The rise and fall and rise of ad networks

Ad networks are the great survivors of the digital marketing industry. In the late ‘90s, when the digital advertising landscape was fragmented, with countless websites offering ad space but no efficient way for advertisers to reach them at scale, ad networks plugged the gap by aggregating inventory from multiple publishers and selling it to advertisers, often at discounted rates.

Both sides benefitted. Publishers got access to a broader range of advertisers, helping them to monetise unsold inventory, while advertisers were able to reach larger audiences across multiple sites through a single point of contact. The win-win nature of the ad network offering meant they soon came to dominate the digital advertising space.

Under siege

But if there’s one thing this industry teaches you it’s that things move fast, and laurels are not to be rested on. And by the early 2010s, under siege from the rise of programmatic; transparency concerns over the “black box” nature of the ad network model; quality issues; and the emergence of direct deals, and of ad exchanges, with their more transparent, auction-based model for buying and selling inventory, the days of the ad network seemed numbered. The rise of sophisticated demand-side platforms (DSPs) representing advertisers’ interests, and supply-side platforms (SSPs) representing those of publishers, squeezed the traditional ad network even further.

But almost a decade and a half later, and ad networks have not only survived, but thrived. So how have they pulled it off? It’s been down to a number of factors. The first is specialisation. By focusing on specific niches, such as mobile, video or native advertising, ad networks have been able to show how they offer unique value in an increasingly complex ecosystem.

Data has also been a key factor. By becoming more data-driven, integrating first-party and third-party data, ad networks have tapped into the zeitgeist of better informed and targeted advertising campaigns. Tied in with this has been a focus on privacy. With the spectre of Google phasing out of third-party cookies now shelved and increased privacy regulations, some ad networks have found success by positioning themselves as privacy-compliant alternatives for reaching audiences.

The programmatic revolution

The ad networks also made a wise and conscious decision not to fight the programmatic revolution, but instead, to join it. The modern ad network successfully blends the automation and scale of programmatic with the curation and targeting of their more data-driven approach. This has also enabled them to up their quality game, by prioritizing inventory quality and brand safety to address previous concerns about fraud and inappropriate placements.

Finally, the ad networks remembered why they were so popular in the first place – simplicity. In an increasingly complex ad tech landscape, many advertisers and publishers appreciate the relative ease of working with ad networks, often on a managed service basis, with help at hand when they need it.

So while ad networks have survived, they have only done so by evolving, and today’s ad network doesn’t look much like its forebears. Many modern ad networks operate as both traditional networks and programmatic platforms, offering flexibility to advertisers and publishers, leveraging both contextual and audience data to provide precise targeting capabilities.

As more inventory, and more types of inventory, are traded programmatically, they offer cross-channel reach, across display, mobile, video, audio, DOOH and connected TV, as well as additional services beyond matching media sellers and buyers. These include creative services, analytics and optimisation tools. They also offer a level of transparency that the ad networks of old shied away from, giving advertisers detailed insights into where their ads appeared and how they performed.

Develop and evolve

All of these factors have enabled ad networks to remain relevant for much longer than it once appeared they would. But while digital advertising continues to move at lightning speed, some things never change, so the ad networks know that to continue to thrive, they need to keep developing and evolving.

Here and now, that means the further integration of artificial intelligence and machine learning for improved targeting and optimisation. The continued development of cookieless targeting solutions in response to privacy changes. Expansion into the new, emerging channels such as audio advertising and in-game advertising. And an enhanced focus on first-party data partnerships to provide unique audience insights. Not least amongst the key drivers for success is the ability to operate with the right technology and the flexibility to maintain relevance in a fast moving landscape, choosing the right partner that can facilitate service and support growth is Vital to health, in addition, finding a partner like Limelight inc who specialise in the tech without competing themselves as an exchange and competing for the same dollar creates trust and clarity.

Looking back at the history of ad networks, however, I don’t doubt their ability to navigate the ever-changing digital landscape. Rather, I look forward to seeing how they continue to shapeshift to not only cope with, but profit from, whatever the industry can throw at them.

To help navigate the programmatic landscape, Limelight Inc. alongside other partners from our space, will be publishing its annual State of the Ad Networks Report, where we will discuss the big challenges and opportunities for ad networks as it stands today. Stay tuned!

Also published in: The Drum