Whither The Ad Network? Industry Insiders Debate Some Of The Critical Challenges Facing The Predominant Ad Net Model

I wrote a piece recently entitled “The Life & Death Of The Ad Network”. I argued that the rise of real-time ad trading would fundamentally change the way ad nets currently do business – but concluded that the ad network model would survive so long as it adapts to the changing trading conditions within the display marketplace. In the interest of fairness ExchangeWire recently asked a number of leading and emerging ad network players the following series of questions to get their perspective on the changing European display landscape:
“There’s been a lot of debate around how ad networks can work with the buy and sell side – especially with the advent of SSPs Agency Trading Desks and DSPs in the European market. How can ad networks add value to advertisers and deliver more revenue for publishers? Will we see consolidation – and will ad networks with proprietary tech, inventory or data take a greater share of budget from media plans?”
Here AOL’s Brandon Keenen, Tribal Fusion’s Doug Conely, Yahoo’s Nick Hugh and MediaIQ’s Lee Puri discuss the challenges faced by the current ad net model.

Brandon Keenen, Senior Director of Sales AOL (UK)

Is real time bidding changing the way we should do business or just the way we bid on inventory? There are numerous platforms that have now emerged in the marketplace and each claims to be the way forward in the display space. The race to the bottom has begun and it’s likely to get ugly.
Yes, they make the buying process easier and yes they can in some ways make things more efficient, but is running a business as a publisher or network simply about ease of use?
Over the years ad networks have been at the cutting edge of innovation and yes, they still are. Just because it’s a fairly complex process it doesn’t mean that we should discredit what we have learnt. For example; how are inventory and data utilised to create the maximum ROI? The answer is resource, and not just technical resource but human capital. The latest and greatest kit can look good in the show room, but it takes an experienced and seasoned team to deliver clients the results they want and expect.
Don’t believe the hype! The acronym businesses have created a marketing machine that’s not short of propaganda. They also have very smart and convincing people, but I am still not swayed. I am still waiting for a network spin off to guarantee above the fold placements, ad delivery adjacent to relevant content or even brand safety. I know all the arguments including optimisation technology that can frequency cap by slot, but there is a fundamental flaw in these guarantees for the “above the fold placement” argument, down in the small print of the t’s and c’s (the ones that you agreed to when you signed up to use the exchange).
One thing big ad networks have is in-house counsel, which is a luxury, but also a necessity in this complex space. With this they are able to read the terms the exchanges put forward for everyone to sign. It is at this point that any guaranteed placement goes out of the window. In most cases, the promise cannot be fulfilled because it’s the large scale publisher base that ultimately controls the sites. For example: a tag may be placed above the fold one day, but content may push it the next. This lack of understanding contributes to the transparency paradox.
Don’t get me wrong, Ad Exchanges , ATD’s, DSP’s, DMP’s, and SSP’s are a great addition to our space. They allow the good networks and holistic agency trading desks to scale quickly and easily, but ultimately it’s all about transparent relationships with publishers, understanding their needs and partnering with them to ensure ROI on both sides. In my opinion: exchanges are not a good long term strategy for publishers unless they put all of their inventory in and make it totally transparent. If that’s the case, send the sales team home and with it pack up the editors, photographers and video crew because you may not be able to afford them.
Sorry, but publishers are running businesses too and are not obliged to make everything available at ‘mates rates’. I know the obvious thing to say is that it’s all about the audience, and to a large extent that’s true, but our advertising partners want data insights, ‘look-a-like’ modelling (to find new users) that creates differentiated pools of inventory based on user sessions – not just the best technology to handle real time bidding across a platform (which we as networks can also do).
Ad networks have a business model that everyone in the space is still trying to catch. It seems to me that everything out there is really a variation of an ad network anyway – and I’m waiting to be proven wrong.
If I were an advertiser that wanted performance or an agency looking out for my clients best interest I would want a partner that I can work with that can navigate the space with expertise and technical superiority. I would want a partner that has real time bidding capabilities with a great team to run it. I would want to know that the humans are looking out for the safety of my brand and not just racing my ads to the bottom of the barrel. As an advertiser your safety and reputation is paramount. Digital is a slice of your plan, but shouldn’t put the rest of the pie at risk.
How do ad networks survive in the space? By utilising real-time technology across a large scale of high quality publishers – leveraging proprietary, SSP and exchange technology partners via integration – to get the most efficient scale and performance for our clients. Sorry marketers, but ad networks are here to stay and here to win.

Doug Conely, Senior Director for Global Data & Targeting, Tribal Fusion

The new platforms and players that have emerged over the past couple of years are positioned to either serve publishers or to serve advertisers. Ad networks (other than site rep) remain the businesses most dedicated to serving both and what we see is that, far from losing their relevance, the new players can only best serve their clients by helping unite the needs of both advertisers and publishers. We’re already seeing that trend, though many avoid the “ad network” label.
The problem is that being an ad network is actually quite hard. We have developed to be able to best balance the demand of advertisers for targeted campaigns at scale with the need of publishers to maximize their yields. The technology, people and processes needed to strike that balance have been a decade in the making and continue to develop. And this balance is crucial for the display ecosystem to survive and thrive.
In the meantime, platform trading, as ExchangeWire itself said, is expected to account for about £50-60m of the total display market this year. We’re happy to continue to take share from the bigger slice and feel that the trading trend is early enough that, as long as we engage as we are now, we’ll develop a strong position in playing for the emerging market too.

Nick Hugh, Director, EU Display and DR Marketplaces at Yahoo!

Consolidation in the ad network space is inevitable. We’ve seen significant innovation on the buy-side through the advent of DSPs and on the sell-side through exchanges (such as Right Media Exchange) and SSPs. With that level of innovation the industry is becoming more transparent and it enables the trading desks to play in that space as well.
The rise in competition and the evolution of the industry is a good thing, but what will stand some players above the rest will be a differentiated offering. If you don’t have clear value-added service to contribute to the ecosystem, it will be hard to maintain a credible presence. Today there are too many companies focused on the last click or the last view – which is inevitable given that the ‘buy-side’ is paying on that basis – so attribution is likely to be a driver of future consolidation as the industry recognises the value of engaging with the whole purchase funnel.
At Yahoo! DR we’ve long understood the value of operating against all stages of the purchase funnel. Our value in the market is the ability to use our proprietary data and inventory, combined in real-time, with third party data and inventory to drive new users, whilst also retaining existing users. Whilst inventory is being commoditised, the true science is to understand the user’s mindset at a precise point in time and data plays the critical role in that. We’re proven in our ability to use data from Yahoo! and 70+ other data providers across billions of ads every month, in 20+ countries in the EMEA region. We’ve also invested in the people who drive that success – algorithms alone won’t drive enough of that value, it’s definitely man (or woman) plus machine that is required to maintain a sustainable value proposition for the advertiser. And it works; we’ve been growing share steadily and significantly across Europe.
We work with the trading desks on the right terms, through Yahoo!’s leading exchange (Right Media) and have always advocated the benefit of an open platform. This enables the agencies to bring additional value into the ecosystem through the more efficient use of first party advertiser data. We’re expecting to continue to grow share as volumes through the trading desks grow – that will come through both taking share from non-differentiated competitors, but also the additional value being offered will inevitably grow the size of overall display market.

Lee Puri, Co-Founder at Media iQ Digital

Ad networks that arbitrage media as a means of value will most definitely have to re-evaluate their approach. Buy and sell side market conditions are ripe for networks to deliver excellent results for clients. They just need to move their thinking away from the traditional sell-side approach. Adopting the role of the ‘middleman’ these days doesn’t cut it for ad networks. Agencies and advertisers expect more.
Consolidation within the ad network space has always been talked about, but it is worth noting the market is a much more open licensed landscape than it was a few years ago. A small start-up can now launch with a solid strategy and quickly challenge an established player when it comes to results and service. Close the market and you close the opportunity for innovation. In this respect as a market we want competition as it’s a catalyst for innovation, which is needed to get more advertising spend online. This is one common objective we all have!
When it comes to technology, networks that focus less on building proprietary ad servers and more on proprietary bid/targeting algorithms as a means of differentiation and efficiencies could see solid scalability.
Ultimately the ad network that has the best approach to targeting, optimisation, and servicing will be in a position to add value to publishers, agencies and advertisers simultaneously.