Three Very Different Ad Network Tales: How The European Model Is Evolving In The Changing Display Space

There were three trade press stories this week that exemplified the changing face of the ad network model in the European market. Although these news events were completely disjointed, it did yet again hit home how flexible, adaptable and innovative the ad network continues to be. These ad networks have very different offerings – but showed that even with the emergence of DSPs and ATDs, they could still add value to both advertisers and agencies. The following is an attempt to move beyond the high-level PR to see how three very different models could well be a blueprint for existing players.
Moving To The Demand Side; Adconion Splits Its Business Into Brand And DR
Adconion, a power-house in European display, announced this week that it was splitting its business into two distinct divisions: brand and DR. It appears that the DSPs and the ATD are taking their toll on one of the big third party buyers in the market. There were no details on how exactly this new area of the business will work with agencies. My guess is it will play out like this. The DR arm of Adconion will licence a DSP – most definitely AppNexus. Or it will build its own bidder. The DR arm will become a DSN or buy-side network – buying dynamic inventory from exchanges, SSPs and possibly some managed supply from the likes of eBay. The model will not be all that dissimilar from MediaIQ or Jemm Media.
Agencies might say you can only work with us if you have prop supply. But we all know that is simply not the case. There is plenty of spend still out there for the “great optimisers”. Granted there will be no re-targeting budget available for these DSNs given the risk of bid inflation. But prospecting will still be a sweet spot for those ad nets that can execute campaigns across real-time supply and deliver performance. This is a great time to be a buy-side network – because not all agencies will be able to do it right despite having the tools at their disposal. The dearth of talent persists, and the ad nets still have the bulk of this resource. Adconion’s move is a smart one. Of course that all depends on whether or not it is going to employ the strategy above. If I’m wrong on the DR strategy, well then they might well be in trouble.
The Little Sales House That Could, That Did And Then Sold For Seven Figures
Ah, the sales house. What can you say about this often overlooked ad net model? Often repping vertical publishers and selling to niche advertisers, this is still a pretty solid model given the value of context to the brands these sales houses are selling into. In Germany for instance there are over 400 sales houses selling to advertisers (note to SSPs or exchanges: if you are looking to crack this market you’d better find a way to accommodate this powerful group of pub reps). The German sales houses are a critical part of the display eco-system there. In the UK there are handful of relatively successful players in this space. TDP, which only this week changed hands for a seven-figure sum, has managed to build a lucrative business aggregating B2B and specialist site inventory, overlaying with Bizo data, and selling high value audiences to agencies. Its success has not gone unnoticed – and it was for this very vertical success that it was acquired by Martini Media.
Other examples of successful vertical ad nets/sales houses show this model is far from dead. The Travel Ad Network for instance is another great example of an ad net building a highly relevant and desirable audiences. Of course you can build niche audiences through the automated channel. But if you can lock down supply and data from travel sites (airlines, car rentals, hotels, etc) – as well as leveraging third-party data infrastructure – you are more likely to deliver better performance and hit brand advertiser’s KPIs. And there are still a lot of niches out there still to be tapped. Lots. I can see this sales house/vertical ad net model evolving into a mix of dynamic and managed supply – with some audience extension thrown in to give these vertical players greater scale. The Germans will love it.
How A CPC Ad Network Ruled The World
Criteo could be the greatest European ad network of all time. Fact. Though it would argue vehemently that it’s not an ad net, Criteo could well signal the great evolution of the model. Dissenters say that re-targeting has plateaued and will ultimately be commoditised when Google finally bundles Teracent into DFA/Invite Media. Possibly. But not before Criteo goes from $200 million dollar per year to become a $1 billion dollar company. What I like about Criteo is that it evolved an old model. Re-targeting is old hat and has been around since the days of Blue Lithium. What they did was build a robust dynamic creative solution – and used the exchanges and SSPs to drive campaign performance. But it was the client direct strategy where it really accelerated the growth of the business. This was a first for an ad net: nobody in the European display market has ever tried to circumvent the agencies. It usually ends badly. Because no ad network wants to fall out with the agencies.
Criteo went to e-commerce clients – where it knew its solution would work best. The company practically owns the re-targeting space in Europe. The biggest problem it has now is moving beyond remarketing, and getting into the prospecting game. If it can get its look-a-like-modelling solution to be a success, Criteo will most definitely do a billion dollars in revenue.
As I said on this blog many times before: the ad net model is not dead, it is evolving. And as these three disparate stories this week demonstrate, its demise is being greatly exaggerated.

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