Re-thinking Ad Networks Model in the Programmatic Era

Last updated on April 27th, 2023 at 06:11 pm

The role of programmatic that has become a “peak” of advertising technologies so far continues to evolve. The programmatic market is snowballing. At the current pace of expanding 20% a year, its growth will reach $68 billion by 2020, as predicted by eMarketer. However, the rapid growth of the programmatic ecosystem brings to its participants also multiple issues. New market realities require re-thinking of the way we’re doing things in media buying. Specifically, changes refer to selling models and new place of ad networks in the programmatic ecosystem.

In this article, I offer to take a closer look at how ad networks (should) adapt to new realities in the context of publishers – networks’ participants that attract end-users and face the most problems caused by programmatic.

A Brief Look Back

The way digital ads have been served changed significantly over the past 20+ years. Since 1994 when we have caught first ad banner placed on the website and the ad network model emerging in 1998, the number of internet users has grown tremendously, pushing the way of ad delivery to the new frontier.  A search for the new milestone has brought us to the next stop – arising of programmatic advertising.

Coming as a new media buying approach, programmatic was expected to completely displace the previous models of purchasing ads. However, so far programmatic hasn’t become a panacea and it’s hardly ready to become one and only selling model.  

Publishers have been slow to adopt programmatic: only 25% of them, according to IAB Europe report rated programmatic as a priority. Why? Expectations placed in programmatic with its automation and promising opportunities of revenue growth appeared to be too high. In reality, today publishers still can’t transparently control, plan, and boost their earnings.  

Specifically, according to the Operative survey, publishers get from programmatic advertising just 10% of their total digital ad revenues. Another estimation by Warc, shows that over the past year only 40% of advertisers’ budgets spent on programmatic has reached the publishers.  The remaining 60% ad dollars are shared between numerous vendors across sophisticated supply chain

At a Crossroad of Monetization Options

Focusing on their main goal: to sell more premium inventory on much more fair conditions, publishers have to consider several selling models. Each model has its pros and cons and can’t serve the one-shot stop solution for publishers.

For instance, Open auctions   don’t provide publishers with any guarantees on results on their premium inventory selling and take profits distribution undercover.

Another model, Header Bidding (HB) gives publishers more control over the inventory selling process and opportunity to engage several DSPs simultaneously. However, doing so can slow down website speed. Plus, HB lacks creative ad formats.       

One more option, private marketplace (PMP), also allows publishers to control their inventory selling, ensure ads quality, and brand safety. Yet, building PMP requires manual management of technical and processing aspects.

Since none modern selling model can’t bring publishers full control with their earnings, there are two possible ways for them to  monetize their inventory most efficiently:

• Selling inventory independently to a number of DSPs and direct advertisers, which is time-consuming, and requiring loads of handiwork
• Joining SSPs which still control profits level, and just hoping to get a fair profit.

With these scenarios and programmatic limitations in mind we come to the point what publishers’ need to sell effectively in the new market reality:

• short and transparent supply chain and reliable buying partners
• convenient and effective media selling management tools
• rich creative formats to help advertisers to be noticed
• an effective combination of selling models (direct, different programmatic models, Header Bidding)

Searching for the Way Out

Instead of automation, programmatic may have brought, publishers still have to cope with their inventory manually. Even with a mix of different selling models, they slice their inventory themselves, and then strive to find the most efficient ways to sell it.

If a publisher sells independently, they have to build own sales, tech, and integration teams, or, to find a reliable partner who will not only assume selling of the main inventory via the most efficient models and optimize demand, but will also provide access to technology solutions.

Both options show that publishers need to rely on an effective tech solution allowing them to combine all available selling models to serve ads.

Perfectly, if tech vendor a publisher could rely on, provides access to demand, guides and leads  monetization, and offers advancements, including:

• transparent supply chain with access to multiple demand sources
• clear financial conditions
• support of all existing ad formats, including premium
• multiple targeting options
• data management tools.

To sum it up, such vendor should bring to the table both, full-service technical management and take care of publishers` monetization.

A New Approach to Ad Network

Traditional ad network model, serving as an intermediate between brands and publishers, doesn’t work as efficiently in 2019 as it used to be in 2009.

Yet, as we’ve already seen programmatic won’t replace ad networks anywhere soon. Conversely, the number of ad networks keeps growing. What is more, ad networks become the whole new part of the programmatic ecosystem, bringing added value to direct publishers.

Specifically, the modern ad network model is the way to minimize publishers’ handiwork with inventory slicing and selling. Moreover, good ad network should address the main publishers’ pain points and provide the following must-haves:

• Effective monetization offering fill close to 100% at the most optimal rate
• Transparent monetization gateway that manages all publishers’ risks
• Advanced inventory availability and management, letting publishers run all their activity and support all existing inventory types across the single platform
• Ad serving with ad management tools and extended targeting options in place
• Access to DMP with an opportunity to manage their own data in the way publishers need, including data and audience management
• Brand safety in regards to publishers’ media buyers and the quality of ads they promote
• Supply-side and Demand-side accounts with detailed reports for performance control
• The human touch to provide customization and personal assistance
• Localization for better opportunities to provide local customer support, billing, and manage financial aspects

Here’s what a modern model for ad networks is. It keeps serving as a direct broker between two sides and becomes more – a full-service vendor and ad tech provider. The new ad network is a combination of direct management and programmatic ecosystem. With technology, advanced waterfall model, and support for different selling options, ad networks focus on providing publishers with an all-inclusive approach and meeting their needs fully.

Final Thoughts

Powered with technology, client-oriented approach to the publishers, and closer relations with advertisers, modern ad networks can compete with global leaders and occupy their niches in the global or local markets.

Guest Post by Elena Podshuveit: You are welcome to share your opinion on the state of ad networks today! Please address your questions or comments to the author: Elena Podshuvejt, Chief Products Officer at Admixer Technologies.