An online advertising network or ad network is a company that connects advertisers to web sites that want to host advertisements. The key function of an ad network is aggregation of ad space supply from publishers and matching it with advertiser demand. The words "ad network" by itself is media neutral in the sense that there can be a "Television Ad Network" or a "Print Ad Network", but is increasingly used to mean "online ad network" as the effect of aggregation of publisher ad space and sale to advertisers is most commonly seen in the online space.
Industry Overview
The advertising network market is a large and growing market, with the top 20 companies earning about $2 billion in revenues during 2007. This represents around 13% of the total display advertising market, forecasted to grow to 18% by 2010. This growth has resulted in many new players in the market, and has encouraged acquisitions of ad networks by large companies entering the market.
On June 30, 2010, the Interactive Advertising Bureau (IAB) in conjunction with PricewaterhouseCoopers released the IAB Internet Revenue Report - First Half 2010, and as part of that report provided a listing of the Top 50 Advertising Networks. The list, published in the June 2010 issue of Website Magazine is an inclusive listing of advertising network categories -- text, search, classified and mobile. Rankings are based on the number of unique visitors their advertising network is able to reach.
In August 2010, comScore released a press release listing the Top 20 Largest U.S. Online Advertising Networks as follows:
- 24/7 RealMedia – Requires a minimum of one million page views per month. 400 billion global advertising impressions served every month. http://www.247realmedia.com/
- AdBrite – Offers display/contextual ads. Reach of 100 million online visitors. http://www.adbrite.com/
- Adify – Offers display/contextual ads. Reach of 90 million online visitors. http://www.adify.com/
- Advertising.com – Primarily display/banners and media buys. Owned by Platform-A. Reaches 91% of all US internet users. http://www.advertising.com/
- BBN Networks – High-end B2B publishers and advertisers. Reaches 35 million monthly unique users.http://bbnnetworks.com/
- BidVertiser – Offers contextual and banner ads. http://www.bidvertiser.com/
- Bizo – Seems focused on the B2B space. Emphasis on a targeting and optimization system. Reaches over 30 million unique business users http://www.bizo.com/
- Break Media – Powered by Adify, and targets audiences of males age 18-34. Requires at least 100,000 page views per month. Over 100 million unique visitors a month. http://breakmedia.break.com/
- Burst Media – Focused on banners/display/media buys. Mixture of CPM and CPC. Advertises to a range of 4700 sites. http://www.burstmedia.com/
- BuySellAds – Offers fixed monthly prices based on average impressions. http://buysellads.com/
- Chitika – Focused on search related contextual display ads. Reaches ver 2 billion monthly impressions across more than 80,000 websites. http://chitika.com/
- Clickbooth – CPM, CPC, and CPA campaigns. Requires at least 1,000 “unique page views” per month. Owned by IntegraClick. http://www.clickbooth.com/
- Clicksor – Primarily banners. Totals 3 billion ad impression per month. http://www.clicksor.com/
- Glam – Focused on media buys and display ads for primarily female audiences. Requires at least 100,000 pages views per month. Reaches over 80 million viewers every month in the US and 164 million users worldwide. http://www.glammedia.com/
- Google Adsense – The king. https://www.google.com/adsense/
- Kontera – Primarily inline contextual text ads. Reaches 100 Million Monthly Uniques. http://www.kontera.com/
- Technorati – Focused on banners. Reaches 248+ million unique visitors. http://technoratimedia.com/
- Tribal Fusion – Media buy banner network and entirely CPM. Requires a minimum of 60,000 impressions for each ad space. Reaches over 230 million people per month worldwide. http://www.tribalfusion.com/
- ValueClick Media – Focused on banners, display/media buys. Reaches 172 million unique users.http://www.valueclickmedia.com/
- Vibrant Media – Primarily inline contextual/rich ads and media buys. Reaches 170 million unique visitors.http://www.vibrantmedia.com/
Ad networks are primarily involved in selling space for online ads to appear. This online advertising inventory comes in many different forms, including space on websites, in RSS feeds, on blogs, in instant messaging applications, in adware, in e-mails, and on other sources. The dominant form of inventory remains to be third-party websites, who work with advertising networks for either a fee or a share of the ad revenues.
An advertiser can buy a run of network package, or a run of category package within the network. The advertising network serves advertisements from its ad server, which responds to a site once a page is called. A snippet of code is called from the ad server, that represents the advertising banner.
Large publishers often sell only their remnant inventory through ad networks. Typical numbers range from 10% to 60% of total inventory being remnant and sold through advertising networks.
In June 2010, Apple announced the iAd mobile advertising platform for its Apple store apps for its line of mobile devices, namely the iPhone and iPod. The iPad was later added. iAd was officially launched July 1, 2010. According to AppleInsider, based on the estimated size of the mobile ad market, the company says it will capture a 50% share of mobile ads in the second half of 2010.
According to market research firm EMarketer, U.S. mobile advertising spending will grow 43 percent this year to $593 million from $416 million last year. Mobile ad spending is forecast by EMarketer to grow almost threefold more by 2013, reaching $1.56 billion. According to mobile phone tracking firm International Data Corporation, the sale of smartphones will jump 55 percent 270 million units this year.
AdAge writes about eMarketer's new mobile ad forecast, which says that revenues cross the billion-dollar threshold next year in the US market. I briefly exchanged emails with Noah Elkin, who's responsible for the forecast, and he told me it pre-dates Google's statement last week that it had achieved $1 billion in mobile ad revenues.
Smaller publishers often sell all of their inventory through ad networks. One type of ad network, known as a blind network, is such that advertisers place ads, but do not know the exact places where their ads are being placed.
In most cases, ad networks deliver their content through the use of a central ad server.
Large ad networks include a mixture of search engines, media companies, and technology vendors.
Types of Ad Networks
There are 3 types of online advertising networks:
- Vertical Networks: They represent the publications in their portfolio, with full transparency for the advertiser about where their ads will run. They typically promote high quality traffic at market prices and are heavily used by brand marketers. The economic model is generally revenue share. Vertical Networks offer ROS (run -off-site) advertising across specific Channels (example: Auto or Travel) or they offer site-wise advertising options, in which case they operate in a similar fashion to Publisher Representation firms.
- Blind Networks: These companies offer good pricing to direct marketers in exchange for those marketers relinquishing control over where their ads will run, though some networks offer a "site opt out" method. The network usually runs campaigns as RON or Run-Off-Network. Blind networks achieve their low pricing through large bulk buys of typically remnant inventory combined with conversion optimization and ad targeting technology. There are two types of blind networks: blind networks and premium blind networks. Blind networks include: Admoda/Adultmoda, Mojiva, InMobi, AdMob and Buzz City. Premium blind networks include: Jumptap, Madhouse and Millennial Media.
- Targeted Networks: Sometimes called “next generation” or “2.0” ad networks, these focus on specific targeting technologies such as behavioral or contextual. Targeted networks specialize in using consumer clickstream data to enhance the value of the inventory they purchase.
There are two types of advertising networks: first-tier and second-tier networks. First-tier advertising networks have a large number of their own advertisers and publishers, they have high quality traffic, and they serve ads and traffic to second-tier networks. Examples of first-tier networks include the major search engines. Second-tier advertising networks may have some of their own advertisers and publishers, but their main source of revenue comes from syndicating ads from other advertising networks.
While it is common for websites to be categorized into tiers, these can be misleading. While Google is in the clear majority of advertisement impression served, other networks that could be labeled as tier 2 actually dominate over these tier 1 ad networks as far as the number of customers reached.
COMMENTARY: The advertising network industry is highly fragmented with just a few industry leaders, a small list of followers and hundreds smaller ad networks serving specialized niches or targeted publishers and sites. The number of advertising networks have grown rapidly, to meet the demand, but some industry experts are predicting that the industry is overdue for a shakeout or contraction due to consolidation.
Spending on general, broad-based ad networks -- which currently are the dominant source among advertisers and agencies that buy online advertising inventory though networks -- will decline over the next 12 months as Madison Avenue shifts its focus toward more targeted options based on user behavior or social networks, according to a new study being released this week by the Center for Media Research.
Targeted ad placement based on behavioral attributes works as follows: A user navigates to a Web site and requests a page. When the user comes, the request goes to the Web server. The Web server makes a call which evaluates the user’s cookie. Based on that segmentation scheme, the cookie is then placed into the appropriate bucket and served relevant content.
Behavior is determined by pages/content viewed, the number of visits, entry pages, the path taken, products viewed, frequency of page views, conversions, internal search keywords, the referring site and the referring keywords.
You can enhance your behavioral data with non behavioral data like geographic location, IP, language, connection speed, domain, data/time, home/business. Demographic information can be used, as well. Stuff like gender, age, location, income, likes/dislikes, hobbies, and the list goes on. Be careful with user-inputted data because people lie. Anil tells everyone he’s a CEO because he wants the magazines they give to CEOs. Heh.
Once you understand the user, you can target online media (banner ads), in-house ads, site images, site content, landing pages, email to them.
With the explosive growth of mobile devices, namely smartphones, iPods, mobile apps, social games, electronic game players, and tablet computers like the iPad, mobile advertising networks have entered the marketplace.
Advertiser's can use one or more advertising networks to insure that their ads are placed either online either randomly (blind networks) or targeted sites or embedded into electronic games, or appear in social games and mobile apps.
If you are a small business owner, you can use self-serve ad networks like Google AdSense to place your ads. Search Engine Journal prepared a list of self-serve ad networks here.
Courtesy of an article dated November 1, 2010 appearing in MediaPost Publications Online Media Daily and Advertising Networks appearing in WikiPedia, comScore's List of Top 20 Text-Video-Classified Advertising Networks and The Interactive Advertising Bureau
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