Issues with Ad Networks

Programmatic Display has experienced rapid growth over the last few years. It represents a significant evolution from its forerunner – the Ad Network. This article describes the issues with Ad Networks resulting in Programmatic Display being regarded as a significantly superior alternative.

Ad Network Re-Visited

The Ad Network has these important functional components –

• Publishers: The web and mobile publishers with whom the Ad Network has direct commercial relationships to access ad inventory. The publisher’s ad server runs the Ad Network’s tags on identified placements at a fixed frequency and volume as per the commercial agreement.
• Advertisers: Route their demand through the Ad Network’s sales team.
• Network Ad Server: The system that takes decisions regarding which advertiser campaign to run on which ad spot. It works to consume the contracted ad inventory.

The primary use of Ad Networks was to provide incremental reach amongst long tail publishers. This is increasingly important as share of long tail traffic is substantial. From the publisher’s perspective, the Ad Network offers incremental monetisation for inventory unsold by their sales team.

Inventory Access Issues

One important Ad Networks issue is inventory access.

Ad Networks have to compete with programmatic ad exchanges for publisher ad inventory. In addition, Since the sales process of Ad Network is manual, only a few large campaigns execute on each at any given time.

In comparison, Ad Exchanges get a lot  many more campaigns through the connected DSPs. This means that the eCPMs (or yield) driven by Ad Exchanges is higher than Ad Networks. So, in order to get ad inventory, Ad Networks have to offer good terms such as minimum guarantees to the publishers. The Ad Network is then under pressure to prioritise usage of this ad inventory (to avoid losses). In this situation, campaign performance usually suffers leading to customer attrition.

Daisy Chaining

In order to ensure that there is adequate ad inventory, Ad Networks work between themselves to share inventory through a process called as daisy chaining. Simply put, the Ad Networks that have more ad inventory than campaigns, supply it to other Ad Networks.

Contrary to expectations, this still happens and can create several issues from an advertiser perspective –

• These daisy chains can frequently go several levels deep. This comprises brand safety and targeting.
• Frequently, in order to prevent channel conflict, publishers work with Ad Networks in a blind manner which creates lack of transparency. While this also exists to some degree in programmatic display, there is technology and investment to manage it.
• The last big challenge presented by such a model is the lack of automation. Every advertiser may work with several Ad Networks to leverage the strength of each. The process of integrating information from all of them into a single actionable set of data is manual at best and completely broken at worst.

Impact

These issues in Ad Networks significantly reduce the attractiveness of this channel for advertisers. In comparison, programmatic display presents a much better alternative.