Future of Ad Networks Remains Murky

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fight_small.jpgADOTAS – As 2009 crawls to the finish line, all the predictions that this year would herald the great ad network shakeup have proven to be less than accurate. Estimates hold the ad network count somewhere around 400, a rather robust population that many think should be thinned.

Potentially offending a great deal of the crowd at the Digiday:TARGET conference on Tuesday at the W Hotel in New York City’s Union Square, Benjamin Barokas, cofounder and CRO of AdMeld, said that only 30-40 of those networks actually mattered.

Possibly the liveliest event of the conference, “Ad Networks: Shaping Out or Shaping Up” reunited sparring partners Kirk McDonald, president of Digital Time, and Bill Wise, vice president and general manager of Right Media for Yahoo!. Last year a similar panel featuring both produced a great deal of fiery back-and-forth; this year’s match had some intense jabs, but there was never animosity in the tone. In fact, both the panelists and the audience spent a good amount of time cracking up.

McDonald said consolidation was the only future for ad networks — “Having 400 networks doing the same thing is not viable in the long term, especially as agencies and pubs take on targeting functions.” he said.

Smart agencies have created their own demand-side platforms, he noted. These platforms along with publisher/supply-side platforms — similar to Time’s own ad network, Time Axcess, launched in April — will become two magnetic poles in the space, pulling all the players in the middle closer to one side or the other.

Wise struck back that $2 billion in funding went into networks over the year, showing advertiser’s desperate need for access to great data. These intermediaries have become more valuable than publishers. While some networks did bite the dust over the year, he noted that many are evolving into demand-side platforms.

“Traditional publishers need ad networks as categories are growing faster than they are,” Wise claimed

Barokas was not to be left out of the quarrel. He predicted that the dwindling down of networks will be Darwinian — the strongest, those that can marry their unique data sets with creative optimization, will live to see another year.

The little agreement among the participants suggested that 2010 will also be difficult to prognosticate about ad networks. Looks like we’ll see Kirk and Bill duke it out again next year.

3 COMMENTS

  1. The “banner” was supposed to die 10 years ago too.. funny how it’s still around. There are more ad networks now than ever and money is still flowing into them. Stock Exchanges exist and serve a purpose, but so do mutual funds. The exchange model while it shows potential, is largely just a bidding engine that commoditizes inventory. The quality of that inventory is poor and brand publishers, won’t play unless it improves their business (not marginalizes it). Brand advertisers will play, but they won’t allocate all of their budget there – they still want to build their brand through the association with premium publisher brands.

  2. There are any number of new Tier 1 and Tier 2 networks being created. I have seen some incredible value propositions from some of the new ones, stuff the more entrenched do not have nor will ever be able to fully emulate. Some will rise, some will fall… it’s a normal business fluctuation not the end of a segment.

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