a bad thing...it's just hard to explain some times. Over my years in the media side of the biz, I've met and done business with countless people in this industry and overall I have to say, what a great group of peeps! I've worked both traditional and internet-side...no offense traditional, but the internet profs are way more fun to work with. Maybe it's because we're all relatively young and learning the ever-changing landscape of the big WWW daily. Maybe it's because it takes a certain personality to want to dig in the trenches to build out this new medium.
Maybe everyone has "been there, done that" on the stuffy side of advertising and marketing and is set to do the complete opposite. Whatever the reason, it fills your life with very unique and interesting relationships.

And sometimes those relationships, turn into friendships....crossing into your personal life.....

I was attending my friend's wedding over the weekend, she was one of my first clients, a co-worker and a "help guide" for motherhood. At the same wedding were....1 old boss, 3 more former co-workers, the admin for the Oldtimers Group and 3 former sales reps. Together, however, they are also known as my friends.

I've felt for years that this industry is just one big happy family and watching the NY sales reps' toddler dancing with my flower girls, somehow solidified my feelings.

The moral of this story? My writing is just not very creative when prompted repeatedly.