CPX CEO, Mike Seiman, predicts the future of display advertising…

As I sit at my desk, a little bored towards the end of a long Wednesday, I decided to just ramble off points about what I think will happen to DSPs and ad networks in the next 24 months in 10 points:

1 – All agencies will own a DSP, and if you are a DSP and not owned by an agency, you will wash away.

2 – DSPs will become less and less relevant, as exchanges begin to build more intuitive interfaces for themselves.

3 – CRMs will be created to manage all exchanges that will be licensed, and not take a % of media, making all agencies realize they might have made a mistake buying a DSP and not waiting.

4- Exchanges will never break out of the lower end of the ad chain, and it will still continue to be Direct Sales/Ad Network/Exchange.

5 – Agencies and advertisers will soon realize they cannot execute an effective campaign utilizing exchanges, and while it’s a nice addition to running a campaign, it can never make a campaign. Therefore, ad networks will still be the best alternative to direct media buying.

6 – Ad networks will continue to innovate, in terms of plugging into exchanges and supply side platforms, to build custom audience segments using data. This will finally be perceived as of tremendous value for agencies and direct advertisers.

7 – Supply side platforms will still exist, and become more and more like exchanges, and less and less like ad networks.

8 – Ad networks will buy more and more unique inventory by arbitraging site traffic at proper cpms, ensuring publishers they will get what they need for their inventory.

9 – Publishers will start to see the real value of ad networks as they gain higher cpms from them. They will also realize that an exchange cannot give them control over cpms, and therefore will only put bottom of the barrel inventory on them.

10 – The ad network and agency relationship will go back to the way it was before all the exchanges and DSPs, except now the ad networks will be back on the cutting edge and continue to innovate for agencies and direct advertisers.

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CPX Interactive President and COO, Rob Rasko sounds off on the growing chorus of high-profile publishers calling for the demise of Ad Networks. Rasko addresses the value that Ad Networks bring to the industry and the reasons they remain a powerful ‘field leveler’ in a space where players run the gamut of sizes and resources in his article posted on MediaPost.

This was supposed to be the year when ad networks would cease to exist, and when publishers would cut their ties. But, not only have we survived, we have also prospered.  In an article on MediaWeek.com, Mike Shields explains that although the poor economy has lessened demand for traditional use of display ads (branding), it has also caused a shift toward performance advertising and audience targeting, which gives ad networks a leg up in the industry.

Some larger, top tier publishers have made claims against the use of ad networks. However,  Shields explains that due largely to what he calls  “a growing bifurcation” in the online ad market between low-end and high-end inventory, “sites that are ranked below the top five or ten in a particular category simply can’t ditch ad networks.” Furthermore, a recent survey of online media’s major players showed that ad network use is on the rise.

Although the predicted “ad network shakeout” hasn’t happened, ad networks are still taking the opportunity to reevaluate and ensure continued success for the rest of 2009 and beyond. CPX COO & President, Rob Rasko, addressed what conscientious ad networks can do to accomplish this goal.

This week, online ad network and technology provider, Collective Media, released the findings of a survey designed ”to better understand the role and value of online advertising networks for both interactive agencies and advertisers.”

The survey was conducted by independent marketing research firm, Sterling Research Group Inc., in February and March of this year, and received nearly 500 responses from major players in the online media industry. Overall, the findings of the survey showed promise for online ad networks despite the poor economy. Here are some specifics:

• 89% of the nearly 500 respondents intend to work with ad networks in 2009, a 5% increase from 2008
• Over 50% of respondents expect to spend up to 15% of their online budgets with ad networks, while 24% plan to spend up to 30% with ad networks
• Over 70% of respondents work with only one or two ad networks on any given project
• 71% of respondents feel that there are too many ad networks
• Efficiency is the reason 72% of respondents use ad networks, and 23% find inventory quality to be what differentiates ad networks from one another
• More than 50% of respondents work with ad networks for branding and direct marketing
• Respondents are most opposed to run online advertising on user-generated video, followed by blogs, and then the general category of ‘social media’

In his blog post entitled “6 Things Smart Ad Networks Should Be Doing to Ensure Success in 2009,” CPX Interactive President, Rob Rasko, lays out a road map of priorities for those members of the ad network community that want to stay ahead of curve and define the industry landscape. Reading the post, it becomes clear that the unifying concept behind all 6 of Rasko’s suggestions is a new level of openness and communication between parties, as well as a focus on service.

He explains:

While it would be easy for ad networks to sit back on the successes of the past few years, I believe that this is the perfect time for ad networks to challenge ourselves to rise to the next level of innovation and collaboration with others in the industry. We should also take the opportunity to focus on the level of service we provide for our advertisers and publishers.

You can read the entire article HERE, but the outline of his suggestions is below:

1. PROVIDE PRODUCT VARIETY
2. COMMUNICATE THE FINANCIAL VALUE OF AD NETWORKS
3. MAKE BEST PRACTICES A PRIORITY
4. PRACTICE DUE DILIGENCE WITH PUBLISHERS
5. INITIATE SYNERGY WITHIN THE ONLINE ADVERTISING SPACE
6. ESTABLISH TRUST AMONG ADVERTISERS

READ ROB RASKO’S FULL POST

By Rob Rasko
President and COO, CPX Interactive

Despite a seeming barrage of predictions to the contrary, ad networks have emerged as essential players in the online ad space. With unprecedented access to advertisers, publishers and agencies, all three parties seek out our industry relationships and expertise (though sometimes begrudgingly) to help them make their online campaigns successful.

While it would be easy for ad networks to sit back on the successes of the past few years, I believe that this is the perfect time for ad networks to challenge ourselves to rise to the next level of innovation and collaboration with others in the industry. We should also take the opportunity to focus on the level of service we provide for our advertisers and publishers.

As I think about the most important things that my company (and other ad networks) can do to ensure success in 2009, six key factors come to mind:

1. PROVIDE PRODUCT VARIETY
2. COMMUNICATE THE FINANCIAL VALUE OF AD NETWORKS
3. MAKE BEST PRACTICES A PRIORITY
4. PRACTICE DUE DILIGENCE WITH PUBLISHERS
5. INITIATE SYNERGY WITHIN THE ONLINE ADVERTISING SPACE
6. ESTABLISH TRUST AMONG ADVERTISERS

PROVIDE PRODUCT VARIETY – In the simplest form, ad networks have two goals: we help publishers monetize their inventory and we help advertisers find the best placements for their ads. This oversimplification, however, does not do justice to the variety of kinds of advertisers and publishers there are, nor to the specific needs they all bring to the table. The ability to service every type of publisher, for example, from the largest recognizable brands to small niche site, is crucial to offering strong, diverse inventory choices to advertisers. A single network must understand and service publishers of all tiers in order to help them monetize 100% of their inventory from the first impression on the homepage to the last impression on the deepest page of their site. For an ad network to grow and compete in the coming year, it must learn to effectively serve every tier of advertiser and publisher from top to bottom, and build product offerings to facilitate that goal.

COMMUNICATE THE FINANCIAL VALUE OF AD NETWORKS - A valuable service is only as good as the provider’s ability to communicate its value to customers. In an effort to be all things to all people, I sometimes think that ad networks have forgotten how to pitch their bottom line value to their partners:
Publishers who engage ad networks conserve time and resources that would otherwise be expended on hiring, training and managing inside sales staff. They are able to use this time, instead, to develop and improve their content so that they can better engage their audiences.

Likewise, advertisers who use ad networks streamline their marketing dollars; enjoying the benefit of scalability that comes with large packaged media buys, and the benefit of audience targeting that comes with technology.

Networks that are best able to articulate these points to advertisers and publishers will pull ahead of the competition in 2009.

MAKE BEST PRACTICES A PRIORITY – When it comes to online advertising, the word ‘transparency’ can take on many meanings. It is easy to get stuck in a finger-pointing match, where each side derides the other’s meaning. Standing in between advertisers and publishers, an ad network can find itself inadvertently ‘choosing sides.’ The bottom line, however, is that only a truly independent network can be best committed to practices that assist all parties in creating the proper experience in online media. Smart ad networks will be mindful of the responsibility that their position bestows on them. As President of CPX Interactive, I spend quite a bit of time attending conferences to determine how we can best regulate our industry and protect the brands we serve, while continuing to support the industries’ freedoms. Ultimately, it is all about moving forward, and continually finding new ways to monitor publisher content, and provide advertisers with better brand protection.

PRACTICE DUE DILIGENCE WITH PUBLISHERS – As an ad network, your publisher’s content is your content. Getting to know your publishers and staying on top of their website content is a matter of responsibility and ethics, as well as good business practices. At CPX, all sites are evaluated and assigned a rating of G, PG or PG-13, similar to that of the MPAA rating system. Websites that give users the right to create their own content are assigned an N/A rating and monitored more closely. CPX Interactive does not allow X rated content into its network of publishers. We have an internal re-check process to be sure that the quality and category of content a publisher presented in the beginning remains consistent over time. An ounce of prevention is truly worth a pound of cure, as any smart ad network knows that even a one-time slip can cause a mountain of headaches all around.

INITIATE SYNERGY WITHIN THE ONLINE ADVERTISING SPACE- As the landscape of the online advertising industry continues to evolve, participants continue to clamor for education and thought leadership. With their connections to advertisers, publishers and agencies, ad networks are in the perfect position to take the lead in creating a more supportive and cohesive industry that can benefit all of us.

As the industry consolidates, strong partnerships will be formed. In the not so distant future, there will be more support and camaraderie in the online ad space which can only help to strengthen the industry as a whole. Smart ad networks will position themselves at the forefront of that process.

ESTABLISH TRUST AMONG ADVERTISERS – Ever ask yourself why television ad revenue is 10 times higher than Internet ad revenue? We do. And we think we know the answer. Advertisers know television. They are comfortable with it because they understand all of the moving pieces, even if their ROI falls short of what it could be in the more ‘inconsistent’ new medium that is online. Building trust in online advertising comes down to consistent results. As an ad network we grade our publishers so that we can tell advertisers where their ads will be displayed, and advertisers depend on us to give them accurate information. If an ad network labels their publishers too liberally, the advertisers will disappear and the economies of scale will break down. It is essential for networks and publishers to work together to create as much honest visibility as possible in the channel. This should be a major initiative of any ad network looking to occupy a top tier position. One thing we can never afford to do is to lose the confidence of advertisers. If you think winning trust is hard, try winning it back after it has been lost.

AdExchanger.com recently compiled a chart of comScore data comparing ad network performance in February 2008 to February 2009. The chart shows that  CPX Interactive was the second fastest growing ad network over this time frame. CPX’s percentage change in both Total Unique Visitors and Total Pages Viewed is second only to Turn Inc.

An article by Mike Seiman, CEO & Co-Founder of online ad network, CPX Interactive, entitled ‘Where to draw the line between ad networks and agencies,’ is currently featured on iMedia Connection. In the article, Mike discusses the current competitive tension between online ad networks and ad agencies, and shares valuable insight based on more than seven years in the online advertising industry.

Read the article on the iMedia Connection website to learn more.