AD NETWORKS

Sector overview

Ad networks were always about far more than remnant inventory; who wants to contact hundreds of publishers to build up a schedule? But even the hardiest souls in this market will admit we entered 2010 in a buyer's market, with CPM rates reeling. Is there simply too much inventory out there? It's not that networks are to blame; at the start of the downturn many of big publishers dropped their prices dramatically. "Advertisers aren't short of sites on which to place their ads and there can be as many as three or four ads per page," says Richard Sharp, MD of media and head of trading at ValueClick and chairman of IASH.

At the same time, the big trend in the market is real-time pricing. Many publishers believe the online display market doesn't work effectively in matching buyers to sellers. Yield optimisers such as AdMeld, Improve Digital, PubMatic and The Rubicon Project automate the sale of media by tagging pages and matching them to advertisers.

Increasingly this inventory is finding its way into ad exchanges - online marketplaces where buyers and sellers trade inventory in real time. These offer the promise that every piece of inventory commands the maximum price the market will bear at any given time. Google CEO Eric Schmidt has said its ad exchange is the next major source of revenue and called it "the next big one" for the search giant. Last year Google unveiled its highly anticipated DoubleClick ad exchange to key agencies and publishers, and in March this year Orange announced it was launching its own version, AdMarket, in conjunction with OpenX.

Liquidity will be key to the success of these real-time markets. The rise of exchanges is having another effect, though: encouraging demand-side platforms (DSPs) for advertisers. Created by major ad agency networks, these allow agencies to use client data to track consumers across the web by plugging their systems into remnant inventory from publishers, ad networks and exchanges.

So the market is becoming much more sophisticated, but ad networks still have a place in the value chain. This year some famous names are absent from our rankings table - Unanimis was bought by Orange and MIG was unable to update financial information in time. But the sector is in rude health. Trade body IASH has made great strides in improving the image of the industry. Giant ad exchanges and DSPs might one day disinter mediate networks but their role looks assured for some time.

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