Online Publishers Turning to Ad Networks to Sell Unused Inventory

Online publishers are increasingly turning to ad networks to sell unused inventory, according to a study released by the International Advertising Bureau (IAB) and Bain & Company.

In 2007, ad network accounted for 30% of total ad impressions, up fro 5% in 2006.

Two reasons were given for the growth:

  • Interviews with online publishers, conducted as part of the study, indicate that the lack of adequate pricing tools and inventory management discipline contributed to the growth in available ad space. This is causing publishers to seek out ways to sell large inventories of unsold ads. Publishers often lack basic information on realized prices and inventory sold by client and channel, limiting management’s ability to make effective decisions.
  • Large marketers continue to shift significant portions of their advertising budgets online and view ad networks as an effective way to achieve greater buying scale and drive down CPMs.

“What this benchmark study tells the industry is that there is a need for more sophisticated yield management on the part of premium publishers, for stronger partnerships between publishers and ad networks, for development of best practices, and more focus on the value of interactive advertising,” said Sherrill Mane, senior vice president, Industry Services of the IAB. “Our industry is at an important juncture and now is the time for publishers to adopt strategic approaches to the use of ad networks who themselves have become critical players in the digital ecosystem.”

Here are additional nuggets of information from the study:

  • Overall, online publisher revenues grew by a healthy 32% in 2007 versus 2006, yet ad network revenues grew more rapidly (in excess of 50%), as marketers boosted online spending
  • High demand for premium video inventory resulted in CPMs 2-3 times greater than display ads on average.
  • Most publishers in the study lack information to closely measure the impact of cross-platform sales, though most indicate focus on using cross-platform to drive volume, not price.

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Local Advertisers Shifting Dollars to Internet

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