February 2010 – Feature: Your Online Ad Network Cheat Sheet
A User-Friendly Guide for Understanding–and Fully Optimizing–Online Display Ad Networks
By Mark Simon
Need to get up to speed on the plethora of online display ad networks out there? You’re not alone. The world of online display advertising–and the networks that the ads run through–is changing so quickly that it’s hard to keep track. That’s why I’ve created this “cheat sheet,” which describes how ad networks help you target customers in different ways, the various pricing models they work through and a few things to watch out for.
TARGETING
To find your best customers, meet them where they are and deliver an appropriate message to them. Different kinds of ad networks help you achieve this goal in different ways:
Vertical Networks - Fashionistas read fashion magazines and sports fans read sports publications. People consume content that relates to their interests. That’s why, in many cases, all you need to do to find the right audience is to find the content consumed by your core audience.
Enter vertical ad networks, which run advertising on sites catering to specific verticals–such as the Travel Ad Network and the fashion-focused Glam Media. An April 2009 comScore study found that vertical networks have phenomenal reach across the Internet and offer extremely high engagement levels. Of course, this shouldn’t come as a surprise: Vertical networks focus on running ads on sites geared around the things that their visitors are passionate about.
Contextual Networks - If you want to target customers reading a publication outside of your vertical, you’ll need to expand your reach.
Contextual ad networks analyze the content on partner site pages and match ads to this content. Typically, the content matching is keyword-based, which means that advertisers select keyword lists they’d like their ads to run against (similar to choosing keywords for SEM). When the network sees a page with a selected keyword, the ad runs. Not surprisingly, some of the largest contextual networks–like Google AdSense and the Yahoo Publisher Network–have ties to search engines.
Contextual networks offer a wonderful way to get your ad in front of an audience that’s already engaged with content relating to the things that you sell, and on some of the best-trafficked sites on the web. One thing to watch out for, however, is “dumb” networks that parse words without understanding their meaning. This can result in embarrassing situations for your brand–from an irrelevant ad to bona fide idiocy (like the contextual system that ran an ad for rabbit stew recipes against a heartwarming story about a young girl’s search for a home for baby rabbits).
Some networks and third-party providers have begun to engineer semantic solutions, which not only scan the words on the page, but better understand the meaning on the page as well.
Behavioral Networks – Contextual advertising helps advertisers find targeted consumers in non-targeted publications. But it doesn’t let advertisers find targeted consumers on non-targeted sections of those publications.
Enter behavioral networks. Rather than tying ads to the content on a publisher’s pages, behavioral networks are able to identify who the user is, what kinds of prior activities he or she has engaged in on the web and what kinds of ads might be relevant to this person–regardless of the website on which the ad appears. For example, let’s say that a user reads six hockey-oriented pages or has indicated through other online activities a passionate interest in the sport. This user will be exposed to ads for hockey-oriented products and services, even when he or she is reading web pages with content related to business-, travel- or automotive-focused topics. Any additional demographic data the network has–such as information provided from an e-mail signup–can be used to add further detail to the picture.
Often, networks will target users by labeling them based on “buckets” comprised of a combination of demographics and site-viewing activity. For example, the 40-year-old mother who frequents cooking sites may be categorized as a “soccer mom,” the web user who reads auto pages may be categorized as an “auto enthusiast,” etc. Some of these networks observe users’ web habits in very fine detail. Yahoo’s Smart Ads system, for example, matches users’ search records with their activity across the vast array of Yahoo content sites, creating a very rich user profile.
Behavioral targeting does raise privacy concerns–an inevitable by-product of creating a system that’s designed to monitor web users’ activity. To mitigate privacy issues, be sure that the network you’re working with properly anonymizes user data, and allows users to easily opt out of targeting.
PRICING MODELS
Ad networks utilize various pricing models, with associated benefits and drawbacks. Following is a rundown of the major pricing models:
CPM – CPM stands for “cost per 1,000 impressions” (”M” being the Roman symbol for 1,000). CPM is shorthand for a flat-fee pricing model based on the number of times your ad runs. On a poorly trafficked site, the CPM may be only a few pennies per ad; on a very highly trafficked page–like the Yahoo homepage–CPM rates rival prices for prime-time TV.
CPM is a term that originated in print media, but highly granular web metrics makes things more complicated online. Historically, CPMs have been set based on the number of a site’s pageviews–the more times a page is looked at, the more the network can charge (all things being equal). But there’s a new movement–driven by advertisers–to shift pricing based on pageviews to pricing based on unique visitors (new visitors who arrive at a site). To me, this pressure from advertisers is legitimate, because if you want to maximize the number of people who see your ad, then you’ll want to pay differently for a visitor who’s never been to the place where your ad lives than you would for someone who’s already been to that site multiple times.
Pay Per Click/Pay Per Performance - While traditional brand advertisers might be satisfied running ads that people simply look at, many Internet advertisers are looking to drive some kind of further engagement with their businesses. For this reason, some networks offer cost-per-click pricing, a pricing system familiar to those engaged in search advertising. In this model, advertisers only pay when a user clicks on the ad. Some networks go a step further–offering pay per action advertising: The advertiser sets a desired action on the destination website, and pays only when the user takes that desired action via the ad.
Exchanges - This allows advertisers to buy ad inventory via auction, in a manner that’s very similar to the search advertising model. The two best-known exchanges are Google’s DoubleClick Exchange and Yahoo’s Right Media.
Ad exchanges were initially created as ways to sell remnant ad space that publishers couldn’t sell otherwise. By putting this ad content up for auction, publishers and networks were able to connect with the advertisers for whom that space would be valuable (and maybe even create competition to drive up the price on those ads). Recently, the Right Media platform was re-branded as a “premium” network–meaning that it’s now a destination for buying prime ad inventory.
BUYER BEWARE
I’ll close with a bit of warning:
Most of the reputable ad networks have earned their reputability. This being said, there are two cautionary issues to think about when you’re considering entering into a relationship with a network: the ability of the network to accurately provide what it’s promised and the willingness of the network to give you control over your data.
Accuracy - When I refer to “accuracy,” I mean that you need to be sure that you’re getting what you’ve actually paid for. Sometimes, ad networks can inflate their numbers, or claim that they’re offering far more precise targeting than they really are, or otherwise charge you as if they’re delivering more than they actually are. For example, while a given ad network might be able to run highly targeted ad inventory, the space where this advertising actually appears may be a spot on the page that’s so low that it will rarely be seen. Obviously, you shouldn’t pay premium rates for such ads.
Unfortunately, some of these errors are the result of simple dishonesty. Often–and more benignly–they’re the unfortunate by-product of a poorly managed network. Either way, you’ll want to stay vigilant to be sure that you’re getting your money’s worth. Before you get involved with an ad network, make sure you’ve done your homework on which networks are reliable and which aren’t as good to deal with.
Data Ownership - Ask yourself this question: If you left your ad network today, how easy would it be to take your data–your traffic statistics, your ad pricing and the places your advertising runs–to a different network? For that matter, how easy would it be for you to use the data developed in one network to duplicate your campaigns in a different one? Some ad networks work hard to make it difficult for you to transfer your data over to a competing network–making it a challenge for you to repeat success, or to start anew if the relationship with that ad network doesn’t work out. So when you enter into a relationship with an ad network, be careful as to who really owns the data you might someday want to export–find out if the owner of the data is you, or the network you’re advertising on.
Mark Simon is vice president, industry relations at Didit, a firm specializing in search marketing and targeted display ads. He can be reached at mark.simon@didit.com.
