Study: Ad Network Use Soars

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rocket1.jpgADOTAS – The IAB and Bain & Company announced the release of a study that suggests that the use of “ad networks” has surged from 5% of total ad impressions sold in 2006 to 30% in 2007. The study is titled “Digital Pricing Benchmarking Study.”

Online publishers are continuing to experience growth rates of 20-30% in ad revenue, and keeping up with these rates has left many with an excess of inventory which they are selling through ad networks at up to 90% discounts versus direct sales rates. John Frelinghuysen, a partner in Bain’s Global Media Practice and study author said “Online publishers are producing more inventory than the market demands, and risk devaluing the premium nature of their brands, particularly in light of ad networks growth and their dramatically lower pricing. Building more effective relationships between publishers and ad networks is critical. In the long-term, both parties will benefit from gains in ad network CPMs.”

Other key findings in the study include online publisher revenues grew by 32% in 2007, yet ad network revenues grew more rapidly(in excess of 50%), as marketers boosted online spending. High demand for premium video inventory resulted in CPMs 2-3 times greater than display ads on average. Also, found was most publishers in the study lack information to closely measure the impact of cross-platform sales, though most indicate focus on using cross-platform to drive volume, not price.

3 COMMENTS

  1. Although, we all know that Ad Networks’ volume grew in 2007, it would be interesting to see the same analysis for first half of 2008. I don’t think the numbers would be so optimistic in favor of Ad Networks.

  2. This whole ad network scenario is a short-term boom and a long-term bane.

    Given that you can buy solid inventory at a fraction of the cost, why wouldn’t you use ad networks almost exclusively, especially for test campaigns when you’re trying to optimize creative and call to action?

    But ultimately, this whole model is unsustainable. Sites cannot continue to sell an increasing share of their ads at a couple bucks per thousand, and the increasing competition is going to cause ad network failures and consolidation SOON.

    I just put up a blog post with more detail on how this is going to shake out.

    “Ad Networks Are a House of Cards – But a Great Deal”
    http://is.gd/Ste

    Jason Baer
    Convince & Convert – digital consulting for agencies
    http://www.convinceandconvert.com/convince-convert-digital-marketing-blog

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