Competitive Positioning in Internet Advertising

Part 3 of US Internet Advertising Landscape

Read Part 1 here

Read Part 2

If you are a publisher or an advertiser today, there is a bewildering array of choices for you regarding how you monetize your content as a publisher or reach a desired audience as an advertiser. The final article in this series is an attempt to clarify how the different players fit in with respect to your objectives.

Refer to the accompanying figure as you read further.

Positioning in the Internet Advertising Landscape

Ad Networks and Ad Exchanges

There are over 300 Ad Networks in the US  with Advertising.com (AOL) and Value Click being some of the more famous. Ad Networks do one or both of the following:

• •Sell unsold impressions for head publishers
• Aggregate audiences from smaller publishers, and in doing so, are the most efficient way for advertisers to purchase impressions on small sites

According to Bain/IAB, Ad Networks account for •90% of all display ad impressions but only•30% of all display ad revenues. This is because Ad Networks severely discount ad prices compared to buying directly from publishers. CPMs for ad networks average about $1 versus $15 for direct sales (Source: Bain/IAB).

Ad Networks use a variety of revenue models including revenue share with publishers (typically 60-65% of revenues is shared with publishers), arbitrage (buying inventory at wholesale prices) or pure service fees. Some of them, like Blue Lithium and Revenue Science use affinity/behavioural targeting.

I certainly expect of lot of consolidation among ad networks, since it is unclear what really differentiates them.

Quick Buying Guide for Advertisers

The table below, in conjunction with the Figure provides a quick overview of what to do if you are advertiser.

Your budget is	And objective is	Your best bet is
> $100K	Conversions (click throughs to your landing page, call to action form etc)	Google Adwords via Efficient Frontier. There is a cottage industry of value added service providers for Adwords that can help you optimize your keywords and bids subject to your budget and conversion objectives. The most notable among these providers is Efficient Frontier.Lead generation services are another option.
> $100K	Impressions/Brand awareness	I would recommend starting with an ad exchange like Right Media and if it cannot meet the need, buy directly from the publisher.While you can buy directly from specific publishers, you can go to an ad exchange like Right Media and purchase the same inventory at 1/10th the price. The main trade off with an ad exchange is that you may not know the specific pages or time windows in which your ads might run. In addition, many publishers allocate only a small portion of their inventory to ad exchanges – so you may not be able to purchase the impressions you want from an ad exchange.Sponsored microsites are option if you want a presence on the large publisher’s domain.
<$10K to $100K	Conversions	Google Adwords is your best option
$10K-$100K	Impressions/Brand awareness	Your best option is to work with an Ad Exchange like Right Media. You can bid for ads based on a variety of criteria, but you may not know specifically on which pages or time windows your ads might run.Your next best option is to pick an affinity targeted network such as Blue Lithium. Many ad networks are also available as part of ad exchanges, so you may not really need to go directly to ad network.Some of them also offer CPA/CPC based programs, in addition to CPM based programs.
<$10K	Impressions/Brand awareness	Niche audience networks such as Glam Media, Adroll and Federated Media are your best bets. Federated Media focuses on blogs that have sufficient reach. Glam Media aggregates women audiences from a variety of niche and blog sites.Some of them also offer CPA/CPC based programs, in addition to CPM based programs.

Quick Selling Guide for Publishers

If you are a publisher with a large audience, you will get the best prices for your inventory by selling directly to advertisers. Use ad exchanges and networks for unsold inventory.

Mid-sized and tail publishers are best served by ad exchanges, where you can name your price. Use Publimatic or Project Rubicon to aggregate all your ad networks in one place and ensure the best-priced ads are served first.

If your content lends itself to contextual targeting (e.g. buying guides, product reviews etc), you might do really well with Google Adsense.

Read Part 1 here

Read Part 2