Jun 11, 2007

Half of the ad network story

My friends at Lotame processed their one billionth ad transaction this weekend and will quickly double that.

At the same time, Jeremy Liew writes about content specific ad networks that in effect are creating synthetic ad channels:

"Synthetic channels, like the channels on the big portals, have an advantage in this respect. By guaranteeing that all sites in their network are about a single topic, they can aggregate a critical mass in traffic while still enjoying endemic site RPMs. This is, in a sense, a “hack” to true contextual targeting, but it has the advantage of being simple to understand and hence simple to sell to advertisers."
Examples of content specific ad networks that Jeremy points to include Jump Start and Glam.

Ad networks fill an important gap in the online publishing equation -- the efficient and orderly monetization of content assets. That being said, clearly ad networks are great for advertisers and the networks, but are they great for publishers? Some, like Mike On Ads, believe ad exchanges can/will step in to balance that equation.

I think the ad network businesses are becoming commodities and as such the drive for differentiation and higher prices leads, on one path, to content specific channels. It's one reason I like the vertical ad business of Adify so much - it attempts to place itself out of the domain specificity business and just provide the relevant platform and tools.

And, exchanges are also a way to provide differentiated unbiased value, but they too could become commodities as their numbers rise.

But I still think networks, synthetic ad channels, vertical ad businesses, etc., are only half the equation, because they all still focus primarily on the content side of the equation, the publisher's perspective. They provide great value in determining what a consumer's interests are, based on the sites being visited (that's precisely the value proposition of a synthetic channel). But in using the content as the starting point, they run the risk of merely re-creating the ad business online. Same old inside-out model.

They don't yet provide enough value on what the consumer of content is doing, with and to that content. They don't flip the ad perspective to concentrate on the actions consumers take and then create value from there. Media companies, as Roger Ehrenberg points out, are and have to move to this focal point. I think the next wave of real online ad innovation will be parallel to this trend and move away from content toward the consumer. It's an important step that can help the new models -- including synthetic channels -- add much more value than being associated with a vertical domain.


Aaron said...
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