Meanwhile, advertisers face a fragmenting internet audience. Where it was once possible to reach their target customers by buying space on a few key portals, today's consumers are spread across blogs, social networks and a myriad of niche sites. In this environment, buying media from individual publishers is a less than attractive option.
That's where the ad networks come in. The firms operate by agreeing to sell ads on behalf of hundreds of individual publishers who are marshalled together into networks. Advertisers are offered access to these networks, giving them a single gateway through which to serve their creative to a huge audience. In theory, it's a win/win situation. Publishers raise revenue from a greater percentage of their content, while advertisers get the reach they require.
But while the concept is relatively straight-forward, the ad network marketplace has evolved into a very complex beast indeed. According to research company E-consultancy, there are about 85 ad networks operating in the UK.
A few are niche players, focusing on connecting advertisers and publishers within very specific sectors of the internet market.
Others - the majority - are generalists, serving ads to the great mass of the online audience. And while there are plenty of independents, ad networks are increasingly operating beneath the umbrella of larger and more diverse organisations, such as Google, Yahoo, MSN and AOL.
These giants can offer advertisers a one-stop shop, where various strands of an online campaign - including search and display advertising - can be coordinated within a single platform.
Just to complicate matters further, the latest development is the arrival of ad exchanges, which automate the buying and selling of ads through auction platforms.
The market
E-consultancy estimates that UK advertisers spent £240m via ad networks in 2007, and that figure is expected to rise 60% in 2008, with Platform-A, Google, Yahoo, ValueClick Media, Specific Media and Adconion among the major players.
The major networks reach a significant slice of the web audience. AOL-owned Platform-A claims its network reaches about 85% of the online population, while Yahoo gives its reach as 80%. Both are major publishers, and their ad network figures are boosted by traffic through their own portals, but independent operators can table equally impressive statistics. For instance, Adconion boasts a UK reach of 75%.
However, Richard Sharp, UK managing director of independent network ValueClick Media, says reach is only the starting point. "What advertisers are looking for is performance," he says. "They want to know that the campaign is working effectively."
Effectiveness comes down to two important factors. Firstly, as Sharp points out, advertisers need to know that their creative "is being seen on quality sites". In practice, this means sites that are both relevant to the advertiser's audience and in line with its brand values. To take an extreme example, very few banks would consider pornographic sites to be either relevant to their audience or appropriate.
The second factor is the networks' approach to ensuring each campaign delivers the desired outcome in terms of click-throughs and sales. This is increasingly done through targeting. As Colin Petrie-Norris, managing director, international, of Specific Media, contends: "Reach is important, but targeting is where the rubber really hits the road."
Protecting the image
Ad networks have had something of an image problem until recently, both in terms of site quality and the delivery of optimised results. Mike James, managing director of Adconion, admits: "There were some unscrupulous networks that paid very little attention to where ads were shown."
As a result, some brands shied away from the networks. The industry's response was to establish the self-regulatory body IASH (Internet Advertising Sales House). Essentially, its role has been to broker, publish and enforce a code of practice that all members are required to adhere to, with transparency over site quality a key component.
But that transparency only goes so far. The bulk of ad networks "sell blind", meaning that advertisers don't actually know where their ads will be served. "[The networks] have to do it that way," says Linus Gregoriadis, head of research at E-consultancy. "Publishers' in-house sales teams are selling premium ads direct to advertisers. They certainly don't want the same advertisers to know they are selling media much more cheaply via the networks." However, some networks will give advertisers access to visible networks.
北京赛车pk10 optimisation is a less contentious issue, and the major networks have all been busily investing in tools to boost the click-through rates of advertisers' campaigns.
The strategies vary significantly. For instance, Google puts the emphasis on contextual targeting. "If someone is looking at a site relating to photography, then we might serve an ad for a Canon camera," explains Ian Morgan, head of agency sales at Google Networks in the UK.
Meanwhile, Mark Rabe, Yahoo's vice-president and managing director for UK sales, stresses that his company offers a range of targeting options, encompassing demographic and behavioural analysis. He says: "Over the past few years, we have invested in a broad suite of best-of-breed tools."
As the software systems become more sophisticated, some networks are experimenting with so-called "re-targeting". "It's now possible to mount a sequential campaign," says Adconion's James. "That means you can target the same people at different stages as they move through the network, perhaps using a slightly different message each time."
But not all agencies put quite so much emphasis on upfront targeting. "Some of our clients want [targeting] and we will do it for them," says ValueClick's Sharp. "However, we are a performance network and start with a very broad
campaign and then home in on the sites that are working. Our approach is like a funnel."
Ad networks are by no means the only game in town. Austen Kay, co-founder and managing director of Woot!Media, makes a distinction between networks and specialist ad sales houses that deal with a portfolio of publishers, but
sell advertising on their behalf on an individual basis.
"The ad networks are very effective on direct response advertising," he says. "But, for effective brand advertising, you have to identify the right publishers and work with them closely." Woot!Media sells advertising for around 35 "cult" sites and works with advertisers on bespoke creative aimed specifically at those spaces.
US-owned AdGent 007 is similarly focused - in this case on "premium publishers" such as The Telegraph and The Independent newspapers in the UK. "These organisations have effective in-house sales teams operating in their home markets," says Chris Humphrey, general manager. "But they are also widely read overseas, and our sweet spot is selling to overseas advertisers."
But if there is a role for the niche players, there is also space for the emergence of advertising exchanges, which buy and sell online ads on an industrial scale. As Richard Williams, international head of sales at Yahoo-owned Right Media explains, exchanges are essentially auction platforms on which publishers, advertisers and agencies buy and sell ads and media space through automated dealing systems.
"We're complementary to the agencies," he says. "We have about 50,000 buyers and sellers and we sell almost all the inventory that comes onto the exchange."
As Williams sees it, ad exchanges provide a further means for publishers to raise revenues from their inventory. Significantly, Google and MSN have also made acquisitions, giving them the technology to operate ad exchanges.
The impact of ad networks and exchanges on the cost of online advertising has been mixed. According to E-consultancy, which publishes the Ad Networks Buyer's Guide, prices for banners can be as low as 30p cost per thousand (CPM), but only if no targeting is involved. Add behavioural targeting to the mix, and the cost can rise to £8 or £9 CPM. In addition, blind network serving tends to be cheaper, because publishers raise prices when the veil of anonymity is removed.
So, is a blind network acceptable, or does a campaign require the transparency that comes from a visible network or ad sales specialist? How much targeting is required, and will the extra costs be justified in terms of return on investment? With so much to consider, advertisers considering ad networks have some tough choices to make.
Acquisitions Major names build advertising and ad network capabilities
Louise Green, client services director of Platform-A, AOL’s unified advertising division, says: We are offering advertisers a single place that will meet all their needs and allow them to implement a multichannel marketing strategy.
In addition to Platform-A’s latest acquisition, the ad network Advertising.com, it has also bought behavioural marketing network Tacoda, enabling it to serve ads on the basis of the logged activity of individual consumers on sites across the network.
Platform-A is not the only publisher ramping up its advertising and ad network capability. Last year, Yahoo bought behavioural targeting specialist Blue Lithium
in a deal worth $300m, and it snapped up ad exchange Right Media, building on the 20% stake in the company it acquired in October 2006.
Meanwhile, Google purchased DoubleClick for $3.1bn in 2007 in a deal that provided the search giant with both ad-serving technology and an advertising exchange.
And Microsoft has bought its way into the ad network and exchange markets through the acquisition of advertising exchange AdECN, and the $6bn purchase of aQuantive, incorporating ad-serving company Atlas and behavioural targeting specialist DrivePM.
Specialist networks
Ad networks tend to define themselves in terms of reach, coupled with their ability to target key consumer groups
and optimise campaigns. However, the market has also attracted specialist players.
Adknowledge, which serves eight billion ads a month across social networks such as Facebook, MySpace and Bebo, is a case in point. We specialise in social media, says managing director John Cole, stressing that the network’s ads include applications as well as display advertising.
With around 40,000 applications on Facebook alone, brands face the challenge of standing out from the crowd and attracting users. Adknowledge’s solution
is to target ads and applications precisely. We use demographic data to deliver the applications, says Cole. We can guarantee a demographic and a certain number of people.
Meanwhile, Woot!Media sells ad space on behalf of a niche audience of cult viral, gaming, animation and blogging sites. The inspiration for the business were statistics showing that a majority of online advertising spend was formerly directed at a handful of websites and portals, leaving most publishers struggling to sell their inventory.
According to managing director Austen Kay, his company’s portfolio of about 35 publishers represents a key resource for advertisers seeking to hit 16 to 24-year-old opinion formers on quality sites.
Unlike many ad networks, Woot!Media sells publishers’ inventory openly, allowing brands control over where their ads are placed, while media owners benefit from premium rates.
Further variations on the specialist theme include Glam Media, a network comprising sites that carry female-oriented content. The service is aimed at advertisers who want to reach a female audience and wish to exercise control over where their ads are placed.
In June, Glam Media acquired Monetise, a company that sells display advertising and advertorials, strengthening its presence in the UK market.