Time for super-brand ad networks

Cameron Hulett, senior vice president, publisher solutions at Acceleration, explains why publishers should consider establishing super-brand ad networks as they strive to take more control of selling their online advertising inventory.

Wednesday, 31 March 2010

To understand the rationale for super-brand ad networks, it’s worth casting a critical eye over the current ad network landscape.

The problem with ad networks

Typically ad networks fulfil one-to-many advertising sales strategies for publishers and advertisers: a third party partners with multiple websites to serve ads in return for a share of the revenue.

Many ad networks offer the benefits of a fairly well-defined demographic, and achieve relatively good penetration. However, one of the drawbacks of current ad networks is that advertisers have limited – or no control – over the publisher brands they get associated with, and they can never be sure that their ads are being experienced in the way they would like them to be.

The same argument works in reverse. The style of the ads being served across the network may not necessarily correlate with the quality or branding of individual sites. There is a risk of ads appearing on network sites that have no relevance to readers and may even frustrate them.

Another issue for publishers is that ad networks tend to “go for volume” and drive down pricing, while at the same time taking a significant portion of CPM. Additionally, this boils down to the ad network taking control of the pricing of advertising, which is something stronger publishing brands don’t want to relinquish.

Ultimately, this puts the reputation of the publisher and advertiser brands at risk of being eroded over time, and is the reason why high value publisher brands shy from ad networks.

How would a ‘super-brand’ ad network work?

To get around these issues, publishers with strong brands – super-brands – should consider building their own ad networks. These super-brand ad networks are an extension of the existing vertical ad network concept, but with the backing of a significant brand behind it. It would offer a combination of the publisher’s own inventory along with the inventory of a network of specifically selected, focused and well aligned partners. The network members would benefit more from being aligned with the super-brand than they would by being members of a less focused network without the brand association.

Building such a super-network takes time and effort, but will give super-brand publishers the presence they need to survive and dominate their chosen markets. When building the super-network the super-brand needs to strive to become the first point of call for advertisers, while at the same time the reason for turning to the super-brand publisher for advertising needs to be clear to advertisers.

The result would be a premium inventory network that is fundamentally different from the existing vertical ad network market we see today. This would be backed by an engaged, loyal community of websites that benefit from the super-brand association.

Creating a super-brand network would also enable the publisher to take control over the CPMs for its particular market by cutting out the ‘middle man’ and setting more appropriate pricing bands for its valuable inventory. With greater control over the inventory in its ad network, the super-brand publisher can offer more targeted advertising packages, based on a range of criteria, and at the same time it can also increase volumes to levels that large advertisers/agencies require.

Measurement and reporting are essential to deriving maximum value from the super-brand network. This enables the super-brand to build highly attractive, well-targeted databases that will attract advertisers even more to their network.

Vertical networks point the way

To some degree, vertical ad networks already offer some of the benefits of this super-brand ad network approach. Super-brands can simply take it a step further.
A study from comScore shows that vertical ad networks were effective in reaching people with significantly higher-than-average engagement in their respective content categories. Of the five segments studied, people reached by vertical ad networks spent at least 60 percent more time in those site categories than the average category visitor (comScore, 2009).

Other vertical network successes include Glam; IDG; the partnership between ESPN and Fox; Gawker; Federated Media; and Reuters. Adify has created a business purely around vertical network technology – and the fact that it sold for US$300m to Cox Enterprises shows that this approach offers significant value. In addition to this one of the early ad networks, Collective Media, has extended its network offering, and is now connecting itself into multiple data sources. So this space is moving fast!

Ultimately, however, even vertical ad networks cannot offer the levels of control over inventory and pricing that today’s publishers so urgently need in order to stop the erosion of their online businesses. The time for super-brands to take control has come.