Will the DSP Kill Ad Networks?

Some of you may know that I started my career in interactive marketing at Advertising.com, now part of AOL Media. I have a soft spot for the "good kind" of ad networks, those who keep the advertiser and publisher interests in mind, who strive for good quality advertisements and content, and who have killer optimization and targeting technology. I have always looked at ad networks as a key technology driven service who fills important needs for both the buy and sell side. However, within the past six months or so, I see fewer and fewer of these networks making headlines, being the topic for discussion at forums or, most importantly, on the lips of interactive marketers. 

Instead, I hear more and more about the rise of the demand side platform or "DSP." (Full disclosure: my husband works at one of them.) But it's not my husband who has convinced me of this sea change (although don't tell him that!)  Rather, it's the marketers themselves who are embracing the data and advertiser driven DSP model. There are many companies who call themselves DSP's, some already established like AdChemy, x+1 and Media Math but there are others are cropping up recently including Turn, DataXu, AppNexus and others. Most have a combination of optimization and data targeting that is geared for marketers, with a buying strategy that mostly takes advantage of inventory on ad exchanges. What will separate winners from losers are quality of the services and technologies that make up the offering. In other words, are they easy to work with and do they provide results?

With the rise of independent DSP has also come a crop of automated buying platforms created by the agencies, including Vivaki, WPP's B3 and Havas' AdNetic. Many in the industry wonder if agencies have the technical and analytical chops to compete with the independent shops. But no one denies that they have great positioning in the market, already working with the very advertisers the product is meant to serve.

It's very possible that these two forces in the industry will replace what ad networks have done for marketers in the past. Certainly, my alma mater, Ad.com no longer exists the way it once did.

Look for a lot more research on this shifting landscape in the near term from Forrester.

Comments

re: Will the DSP Kill Ad Networks?

Too many factors are at work here to say that any one set of services will kill another.Here's what is inexorably leading to a thinning of ad network ranks and the possible reinvention of the winners as something else (such as a DSP, like Turn):DSPs, in combination with the agencies that white label them or make buys on them, plus the advertisers and publishers trying to limit their use of ad networks to regain margin and control, plus the data providers and buy- and sell-side optimizers that enable the DSPs to perform their key roles, plus the exchanges that provide most of the inventory for the DSPs, plus big media companies and agency holding companies building, acquiring, becoming their own ad networks, plus services as yet unknown ... are ALL contributing to the complete reshaping of the industry as we've known it. Ad networks are particularly vulnerable because they've become so pervasive and many question whether they add enough value to justify profits - both real and perceived. bz

re: Will the DSP Kill Ad Networks?

I am looking forward to reading the report, it sounds great. Don't hesitate to reach out if you would like to learn more from a DSP perspective. Keep up the good work.Zach CoeliusCEO, Triggit