The media network has taken a battering of late, but what’s new. Since their inception networks have had the finger pointed at them for their cowboy tactics, high margins, cookie bombing, dogey inventory… you’ve read the stories. Now it’s the advent of new technologies and trading models; Agency Trading Desks, Data Management Platforms (DMPs), Demand Side Platforms (DSPs), Exchanges & Supply Side Platforms (SSPs) that are set to undermine the network business.

But I would argue that now more than ever the future for networks is bright, and here are some thoughts on why.

With over 10 years market existence under their belt networks have grown to command a significant amount of digital ad spend and are a standard element on the majority of agency media plans. In the UK alone networks still account for over 40% of display revenue (Econsultancy Online Advertising Network Buyers Guide).

So why do we hear the network model needs to change?

The reality is that the network model has always been in evolution; from the early days of pure inventory arbitrage to today’s highly refined performance driving and audience targeting entities networks have often been at the forefront of adopting new technologies and data capabilities. Just look at the huge array of network types that have evolved over time: Contextual, Audience, Performance, Site Rep, Vertical, Video and these are just a few. Networks by nature are dynamic, responsive to the environment around them to ensure they stay ahead of the game, continually innovating and evolving to drive better results knowing that’s the way to continually secure both demand and supply partners.

Is this new wave of technologies a threat for networks?

ad network performanceAs the network sits in a pivotal position between supply and demand they are best positioned to take advantage; Real Time Bidding (RTB) is of huge benefit, networks were the first to play in the exchange space and are already expertly accustomed to layering data intelligence onto impressions. In fact, if you look under the hood of the DSP, Exchange or SSP these businesses have been developed out of the network model, most often by people with past media network experience.

Two other key considerations: Media & Performance

Networks fundamentally understand the complexities of acquiring and managing supply and continue to be a large source of discretional inventory revenue for publishers whether this is brought direct, via an SSP or through an exchange. From a demand perspective inventory volume from a network is guaranteed, you receive what you book. Given all the under-delivery clauses agencies enforce on IOs having delivery guaranteed is still a key component of the media plan. But it’s not just volume it’s also quality that counts. Networks brought about the first industry self-regulation best practice with the introduction of the Internet Advertising Sales House (IASH) Council. IASH established a means of qualifying the type of inventory used giving transparency to the media buyer as to the genre of content their ads would appear across. Today Exchanges are still struggling to provide similar regulation so the risk is directly placed back into the hands of the media buyer. The growth of ad verification companies shows the concern has gone beyond just the inventory type to ensuring the right frequencies, placements and audiences are adhered to. Who better to manage this detailed level of delivery than a network whose technology and manpower enables daily/hourly monitoring and optimisation The recent TrustIndex report from Double Verify showed the traditional media networks on top with the lowest number (2%) of non-compliance incidents.

ad network homeSo let’s look at performance. Be the end result to target a specific outcome (Direct Response)or audience type (Brand) networks have invested heavily in technology, data and skillsets to drive ever improving ROI. Whether you’re buying on a CPM, CPC or CPA a network will guarantee the end result and take 100% of the risk in delivering it. However, where does the buck stop with any agency buying on behalf of their advertiser via their own network? Or even through an Exchange? Who will compensate the advertiser for mistakes made, performance targets not achieved or under-deliveries?

And finally, a thought on consolidation. You’ve all by now seen that lovely colourful slide awash with logos depicting the new media/technology landscape. If consolidation needs to happen anywhere it’s in the DSP, SSP, DMP space and already we’re seeing these entities evolving and merge their business models to provide more end to end solutions.

Networks are survivors; their model continually evolves to ensure they add value at both the supply and demand side of the chain through the service and performance they deliver. ExchangeWire in a recent article ’The life and Death of Networks’ hailed the Agency Network as the new champions. It’s questionable as to whether this model will really take off given the challenging contradictions is poses.

Is the demand side network the future? Maybe... In truth whatever the label advertisers will continue to demand a managed media buy where the guarantee of inventory, delivery and performance is carried by the media owner.

And as advertisers become more digitally savvy, increasingly looking to connect with their specific audiences across all phases of the purchase funnel, networks are favourable positioned to maximise the benefits from the new technology and data capabilities around them and as always deliver results.

Thank you,

Zuzanna Gierlinska

Director of Microsoft Media Network, EMEA at Microsoft Advertising

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