In a recent post, we at Epic Media Group predicted the interactive marketing industry will consolidate somewhat in the months ahead. In that post, we had purposely used terms like “interactive marketing industry” and “digital marketing services companies” instead of “ad networks.” Today, we are addressing what ad networks look like now, and what they will look like in the future.
For a few years, certain industry pundits and followers have claimed ad networks would become irrelevant over time. Since our business has been categorized as an ad network, we certainly didn’t believe that and concrete industry data refutes this as well. In fact, old school ad networks have given rise to much more comprehensive digital marketing services companies that are deeper than the traditional ad network of a few years ago.
As we and other industry experts have stated, the interactive marketing ecosystem is cluttered and this chart exemplifies this point. The chart is useful as a snapshot showing all the various service providers and types of services in the chain; however it is also somewhat outdated in terms of what many of these companies are striving towards and are currently delivering for advertisers and publishers in practice today.
Speaking only for Epic Media Group and Traffic Marketplace, I can tell you we don’t consider ourselves just an ad network by the traditional definition. Sure, there is a major piece of our business that is driven by a network effect, meaning we leverage tremendous scale and reach for advertisers and agency partners by garnering distribution via dozens of safe, targeted, high-value publishers simultaneously rather than one-to-one. However, to say that’s all we are is incredibly short-sighted. Referring again to the ecosystem chart above, we could be categorized within mobile networks, performance-based networks, rich media networks, yield optimizers, DSP’s, and creative optimizers. Not to mention what we’re doing in brand protection; technology, RTB (real-time bidding) and our platform; emerging media; and across specific verticals.
While it’s easy to analyze the companies that support the industry by putting them into buckets, it can be inaccurate. Modern interactive marketing companies are a lot more strategic – and diversified – than the ad network of even a few years ago. This does not diminish the value of running massive networks; it simply doesn’t tell the whole story of what some intermediaries provide or are focusing on strategically.
Consider one definition of an ad network: “a company that connects advertisers to web sites and publishers that want to host advertisements.” If that’s all it is, you can see why hundreds of ad networks were born over the last several years.
We have stated before that the lines are blurred in the interactive marketing space unlike any other medium. People and industry experts like to analyze things in nice, neat buckets. Offline, there are direct response advertisers and publishers at one end; brand advertisers and premium publishers at the other; and there is a one-to-one relationship between advertiser and publisher in most cases.
Online, it just isn’t the same simple model, yet analysts like to put together charts such as the one linked to above with service providers lumped into specific buckets. The reality is that there will likely never be a one-to-one advertiser/publisher relationship in interactive marketing. But is it accurate to say that there are, by my count, 22 potential other parties in the advertising chain? No, but it looks great on a PowerPoint slide. New, digital marketing services companies are already performing many of the functions niche companies serve today – under one roof, no less.
The strongest ad intermediaries have businesses today that look like a good investment portfolio. They are well-diversified and bring a host of solutions to their advertising and agency clients. To some extent, they’re a one-stop-shop which was the goal of the formation of Epic Media Group. A few other companies have followed this strategy as well. Using the financial services analogy, a good intermediary’s portfolio is data-driven, squeaky clean from a compliance and brand protection standpoint, focused on technology and expansion of one’s platform, and possessing an eye toward forming long-term partnerships.
The ideal portfolio digital marketing services companies must provide to advertising clients includes in no particular order: 1) generating scale; 2) the ability to run ads on a number of devices and platforms; 3) targeting ads based on the distribution type (display, search, social, etc); 4) protecting their brands; 5) optimizing campaigns utilizing technology and real-time bidding capabilities; and do all of this on a global scale. While a network effect may be underlying a few of these items, it is not the sole thing companies who support the interactive marketing space nowadays hang their hats on; it’s much broader and more comprehensive.
It is a fair assumption to claim that there are many ad networks still out there based on the old definition, and still provide some value in that capacity. But, there are a handful of companies that go beyond that and are considered the next generation of Ad Networks. For those who believe things like RTB are replacing the ad networks of old, it is actually the networks themselves which are doing so.
Michael Sprouse is the Chief Marketing Officer for Epic Media Group.
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