are publishers moving in on ad networks

Posted on December 14, 2009

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CBS is the latest in a series of publishers to limit or cut out access to ad networks. at the end of the day its all about getting teh right eCPM so the access is still there. however, in a world where clicks are more valuable than impressions you have to look at the economics and ask yourself whether ad networks are not a more attractive value proposition than media businesses.

1. advertisers are buying ROI – they dont buy a media because they want to, they buy a media because of a business benenfit.
2. where the business benefit is seen as a lead/acquisition (point of sale) the value in paying only for a result is immense as cost/result has a linear relationship
3. as behavioral targeting grows, the person with the biggest known user base will win the bulk of the deals. as ad networks can work across a wider range of related media to allow advertisers to target, they should be able to deliver large inventory volumes and high ctr’s
4. the media cost via an ad network is often at a discount to a premium website

a nice article on CBS and this issue from paidcontent.org can be found here

Updated: CBS Interactive is cutting the cord on third-party ad networks and some online ad exchanges effective immediately, paidContent has learned. The company is preparing its own ad serving platform, dubbed Madison, to power the CBS Interactive (NYSE: CBS) Premium Ad Network for its group of properties, betting that it can better handle its own inventory as the economy begins to recover. The decision to go in house was first reported by AdAge. Thanks to its purchase of Cnet last year and its moves since then, CBS can claim 200 million monthly users across its sites, securely placing it among the top 10 global web properties. By taking back its inventory from ad nets, CBS is testing the weight of that acquisition.

CBS Interactive President Neil Ashe told AdAge he accepts the probable decline in revenue as a result, but he contends the CBS digital unit can do better on its own over the long term. CBS Interactive isn’t cutting off third-party sites altogether. It will continue to hand over some ad space to online exchanges, including Yahoo’s Right Media, Google’s DoubleClick and Publicis Groupe unit Vivaki’s Audience on Demand platform. Third parties that can promise the kinds of data and prices that meet CBS Interactive’s targets will be allowed to serve the company’s ads.

The unit will immediately discontinue the use of third-party ad networks for display ads across all of its global sites. CBS Interactive says it expects to gain a range of demographic, behavioral and re-targeting options; more flexibility in its relationships with selected third-party online ad firms; and more customized ad programs tailored to its specific audience.

Since Wenda Harris Millard compared inventory on remnant ad networks to “pork bellies” almost two years ago, more and more publishers have been rethinking the efficacy of handing their ad space to third parties. But when the economy worsened last year, the debate became more or less academic. In the meantime, the number of ad networks has only increased, even as many forecasters two years ago had expected a quick contraction.

Lately, a number of publishers have indicated that they would move to scale back their dealings with ad networks. Most notably, AOL CEO Tim Armstrong clarified the company’s stance on how it would use its own ad network, Advertising.com. While Armstrong dismissed an analyst’s report that AOL (NYSE: AOL) would pull all its premium inventory off Advertising.com, he said the company would place more emphasis on developing its in-house sales team.

CBS Interactive’s inventory pullback from nets such as Advertising.com and ValueClick (NSDQ: VCLK), could spur other publishers who have wanted to make similar moves. Fo now, it joins a number of other high-profile publishers such as Time Inc. (NYSE: TWX) and Hearst, who have made a point of withholding inventory from ad nets this past year. But ad networks insist that, despite making headlines, it won’t make much difference to their continued expansion. As Mike Cassidy, CEO of ad net Undertone Networks, tells AdAge, there is some concern about Yahoo’s plans to block some third parties from its Right Media exchange. Yahoo’s message to the ad nets is very simply this: add value through data and more sophisticated targeting or get chopped.

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