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.”
Express your opinion, comment below.