Ad Networks 101

For the past several years, digital advertising has accounted for over 70% of media spend, according to eMarketer. To put that into perspective, that’s over $200B in digital ad spending, and this number is expected to grow with projections reaching over $300B by 2024. With digital ads comprising such a large amount of media spend, it's clear that digital is the defacto medium for today's advertisers. To keep pace with the tremendous growth and subsequent evolution, advertisers and publishers have turned to third parties to facilitate the process of buying and selling digital ads. Hence, the emergence of ad networks which fills a gap in the ecosystem by providing the infrastructure to deliver data, targeting, efficiencies, and scale in an increasingly fragmented and difficult-to-monetize economy.

Let’s explore ad networks to determine how they operate and the benefits they offer.

What is an ad network?

An ad network is defined as a tech platform that mediates the sale of ad inventory between publishers and advertisers. Simply put, ad networks are companies that sell ad space on any sort of digital real estate. You supply the real estate via your website or blog, and the ad network sells this real estate to a company that wants to place an ad. In return, you get a percentage of the sale. Ad networks are often confused with an SSP (supply-side platform). While they provide similar functionality, an SSP acts as an alternative to an ad network by offering access to a different kind of inventory and delivery (purchase) method.

Previously, ad networks would offer their impressions at a much lower price than publishers’ direct sales, thereby coining the terms “non-premium” or “remnant” inventory. However, as the industry has evolved, ad networks have begun offering advertisers more exclusive inventory from top-tier publishers at premium prices.

How Does an Ad Network Work?

Ad networks use cookies to determine a viewer's specific interests. By accessing cookies that have been stored on a computer after a person visits a website, the ad networks are able to determine the type of ads that are of most interest to that person. This association can be made even if the user doesn't actively click on the ads viewed.

For example, let’s say you went to the Adidas website to look at a new pair of sneakers. Then, later that day, you noticed an ad for those exact shoes while reading your favorite blog. That’s because the ad networks accessed your cookies and saw you visited Adidas’ site, and then served you an ad based on your behavior.

What are the Different Types of Ad Networks?

If you’re searching for an ad network that fits your industry or business model – you’re in luck! There are a plethora of networks for different topics, audiences, and formats. Below are some of the main types of ad networks available:

Premium: focuses on high-quality impressions from popular and reputable publishers. While this network comes at a higher price, it does deliver better campaign results for brands, such as an increase in engagement and conversions.
Inventory-Specific: Specializes in a particular inventory type, such as a video, mobile, or native ad network.
Vertical Ad Networks: offers Topic-specific networks — such as fashion or auto.
Horizontal Ad Networks: supplies a broad reach of impressions for campaigns that are not limited by topic. However, audience engagement is typically lower with this type of network due to the lack of contextual relevance.

How Do Ad Networks Work with Publishers?

By extending the opportunity to sell inventory that publishers are unable to sell via direct sales without heavily discounting and losing out on dollars, ad networks offer a clear benefit to publishers. Unsold inventory is a sunk cost and results in lost revenue for the publisher. Ad networks bring value by improving fill rates and moving unsold inventory. The auction mechanics that are put into place via an ad network allow publishers to generate immediate value by making their inventory available for sale while also ensuring they’re finding the right buyer who is willing to pay the highest price for that inventory.

How do Ad Networks work with agencies and advertisers?

Agencies are responsible for planning and managing ad buys for brands across various supply sources. Depending on the type of inventory an ad network offers (e.g., desktop, mobile, in-app), an agency will request a proposal from potential supply partners in order to determine which partners should be part of their final campaign strategy. Once an ad network is chosen and included in a brand’s strategic plan, then the ad network will handle campaign setup and will deliver the client’s ads to its desired audience across the agreed-upon publishers.

Although ad networks were originally designed to help publishers sell unsold inventory, additional benefits for advertisers have developed from these partnerships:

Scale & Efficiency: serves as a central hub for all inventory available from numerous publishers. This streamlines the process for the advertiser, and they only need to manage one coordinated campaign instead of managing several smaller campaigns set up with each individual publisher.
Frequency Capping: manages a campaign’s frequency capping across multiple publishers instead of leaving the advertiser to manage it at the individual publisher level. For instance, if an advertiser wants to limit the exposure of their ad to 3 times per user per day, an ad network can accomplish this task across the entire network of websites. Direct publisher campaigns pose a risk of higher frequency and more waste due to the inability to track users as they jump from publisher to publisher.

The convenience for advertisers to access desired inventory across hundreds of websites from a singular ad network is enticing. Advertisers can use an ad network’s campaign management platform to create a campaign with their targeting requirements, budget, frequency caps, etc. The ad network has its ad tags implemented on each of the publishers it partners with, allowing the delivery of ads wherever there is a match in criteria.

As an advertiser, choosing an ad network to partner with can be overwhelming. As previously mentioned, there are a vast number of ad networks out there, so it's important to know what to look for when choosing the right partner.

Inventory Type and Quality: Ad networks can offer access to different platforms or types of inventory (i.e., mobile-only, in-app, desktop-only, cross-screen). Before choosing an Ad Network to partner with, ensure that the type and quality of inventory offered to align with your objectives and goals.
Scale: In addition to inventory quality, the size or reach of the ad network is an important factor to consider. Generally speaking, the more traffic the network sees, the greater the efficiencies they are able to offer, resulting in potentially a better ROI for your campaign.
Creative Formats: What ad formats are you looking to activate? A simple display ad? Native? Video? A social-inspired animated unit? Every Ad Network offers its own unique array of creative formats. When it comes to vetting Ad Networks, look for a partner that specializes in ad units that deliver on the KPIs you are looking to attain.
Audience Targeting Capabilities: From demographic to geographic, audience to behavioral, cookie-based data targeting and retargeting efforts to cookie-less contextual and sentiment-based – ad networks generally offer a variety of targeting abilities. As an advertiser, properly identifying and reaching your target audience is a critical factor to your campaign’s success.

For publishers looking to optimize their inventory and advertisers looking to streamline their campaigns, ad networks offer a service to help drive efficiencies in order to deliver on these goals. However, not all ad networks are equal. Each network offers its own unique value proposition, so understanding and properly vetting potential partners to make sure their offering aligns with your goals and objectives is important to the success of your campaign.