Rise of the Ad Network

More and more often, Digital Advertising Agencies are utilising ad networks to bolster placement inventories of online campaigns. Ad networks, which sell display advertising across groups of Web sites, are thriving because of two key points: price and improved technology. When it comes to pricing, ad networks will offer significantly lower CPM/CPC prices then due mainly to the fact that they once served ads to pages where no advertiser wanted to be. Now, though, there are many instances where there are many attractive placements not on the home pages. Additionally, many ad networks now serve targeted ads.

Imran Khan, an Internet analyst at JPMorgan Chase, recently published a report saying “[ad networks] are growing much faster than the general graphical advertising industry.” His calculation was that the top 20 ad networks represented 14 percent of the global display market.

Spurred on by this success, the big players are buying their way into the game. Yahoo bought BlueLithium for $300 million last September. Last July, AOL bought Tacoda for a reported $275 million. Last May, Microsoft bought aQuantive for $6 billion. DoubleClick, which also owns ad networks, was acquired by Google for $3.1 billion.

“These are the gold rush days now for ad networks,” said David Hallerman, senior analyst with eMarketer. “And that kind of counters the appeal of ad networks for advertisers’ agencies, which was to simplify the purchase of ads. And that’s why its unlikely that a great number of ad networks will survive.”

Several sources used, including NY Times, eMarketer, eConsultant and JPMorgan Chase