2007 Ad Network Predictions

This will be one of the most active years for the ad network industry as it goes through a much needed transition thanks to new, exciting ad inventory opportunities. As a matter of fact, ad inventory will dictate new ad network models as each ad network begins to concentrate around its core strength.

As the profit margin for general interest (horizontal) ad networks gets smaller, I predict they will move to an Ad Exchange model that will play to their strength and expertise in remnant inventory. As 2006 proved to the industry, ad exchanges are no longer sketchy business models and can provide a significant value for publishers selling remnant or second or third-tier inventory.

But the ad exchange model presents general interest ad networks with a chicken and egg dilemma: how they can get the most number of publishers and advertisers to use their exchange (which one is more important the publisher or the advertiser) and how to create the best common ground for the two. It would come as no surprise to me if established traditional exchange giants such as eBay join the ad exchange game.

Online video will present contextual ad networks with the opportunity to move beyond textual content and take on the challenging task of understanding and monetizing video content. It will be a rat race with a big prize of becoming the “AdSense for Video.” Though Google is the prime candidate to win the race, it is by no means a trivial task with a set winner.

2006 saw the rise of a new breed of advertising network as vertical ad networks proved they can help brand marketers fill the large void left by general interest horizontal ad networks and present an attractive alternative to the brand-name web properties and large portal ad buys. In 2007 as the branding TV dollars continue the shift to online, vertical ad networks could capture the lion’s share of it by focusing on their core strengths of brand protection, brand engagement, transparency and helping brand marketers connect with their high composition audiences. The key for vertical ad networks in 2007 is to continue demonstrate to marketers that they attract highly targeted, affluent audiences as well if not better than the free standing brand-name sites and portals.

With the enormous pressure behind social networking sites to monetize their reach, behavioral ad networks have a great opportunity to prove their value proposition by segmenting these trendy target audiences into ad packages that both sales reps and media buyers can understand and feel safe with. The key battle will remain the same and that is who can cookie the most sites through strategic partnerships.

With the latest addition of Verizon Wireless to the mobile bandwagon, 2007 is shaping up to be a make or break year for a number of new and existing mobile ad network start ups. With the release of Windows Mobile and the continued adaptation by mainstream users, this will be the year when there will be sufficient mobile ad inventory for the medium to have a chance to prove its value. There will be lots of test mobile ad buys but whether they will translate into value for marketers will depend on how consumer’s react to ads on their mobile devices and if providers can deliver enough reach to become real competition to other proven ad media.

As online ad inventory continues to move from textual and web space to all forms of the digital medium, ad networks will continue to play an ever more significant role in our industry and as each newly established platforms go through their maturing process and new and better ways of monetizing them is discovered, we will continue to see both the evolution of ad networks as well as the birth of new ad networks that present real value for online marketers.