Wednesday, November 28, 2007

Ad networks: moving beyond reach and targeting

By Rebecca Weeks

Real Girls Media's business development director reports on the latest ways interactive media executives are taking advantage of ad network benefits.

As the long tail gets longer and online behavior becomes more complex, media buyers are relying more heavily on ad networks to provide reach and optimization.

"Online networks allow you to scoop up thousands of pennies out there, like assembling your consumer. They have already assembled the inefficiency into efficiency," said Sean X Cummings,'s director of marketing.

But few executives fully understand the opportunities ad networks provide beyond simply aggregating the inventory of small publishers. Earlier this month at an event produced by San Francisco's Bay Area Interactive Group, 250 interactive media executives gathered to learn new ways to better leverage ad networks.

Pam Horan, president of the Online Publishers Association, moderated a panel that aimed to uncover various ways marketers are taking advantage of networks.

First up for discussion was the underlying purpose of ad networks, which have long been viewed by the buying community as pure direct response vehicles.

"In the past, we used them mainly for high volume, but now we're starting to use them for branding purposes. This requires experimentation to find success," said Scott Symonds, executive media director at AKQA.

Some of the networks have been trying to re-position themselves as having a strong offering for brand advertisers, but there isn't much proof of their effectiveness -- not yet at least.

"Is a network's transparency important to you?" asked Horan.

Panelists agreed that run-of-network transparency isn't a huge concern, and Cummings explained why the networks aren't voluntarily offering it: "A lot of networks are hesitant to divulge the list of their sites because they only have a few with recognizable names. I believe the sites with small reach are at an advantage because they are less content rich and therefore the user's eyes gravitate to the advertising. Or at least we hope they do."

As for optimization, Symonds said, "qualitatively driven campaigns take a longer time to build. Learning how to optimize is difficult. What's important is developing a custom universe of well performing sites."

"My biggest challenge with networks is pacing against our budget. They often over-deliver too early for fear that we won't roll over our budget," said Cummings.

Ad networks that don't place their client's needs first are certain to fail.

Differentiation is a must
With new and flexible systems like Adify, it seems every large media company these days is starting an ad network. So how can ad networks truly be differentiated?

hi5 Networks' Brett Finkelstein believes they can position themselves according to function and value: "We segment networks into four types of focus: media, widget, specialties (like geography) and premium -- for example, Hispanics are a really important target for us. And as a publisher, hi5 is getting a premium for non-user-generated content inventory at a 25 to 50 percent higher rate."

Vertical networks are seen as a great solution for clients because they aggregate special demographic or interest groups but most often can provide a narrow reach. Active Athlete Network, for example, allows brands to access athletes and sports enthusiasts, and Federated Media services bloggers. As another example, ad networks like Real Girls Media's allows marketers to reach a vertical within a vertical; advertisers targeting women can choose from nine different lifestyle channels that identify interest groups on as well as on partner publisher sites.

"Exclusivity is another differentiator," added Cummings, "because non-exclusive relationships with publishers put a network at a disadvantage." But these days publishers are reluctant to sign exclusive contracts because they want flexibility to shop for the highest ad rates and try out various partner networks.

Networks offering behavioral targeting -- which operates under the assumption that which web pages users click on and where they go from those pages indicate at least a presumptive interest in buying products related to those topics -- are providing advertisers with higher value from lesser targeted inventory. For instance, brands with longer consideration products, like cars, tend to benefit from behavioral targeting. However, there is still much to be learned about its impact and potential: "I think we need to learn what strategic usage there is for a behavioral targeting campaign and to experiment more with it," said Symonds.

Many advertisers are finding that a combination of behavioral, contextual and demographic targeting can offer the best insights about their target audience. In addition, social networks are also working hard to support innovative concepts for advertisers. For example, AKQA developed a dorm room-related campaign for Target on Facebook, and ConAgra Foods approved an integrated campaign with cooking tips, a celebrity chef endorsement and a sweepstakes -- for its Pam cooking spray on DivineCaroline.

But not all brands should be eager to participate. One of the challenges social networks face is integrating into their communities all the types of brands that want exposure.

"The brands on hi5 must seem fun because by nature our platform is fun and entertaining for users," Finkelstein said.

Be informed before selecting an ad network
What are the key criteria to help buyers determine which ad networks to use?

"Two things: sales support and technology. The sales team must represent their publishers well and provide service that maximizes a client's impact," said Symonds. "They should act like a partner publisher and give general stewardship of the campaign."

This type of high quality service comes as a result of a team's understanding of a client's needs and business model, which can often be discovered through an initial proposal.

Cummings doesn't think technology is robust enough to make a difference when selecting an ad network. "I think the best networks will be those that obtain exclusive contracts with content providers. Not many networks have a lock on the content."

What is the next generation of ad networks?
Two new possibilities related to user re-targeting are sequential and 'avoidal targeting.'

"Sequential often takes too much work, but is worth it. You never really know whether the consumer consumed, but you have to do it quickly. Ads served days apart will never register. In fact, ads served mere hours apart is about the most distance you can afford for "Burma Shave" style messaging," said Cummings. "Avoidal targeting uses cookies to identify those consumers who actually will never be your customers so that you can stop serving them wasted advertising. Pass backs have always been promised, but the reality is that they have never happened."

Social networks may be primed to offer another promising strategy: calculating influence. Finkelstein added, "Purchase intent is being wrapped into influencers with viral impact. We want to know a user's connections and interactions because the level of their activity is a good predictor of how influential they are on community opinion."

Beyond these strategies, I personally suggest you consider ad networks that can offer integrated campaigns, customization and scale, new formats beyond the banner (sponsorships, contests, etc.), roadblocking, consultative selling and enhanced creative testing.

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