GLGi: Online Ad Networks

Council Member Biography

Bart Barden is the Chief Executive Officer at Red Zone Digital, a company providing online advertising consultancy services for clients such as MSNBC and Popcap Games. He specializes in content development, social communities, mobile advertising, optimizing online marketing spend, and ad serving technology. Previously, he was a group product manager at MSN.com, the internet division of Microsoft, where he was responsible for the development, planning and performing strategic analysis of advertising technologies; and senior consultant at Ernst and Young. He is experienced in ad products for brand and direct marketing, paid-search, contextual advertising and targeting, content monetization, streaming video, rich media, infrastructure and platforms, and business development services. He is knowledgeable in advertising and platform solutions, evaluating ROI for online marketing, and advertising opportunities within video, mobile, gaming, and other publishing applications and services.

Table of Contents

► What is the competitive landscape of ad networks?

► How do ad networks work?

► How are ad networks making money?

► What are the current and future trends for ad networks?

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John AronsohnVice PresidentGerson Lehrman Group850 Third Avenue, 9th FloorNew York, NY 10022212-984-3673jaronsohn@glgroup.com

Christine RuaneSenior Product ManagerGerson Lehrman Group850 Third Avenue, 9th FloorNew York, NY 10022212-984-8505 cruane@glgroup.com

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Ad Network Review

Bart Barden

Red Zone Digital

Contents

• Product Offerings• Value Proposition to Advertisers• Value Proposition to Publishers• Revenue Generation• Top Networks:

– Advertising.com– Yahoo/ Right Media– Tribal Fusion– Drive PM (AQNT)– AdSense (Google)

Ad Network Product Offerings

• Run of network

• Site visitor-specific targeting

• Vertical targeting

• View-based conversions

• Behavioral targeting

Ad Network Value Prop: Advertisers

• Performance spend• Reach• Optimization based on minimal spend goals• Behavioral targets• Identification of value• Account management• Reporting systems• Support Multiple ad types:

– Display– Text-based

Network Value Prop: Publishers

• CPM payment for ad inventory

• No platform adoption payment

• No ad operations resources

• No ad sales resources needed

• Simple set up

• Low commitment terms

How an Ad Network Generates Revenue

• % of conversion fees:– Charge for *platform use*– 20-30% depending on volume

• Revenue share with publishers– Action or acquisition fee is shared with publishers

• Terms:– Minimum spend recommendation based on CPM to

*Seed* system– Pre-determined CPA for initial agreement– Network will attempt to minimize risk by trying to get

advertiser to commit to CPM, CPC or CPL spend

Calculating Yield

• RevE = (IMP x CTR x CON%) – CPAGOAL – (CPM x IMP)

Key:• RevE= Revenue Efficiency

– Want to be greater than 1.00– Think ROI

• IMP = Total Impressions purchased• CTR = User clickthrough on ads• CON% = User conversion to a sale once they reach marketers site• CPAGOAL = The bounty the marketer is willing to pay for an

acquisition or sale:– Usually a percentage of sales or cost per lead or application

• CPM = blended CPM that the ad network is charging for each impression

Advertising.com

• Largest ad network:– Reach– Total inventory controlled

• Flexible agreement terms• Larger recommended minimum spend• Site-specific visitor targeting• Largest international footprint• Larger chance for duplication due to network

size• Superior account management

Yahoo/Right Media/Blue Lithium

• Ad Exchange and Ad Network

• Ad Exchange small part of revenue story

• Flexible agreement terms

• Looking to integrate with Yahoo ad engine and platform

• Blue Lithium adds key behavioral targeting and improves user data set to platform

Tribal Fusion

• Require larger minimum CPM spend

• Prioritize best clients in system

• Superior customer service

• Enable vertical content targeting

Drive PM

• Tied to several large portals via remnant program– MSN– OPA

• Smaller in size

• Linked to Atlas DMT and sold as packages

• Inferior reporting

AdSense

• Substitute for Ad Networks

• Requires lower

• Self-service

• Pure CPM model

• Can specify images or video

• Optimization can increase yields but must be done via site resource