In Defense of Ad Networks by Lewis Rothkopf , Monday, June 8, 2009
Go ahead and Bing the phrase "ad networks are bad." You'll see 33,300,000 results.
Now, Bing "ad networks are good." As you were expecting, far fewer results. Right? No. 86,300,000 results with the words "ad networks" and "good" in close proximity.
Why? Because although it is in vogue to trash the ad network business, networks play a crucial role in the advertiser/publisher ecosystem. This is particularly true in the video space.
The benefits to advertisers are generally agreed-upon: good networks help advertisers efficiently execute buys across a select group of well-branded sites. The haters tend to argue that networks have a deleterious effect on publishers. This is far from a universal truth, but it's important to work with networks that will respect your business and seek to create long-term value by partnering with you.
Myth #1: Networks lower CPMs for everyone. It is tempting to point the finger at networks for causing an overall decline in CPMs. However, the advertisers are the ones who drive price. Network relationships are generally structured on a revenue share basis, so networks are incentivized to achieve as strong a CPM as possible. In most cases, advertisers are going to optimize their campaigns to come close to their client's ideal cost-per-event: if publisher-direct pricing makes that impossible, smart publishers can still win the campaign by accepting it through a network. Far from lowering the CPM, the presence of a network enables the publisher to profit from a buy they otherwise would have completely missed.
Myth #2: Networks will bring you scraps. To a large extent, it depends upon whom you decide to work with, but this statement is generally untrue. Networks -- the good ones, anyhow -- know that in order to maintain strong publisher relationships, they must bring appropriate, high-quality advertisers to the table. More importantly, sometimes an advertiser will choose to execute an entire buy exclusively through a network, offering a significant value-add for publishers who work with that network.
Myth #3: Networks devalue your brand. Again, this myth is quickly short-circuited if you're working with the right partner. Ask questions upfront to determine if a potential network partner will be a good steward of your brand. Things you'll want to know: How will you represent my site in the market? Do you ever sell site-specifically? Who are some of your advertiser clients? What sort of publishers do you work with? Do some of your publishers have more favorable deal structures than others? Starting from a position of trust and keeping the lines of communication open will greatly increase the likelihood that you'll have a strong, mutually profitable relationship with your network partner.
As common sense dictates for any industry, look out for the bad apples, but don't believe that networks are inherently harmful; they're not. In most cases, networks can fill the gap between your site-sold inventory and house ads and, on their best days, they will bring you campaigns that no one else is able to capture.
Lewis Rothkopf is vice president of network development at BrightRoll, charged with building strategic partnerships with the Web's top branded publishers. Prior to joining BrightRoll, Lewis was head of distribution for the National Broadband Company, NBC Universal's digital video syndication business.
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