Online Ads: Rise of the Network, Fall of the Portal

Mark today in the history of media. In today’s NY Times, we hear an ad guy praising networks over portals (and by portal, we don’t just mean Yahoo, we mean any closed media property, including TV networks and newspaper sites). Networks used to have cooties; they were supposed to be nothing but aftermarkets for unsold inventory — or so the big media properties wanted us and media planners to believe. But networks are quickly becoming more targeted, more efficient, and more economical. From the Times:

Some of the ad dollars that in the past had been spent at portals are being spread around instead. Ad networks, which fan out ads to thousands of sites, are adding targeting and are signing up reputable sites, making them more attractive for advertisers.

“There was a time when we would go out and buy inventory on the portals,” said Quentin George, global head of digital media and strategic innovation at Universal McCann, which plans media for clients like L’Oreal and Sony. “Portals make it easier for us to buy and place media on behalf of our clients. But as time continues and as analytics capabilities increase, you find that your media dollars can work better elsewhere across a range of different sites.”

Michael Hayes, senior vice president and managing director for Initiative Interactive, which handles digital spending for clients like Home Depot and Bayer, said that advertisers might be turning away from broad buys and looking for more targeted campaigns on smaller sites.

“This is hurting the portals,” he said. “There are more options.”

This is why I say that the Glam model — whether that includes Glam itself or not only time will tell — is a key business model for the future of media. Welcome to the post-scarcity post-media economy.

Comments

[DavidJackson]

This is thought provoking article, but I'm not convinced the ad networks will fare well in a downturn. The quote says that advertisers are looking for highly targeted niche sites to advertise on, and that makes sense.

But the economics of networks are difficult:
(1) If you have a single sales force selling ads on a large site and on a network as well, the incentives are usually greater to sell on the main site than the network.
(2) It's often harder to sell advertisers on multiple websites at one time.
(3) As soon as a website reaches critical mass it often makes sense to handle ad sales directly.

In our space, ad networks aren't yet getting traction, although it's early days:
worldbeta.blogspot.com...

[JeffreyTonetti]

Value Click and similar Ad networks put companies creative in the hands of entrepenuers who spend there dime (win lose or draw) to drive traffic to the Ad networks client sites. What could be better? The masses of incentive based internet marketers often find the best way to market and hammer home the Ad Networks clients sites better and substantially more cost effectively than the client ever could.

The reasons for this:

1) Experience of incentive based marketers
2) The lack of the "Curse of Knowledge" (Made to Stick) allowing marketers of these ad networks to drill down to a sites intent in its simpliest form
3) Trial by fire with NO or Limited expense to the Ad Networks clients with out performance

So in the end if SA had an affiliate program or an affiliate manager I beleive the well thought out content would have a far greater reach thu driving Ad revenue up-

On May 20 03:10 PM David Jackson, SA Founder wrote:

> This is thought provoking article, but I'm not convinced the ad networks
> will fare well in a downturn. The quote says that advertisers are
> looking for highly targeted niche sites to advertise on, and that
> makes sense.
>
> But the economics of networks are difficult:
> (1) If you have a single sales force selling ads on a large site
> and on a network as well, the incentives are usually greater to sell
> on the main site than the network.
> (2) It's often harder to sell advertisers on multiple websites at
> one time.
> (3) As soon as a website reaches critical mass it often makes sense
> to handle ad sales directly.
>
> In our space, ad networks aren't yet getting traction, although it's
> early days:
> worldbeta.blogspot.com...