Monday, April 21, 2008

Networks, Exchanges and Such

What's the difference between Ad Networks, Vertical Ad Networks, Ad Exchanges, Buying Services and Rep Firms?

The differences between these five categories are based on three primary areas; Technology, Media Exclusivity and Media Buying Methodology. The Technology component refers to whether there is a unifying technology back-end that allows for optimization and measurement across all the sites in the “network” or if they are considered separate and the optimization needs to be executed on a site-by-site basis. The Media Exclusivity component refers to the sites or content being sold and whether you can buy that same inventory elsewhere. The Media Buying Methodology component applies to whether the partner allows for you to buy across a transparent list of sites and whether they own the inventory or they go out and aggregate the inventory on your behalf.

Ad Networks are a collection of small to medium sized sites coupled with remnant inventory from larger publishers that they were not able to sell on their own. These Networks typically have a unifying back-end technology that allows for optimization across their entire network. They typically do not have Media Exclusivity and in many cases any number of networks are capable of selling you the same inventory. This is especially true when they are selling you remnant inventory from the major portals. Ad Networks typically are not transparent on the sites you run and the primary way you buy media from them is either based on demographics or contextual categories. They usually also offer regional targeting.

Vertical Ad Networks are similar to general Ad Networks except in three ways. First off, they focus their attention on a specific category such as auto, entertainment, women or travel. Secondly, they typically are exclusive in their representation meaning that you cannot purchase that inventory from somewhere else. They focus on the small to medium sized sites in a specific category; those sites with too little traffic independently to make it on a larger buy or to hire a sales staff. Lastly, they are typically willing to be transparent and share with you the sites you are buying.

An Ad Exchange is slightly different than both an Ad Network and a Vertical Ad Network. Ad Exchanges are similar in that they are also a collection of small and medium sizes sites as well as remnant inventory from major publishers. The Technology component here is intricately tied to the Media Buying Methodology. These sites offer a marketplace or an auction that allows advertisers to control their buys more deeply and bid on inventory rather than place a standard buy. Think of it as going to the supermarket and paying whatever costs the store has laid out for you vs. going to a farmer’s market and negotiating in real-time for what you want. You can identify the produce you want and make bids right there and you would be willing to pay a premium for a perfectly ripe tomato vs. one that was too early or too late. The Technology ensures that Publishers and Advertisers are achieving their optimal ROI. Ad Exchanges are typically not media exclusive.

A Buying Service may appear on the outside to be a network, but they do not actually own the rights to sell or represent specific media. A Buying Service makes it easier for you, the advertiser, by becoming an effective one stop shop for your media needs. From a Technology standpoint, they do not offer much except for possible buying tools that create a more efficient process. They are not media exclusive and their buying methodology is the same as yours; CPM, CPC and CPA.

A Rep Firm can also appear to be like a network, but they do not have any technology that ties together their sites, they are typically not exclusive and they are indeed transparent in their product offerings. What a Rep Firm effectively does is leverage existing relationships with advertisers and marketers to provide a service for Publishers. They can be a one-stop shop for advertisers looking to reach different audience and they make it easier to hear about different sites in one meeting, but that is their primary role. They are a valued service as not every site can hire the necessary staff to grow and in the early stages of a company’s growth they become a cost-effective way to drive revenue without creating more overhead.


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