There are more than 300 online ad networks serving the U.S. alone. Large publishers such as Forbes, CondéNet, Martha Stewart Living Omnimedia and IDG have offered their own networks for some time now. Even LinkedIn has introduced its own ad network. Today, some smaller publishers are getting into the act, and hand-selecting sites (often bloggers) that make sense in their advertising markets.

“Agencies are not saying they’re cutting their online spending, what they are saying is they intend to spend more with fewer people,” says Rodney Mayer, general manager at Adify Media, a company that helps support networks. “The industry is now mature enough that the advertiser needs a network budget and a portal budget. They don’t need to spend $30 million spread over several places, they can spend $5 million in one place and get comparable reach.”

Still, ad networks run the risk of commoditizing a publisher’s site. Last year, ESPN severed its relationship with ad networks such as Specific Media, saying the use of such networks diminishes the value of their brand and content by spreading it so widely, “ultimately threatening existing relationships with advertisers.”

“From the content publisher’s point of view, as a standalone buy, you have appeal limited to just folks in your immediate market,” says sales consultant Josh Gordon. “In a network you can become part of a much bigger buy you’d never be considered for.”

Membership also includes a very steep minus. “If you’re a pharmacy publisher with 50,000 unique visitors, maybe you can get lumped into a huge media buy and it’s you and 20 other Web sites,” says Gordon. “That’s a win but you’re one of a whole bunch of others. Advertisers aren’t looking at the unique value you’re offering, just the category you’re in. You’re basically selling yourself as a commodity.”

2009: Year of the Network?

One of the more promising ad networks is BBN, formed last spring by four major b-to-b publishers: Cygnus Business Media, Nielsen Business Media, Reed Business Information and McGraw-Hill. Since then, the network has added Ascend, Hanley Wood and Vance Publishing.

“There are several hundred million dollars that don’t get sold in the b-to-b category,” says BBN chairman Derek Reisfeld. “For a bunch of reasons, advertisers find it difficult to place money efficiently and effectively in b-to-b.”

Reisfeld says BBN has a monthly reach of 30 million uniques and will add two or three more members soon. “We’re not excluding anybody. We want to build it slowly and make sure we can handle the capacity we have.”

Nielsen sees potential in BBN. “Moving forward with BBN allowed us to have a more compelling solution when we talk with a non-endemic advertiser,” says Eric Biener, vice president of business development at Nielsen, who adds that the requirements for members is minimal. The partnership includes a back-end network (provided by 24/7 Real Media). “It’s not really a drain on any internal resources,” says Biener. “The nature of heavy lifting on our part is tagging our Web sites with the appropriate ad tags.”

The response from the ad market has been mixed. “We’ve had traction but it comes in peaks and valleys,” says Biener. “We see more interest in 2009 and we attribute that to people looking for more cost effective buying.”

Do-It-Yourself Network

In September 2008, Decatur, Georgia-based Paste launched Paste Nation, an online ad network featuring 14 different “tastemaker” sites covering music, film and culture, including blogs such as Brooklyn Vega, PopMatters and the Web site for Seattle’s KEXP radio station. The network averages about 4.3 million visitors per month and 28 million page views, according to publisher Nick Purdy.

“Volume matters. To sell to big advertisers, who will be willing to pay more, you need sales people to do that—it’s an agency level sale,” says Purdy. “Most indie music Web sites are selling low CPM to mostly endemic advertisers. There is a lot more revenue potential in non-endemic advertisers. We have built that because of our print property. The revenue potential on the Web is not as much as in print on a CPM basis. Having a lot more inventory to sell makes a huge difference. It made sense for us to recruit sites that fit our demographic and say to advertisers, if you think Paste is a good place for your money, we can confidently say these Web sites are also a good place for your money.”

It’s a mutually beneficial relationhip. “Members don’t have the revenue to build out a national sales team and our Web site itself wouldn’t have enough traffic on its own to access certain campaigns,” says Purdy. “But put it all together and it makes sense. The thing that’s great for the advertisers is they’re able to buy sites that can really move the needle and buy at scale.”
Paste initially used Burst as the ad server for the network but has since developed its own server in-house. Paste takes a 20 percent commission on each sale while the individual ad rep gets the standard 20 percent and 60 percent goes back to the partner web site.

Purdy says the amount of personnel devoted to the network full time is “1.5.” ‘The work is spread out over a traffic person, a tech person and me in more of a supervisory role,” he adds. “For all sales reps, this is another arrow in their quiver of assets.”

While Purdy won’t say how much revenue the network generates for Paste, he does say it has drawn new advertisers such as Google, Dell, Microsoft and Apple to Paste’s core print and online products. “We’ve got the ability to geo-target and since we have the scale, it really means something,” Purdy says. “An advertiser like Live Nation, with concerts to promote, can now come to us and say hey, we’ve got a show in Indianapolis, we need to push that, can you help us move the needle?’”

New Ecommerce and Paid Content Models
Check out this related session at The Folio: Show, November 1-2 in NYC!

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