I don’t necessarily agree with your outlook on ad networks, Edward. Yes, just like in any other field, if the networks become complacent, they’ll find themselves in not-so-good spots but for the smarter ones that continually improve on their offerings by engaging with their clients and giving them want they’re asking for, I see nothing but sunny days ahead.

The problem with self-service is that it’s usually one-size-fits-all and it’s up to the user to customize the solution. Why is this a problem, you ask? Well the user generally is not the expert and now they have put it upon themselves to become the expert and should they fail (which is too high a probability), they’ll lose more than just time and money. They lose opportunities.

Ad networks are in a unique position to push their servicing from a DIY model to a more hand-holding one for the advertisers and publishers that need it. In doing so, these ad networks can leverage existing relationships to increase revenue and create additional value.

—Ivan

Posted by Ivan | 11:19 am on March 9, 2009.

The idea that an exchange, combined with multiple data inputs, takes the place of networks is too far reaching. First off, a network that combines valuable data with media is taking responsibility for the performance of campaigns from both an audience and a distribution standpoint. Who will be responsible otherwise? Agencies who are buying inventory and data from many sources and trying to piece the two together? Second, I would ask who will take responsibility for where ads run in this new hypothetical environment. Networks have always been a buffer for an agency when an ad inevitably runs on an inappropriate site. It will be interesting to see how agencies handle this without an intermediary to hold responsible.

Posted by Jeff H | 12:24 pm on March 9, 2009.

Great article, Edward.

I can definitely see this come to pass….there is much more content (and growing every hour) than there are advertisers online.

As companies/agencies are looking to streamline their capabilities to survive this elongated financial downturn, this will occur. It is a natural transformation-automation for media buying, all with one click.

Posted by Harold Cabezas | 12:32 pm on March 9, 2009.

Ivan, I don’t know what my outlook is yet. The Rubicon Project, which admittedly has a dog in this fight, argues plausibly that ad networks will grow. Razorfish makes an interesting case that cost and ease will win out.
Jeff, you make a good point. But outside of major brands, will advertisers care as long as they believe they’re hitting the right target demo and getting results, all at a cheaper price? I don’t know .

Posted by Edward Barrera | 12:40 pm on March 9, 2009.

I don’t see this happening so quickly. Think about the smaller/medium sized publisher. Do you see them collecting from 500 advertisers monthly when they make on average $200?

Posted by Eyal | 12:47 pm on March 9, 2009.

Let’s not jump the gun here. The idea of separating inventory from data seems like it might be a good idea, until you start digging into the details. Getting inventory from one place and data from another means the agencies will have sole responsibility for determining what is working and not working. Frankly, that’s a big enough task with inventory alone. The right targeting network should be able to put these two things together and take responsibility for performance. Additionally, it will be interested to see how agencies react to buying directly on exchanges. In the past, when an ad inevitably runs someplace it shouldn’t, the agency could point their finger at the network and absolve themselves of responsibility. What will they do now without the intermediary?

Posted by Jeff | 12:48 pm on March 9, 2009.

Define ‘real time’?

Right now, no advertiser has the ability to make a call on an impression as it is being requested by the user.

99% of advertisers don’t have the technology to:

a) be hooked into the exchange to get the opportunity to make the call in the first place

b) determine who the user is and how valuable they are

c) take the info from b and feed it back to the exchange within micro/milli seconds

Posted by sales guy | 12:51 pm on March 9, 2009.

I would tend to agree that 50% of this will be true. There will be some need of experts to manage buying and selling to and from the exchanges. This may be the one of the outlet where an ad-network may provide useful services.

For example, companies like 360i is hired by agencies and direct advertisers to manage their SEM activity, with brands form Adidas, Nestle, and etc. With commodity PPC media from Google, Yahoo, and MSN, anyone can open up an account with Google, Yahoo, and MSN; and start buying immediately. Its not as simple as you think now right?

We are now experiencing the same kind of issue with display media available in exchanges. Those who has the in depth expertise to navigate this landmine will survive. Networks can act on behalf for their clients to do this, I am seeing that this is being done on Yahoo’s end already.

There is a very useful role for exchanges, cheap low cost and yet safe media. If you can navigate the landmine you will save 100% – 300% on media cost. The question is do you know how to avoid the landmines. There are about 50 people that truly knows how to do this. Is is a pittance when compared to SEM experts out there. Start looking for these people in Linkedin, they will be in short supply real soon.

Posted by Ben | 1:16 pm on March 9, 2009.

nerds

Posted by jc | 2:27 pm on March 9, 2009.

Ad exchanges are evolving; not dying. They’re will always be a need for non prime inventory and a need to monetize it. Exchanges are perfect for this. Barring a new technological change, ad networks will remain.

Posted by Brad | 2:34 pm on March 9, 2009.

Add blind BT to your blind ad exchange inventory and you have no idea where anything runs, why anything works, can’t duplicate anything, and can’t scale your business.

I don’t think the exchange will ever really work as envisioned in this article until there is free flow of information and a common rating mechanisms for data and inventory.

Posted by sabotosh | 3:33 am on March 10, 2009.

Agencies can/do partner with ad exchange experts, MediaMath, like they partner with SEM experts.

Posted by ca | 3:33 pm on March 11, 2009.

Yes, please! Let the ad networks die the death they brought upon themselves and richly deserve!

Posted by Bruno | 7:35 pm on March 26, 2009.