Adotas

Where media buyers start online

Featured Author

Russell Fradin co-founded Adify and serves as the company’s CEO. He is responsible for leading the company’s vision, strategy and continued growth.

Mr. Fradin has extensive experience in starting and managing online and e-commerce businesses. Most recently, he was the SVP of Business Development for Wine.com, the Internet’s largest seller of wine where he was responsible for creating new revenue channels for the business. Before joining Wine.com, Fradin was the EVP of Corporate Development for comScore Networks.

Mr. Fradin started at comScore in 2000 before comScore signed its first customer and was responsible for starting many of the company’s businesses as well as structuring strategic alliances. He began his career at Flycast Communications and had a number of roles during his four year tenure, finally serving as Flycast/Engage’s VP of Business Development. Fradin holds a BS from the Wharton School at the University of Pennsylvania.

More articles by Russell Fradin





Features

Striking A Balance: The Ad Network/Exchange Analogy

Written on
Mar 6, 2008 
Author
Russell Fradin  |
Share
Striking A Balance: The Ad Network/Exchange Analogy

nobody_knows_nothing_small.jpgADOTAS EXCLUSIVE – Over the last twelve months, there’s been a lot of attention on a new category in the online advertising ecosystem – the ad exchange. Acquisitions by Microsoft (ADECN) and Yahoo! (Right Media) and new offerings from Doubleclick reinforce that there is a real role for ad exchanges. It is a mistake to overstate this role, especially in reference to other parts of the advertising ecosystem. Historical analogy demonstrates exactly what the strengths and weaknesses of exchanges will be – can drive prices lower but require very knowledgeable buyers staying informed about all the factors influencing “asset” value. Vertical Ad Networks seem to be launching daily and the reason is that a quality vertical ad network is like buying into a mutual fund, rather than directly on an exchange. The vertical ad network builder is the mutual fund manager and drives value for themselves and their advertisers by tracking all the details and complexity in managing the publishers to deliver a high performing publishing community that efficiently and expertly reaches your target audience.

The United States economy has fluid capital markets facilitated by multiple exchanges – NYSE, NASDAQ, Chicago Mercantile and more. Individual investors are welcome to purchase equities (and options) on these exchanges through their licensed brokers. Yet the majority of individual investors, holding investments in their 401Ks, IRAs and brokerage accounts, have better risk-adjusted return from mutual funds – leading to a proliferation of mutual funds to address every segment and risk profile investors might have.

When an advertiser wants to maximize the return of their advertising investment, they need their Agency Media Planners & Buyers to create a balanced portfolio mixing direct investment in large on-target sites + reach to engaged, targeted audiences through vertical ad networks + broad reach from low cost remnant networks. The share of voice and audience engagement is highest on the premium, topically relevant sites of Vertical Ad Networks while the reach is highest through direct investments and remnant networks. This is the appropriate balance for high return online brand advertising campaigns where audience engagement is critical.

For example, if a major car manufacturer wants to reach safety-conscious Moms with a campaign about their minivan’s safety ratings and features, they might buy on a major news portal – and access a portion of the 5.5M unique visitors that reach that portal. If they added a targeted, premium vertical ad network for Moms to that campaign, they’d add another 4M unique visitors – for an unduplicated reach of 8M unique visitors a month. Already, the premium network is adding more efficiency to the media buy. Then factor in that only a portion of the 5.5M unique visitors on the destination site are moms and they may be on many different pages of that site which dilutes that 5.5M into a much smaller number. But the 4M in the premium vertical ad network are on mom-related sites and are much less diluted. So, the probable value of that blended campaign is much higher than the campaign that only accesses the destination sites.

cid_image004_gif01c87f8d.gif

Traditional performance ad networks and newer behavioral networks add reach to a campaign, but the vast majority of their inventory is unsold inventory from the large destination sites – so this is an excellent complement to the destination buy in order to reach more of the 5.5M unique visitors on that destination site. That said, according to comScore, the duplication between performance and behavioral networks and networks powered by Adify is less than 5% of the sites and 10% of the impressions.

There are no better advertising mutual fund managers than the knowledgeable editors and entrepreneurs extending their reach through the creation of Vertical Ad Networks. Mark Elderkin, of the Gay Ad Network, is arguably one of, if not the, leading authority on reaching the online Gay and Lesbian audience. Martha Stewart’s taste and editorial prowess is legendary – why wouldn’t you want to leverage her to reach your audience? Robert Kadar in Health, The Guardian Editor-in-Chief in travel, Forbes Editor-in-Chief on Business – these experts and more are working for you doing the hard work of selecting, monitoring and optimizing performance of publishers in your advertising mutual fund – your vertical ad networks. When you evaluate these alternatives for increasing your reach, you must consider the editorial expertise as well as the numbers – quality counts if you want a strong return on your brand advertising dollar.

You rely on informed and well-incented experts for your financial portfolio. It’s no different with your advertising portfolios. Exchanges are potentially part of that equation for deploying your advertising investment dollars but the continued fragmentation of the Internet creates meaningful value for advertisers who leverage skilled, well-incented advertising mutual funds for every campaign. Those advertising mutual funds are the emerging category of vertical ad networks.





Reader Comments.

“these experts and more are working for you doing the hard work of selecting, monitoring and optimizing performance of publishers in your advertising mutual fund – your vertical ad networks”

Maybe. These “experts” may not be as interested in monitoring and optimizing the performance of publishers than they are at securing impressions and distributing their content. The quality of such sites is highly uneven and many are laden with UGC or inappropriate content. So, while you may think you are getting the quality of a Martha Stewart or Forbes in their verticals, you’d be sadly mistaken. The QC is trailing the drive to build impressions and sites.

Posted by The Doctor | 2:38 pm on March 6, 2008.

You can DEFINITELY create a ‘vertical’ network within an exchange…it is a matter of time when ad exchanges allow for better targeting by ‘channel’ and more transparency amongst the sites in the channel.

Targeting by URL and placement seems forthcoming. I believe that verticals ad networks provide tremendous value, but it is only a matter of time when verticals join exchanges and trade amongst each other.

Posted by Ron | 12:34 pm on March 9, 2008.

Leave a Comment

Add a comment

No Tags
Article Sponsor

More Features


  • Did you want to be a media junkie when you grew up?
    View Results

    Loading ... Loading ...

Polls Archive

Latest News

News Archive

Spotlight

AdBidCentral’s CEO, Vivek Veeraraghavan Talks Openly*What was the inspiration to start AdBidCentral? The conditions that inspired AdBidCentral came from a variety of factors in my personal [...] more...

Adotas Partnership