Exchanges put pressure on cheapest ad networks

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manyadnetworks_small.jpgADOTAS — I was talking to Joelle Gropper Kaufman, Adify’s SVP for marketing and corporate partnerships, yesterday and asked her about the idea that ad exchanges would replace ad networks:

For the ad networks that are going for cheap, broad reach, ad exchanges made it much more efficient, she said. The risk is if that ad network isn’t adding an value on top of that. At some point the media buyers will just go to the exchange themselves, because why pay a margin to someone who is not adding value, she added.

She said there are two reasons there are tons of ad networks, one is because of Adify (she is head of marketing). There are at least 150 vertical ad networks that did not exist three years ago. Now they do because of Adify. “We think they are good for advertisers. Advertisers think they are good for them, and they are highly segmented.” Advertisers don’t care about all 150, they care about say three of them, and they are happy the ad networks exist.

The other reason there are another 100 ad networks is because of ad exchanges. They made it very easy for people to create an ad network and rapidly aggregrate unsold inventory, cheaply. They want to find the cheapest inventory that will possibly perform, ad exchanges made that so much more efficient “as long as you don’t care what the inventory is.”

The challenge is media buyers are not stupid. They are asking what value is the ad network bringing? “That’s where a lot of networks that are just buying on exchanges are going to have hard time. And there is pressure on them and that has nothing to do with networks that are vertical ad networks” or networks that have their own relationships with publishers or have their own technology or tracking and they don’t broker.  But they are more expensive, she said.

Ad exchanges are putting pressure on the cheapest ad networks – but only the cheapest the ad networks. “Because there is only so much you can do in an exchange and the media buyers do not have time to vet and inspect all the different content that is coming on an exchange.”

Adify have had advertisers tell them stories about ads showing up on questionable sites, she said. “It turned out it didn’t feel questionable to the technology of that exchange that someone else bought it on. There is no contest between a human and a machine when determining context. Every time the human is going to win.”

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3 COMMENTS

  1. Just as all websites and networks (vertical and general) are not created equal, the same goes for exchanges. To sweepingly say that all exchanges are putting pressure on cheap networks misses the point of the current media choices in the marketplace.
    The important questions for advertisers, their ad agencies and publishers to ask are: “where do I have control?”, “where can I be are part of both the scale and targeting needed in today’s fragmented internet?” and “where do I have the opportunity to maximize my advertising effectiveness(advertisers/agencies) or revenue opportunities (publishers)?”

  2. This “article” is atrocious.

    Quoting:

    “There is no contest between a human and a machine when determining context. Every time the human is going to win.”

    Are you kidding me? At scale? Adify knows better than to be associated with a comment such as this. Embarrassing.

    Ad exchanges are occasionally seen as adversarial to ad networks -as they are in this piece.

    On the contrary.

    Ad exchanges are and will be platforms for ad networks, yield optimizers, advertisers, agencies and publishers to buy and sell online advertising more efficiently than ever before as technology brings improved insight to online media. Period.

    I guarantee Adify’s vertical networks will be buyers, too. Makes too much financial sense.

  3. The “cheapest” ad networks? That’s a bit redundant. When will publishers wake up and stop giving away their store? Bring in some real media people, please!!

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