Ad Networks 1999 and Today
Two blog posts got me back on a certain subject I thought I’d write about again. First of all, Mark Cuban posted “I couldn’t resist … Youtube vs. Broadcast.com 10 years ago” in which he compares YouTube and Broadcast.com. Yes it is not a 100% comparison, but interesting none the less. Then I found “Ad Networks: Inventory vs. the brand” by Mathew Ingram (via Simon). From that post just see this part from the end:
> Maybe it’s just the spillover from the sub-prime mortgage meltdown, but in some cases packaging remnant inventory and selling it through an ad network reminds me of the Wall Street practice of bundling underperforming or questionable mortgages together, and “securitizing” them in order to unload them onto outside investors. That kind of strategy works really well — right up until it doesn’t.
Back in the first bubble I was running a statistics service for webmasters and we were using Flycast, which very soon folded because that network kind of did not work. Next up for us was Tribalfusion, and they survived. One of the features I really liked about them was that I could put ads into their system on my site myself for free. Very cool indeed. Seems a bit like Google’s AdManager today. Then there was Doubleclick for the big sites, which was not just a service to use and pay for as a publisher or agency, but a real network selling your inventory, until they stopped doing it when the marketing money ran out. So we had networks, and we had targeting, and we had lots of reach and bundling over different bigger sites.
I do believe that we are running down a similar road and we’ll see if lots of those networks out there will survive today. There is a lot more reach out there of course but one of the biggest differences we have is that the cost side has really really changed. You can have more server power and reach for stuff like behavioral targeting and costs for ad servers has gone way down, as has bandwidth. This allows both better targeting and and created networks that can run on the unsold inventory, because even with several cents CPM you can still run profitably. Also there are more real marketing dollars out there obviously.
Sadly the latter gave rise to ads that are not something you want on your site. The thing is that often times, cheesy ads that have higher click throughs to worse conversion but yield higher ecpms in the end. That is why you have these weird flashing banners, or texts that are totally unreasonable like “You are the 1.000.000th Visitor and you Won!”
As always these are interesting times, and I 100% believe in networks with a clear focus, as I wouldn’t run one otherwise. But we are focusing on filling inventory with marketing budgets from small local players in a performance marketing manner, making you other money. Others allow for exploiting your inventory through behavioral targeting techniques, making you more money. Still others are bundling smaller sites, who are allowing them to make money at all. All have to watch out what they stand for and that they are really providing value over and beyond the other solutions out there. And all have to make sure they can compete with Google, on which ever level that is.