How The Old Ad Nets Are Upgrading

ad net evolveIs the old ad network model truly dead?

When Apple’s ad platform iAd went programmatic, some executives hinted it might be time to start shoveling dirt onto its carcass.

“If there weren’t enough nails in the old ad network model, having Apple make the switch to programmatic is one more,” said Michael Collins, CEO of mobile demand-side platform Adelphic, in a recent conversation with AdExchanger. “The last big holdout has moved to audience buying.”

The original business model, practiced by companies like Specific Media, CPX Interactive (now CPXi), ValueClick (now Conversant), Collective and Undertone, involved collecting ad inventory from publishers and offering it to advertisers – and ultimately taking a cut that clients began to feel was a bit much.

Of course, the basic ad network model isn’t dead at all. Companies like Rocket Fuel, Criteo and Dstillery still use it, though they’ve added programmatic technologies like automation, decision-making algorithms, real-time bidding and infusions of data.

To that end, many of the original ad nets have started marketing their programmatic technologies heavily – some, like Undertone and Specific Media, as recently as this year. At the same time, they’ve also refocused such that their businesses have evolved significantly.

“I think most of the large players from the ad network 1.0 era have moved in different directions,” said Undertone co-founder Eric Franchi. “If you compare some of the large businesses, they look very different. Where a lot of the ad networks have evolved, it’s much more than just media. It’s executing studies, it’s different formats, it’s creative, it’s all these things that have been built on top of what had been a successful model.”

Collective: The Multiscreen Aspirant

Collective is aware of its designation as an ad network and has recently focused itself on building out its programmatic technologies. Toward that end, it poached MediaMath’s chief strategy officer, Eoin Townsend, in August to build out a self-serve technology platform (Townsend is Collective’s chief product officer). In November, it hired Omniture alum John Vandermay “to lead Collective's future programmatic offerings” as CTO.

Collective’s goal, as Townsend explained to AdExchanger, is to become clients’ “full multiscreen partner. And it’s something we’re all building to. We’re all trying to look at automating all aspects of the buying process.”

This is where Townsend sees a point of differentiation. As he describes it, most self-serve platforms focus on the real-time bidding element of programmatic. Collective is betting that its model – half its buying is in an open exchange and the other half is through traditional ad network-style direct relationships – will win out.

Conversant/ValueClick: Cross-Platform Personalization

The ad net that arguably has changed the most is Conversant, formerly known as ValueClick. Its most recent headliner came when Alliance Data Services, parent company of data services giant Epsilon, announced its intent to acquire Conversant for $2.3 billion – a deal expected to close by the end of 2014.

But even before Alliance called, Conversant had divested itself of its owned and operated sites and rebranded from an ad network to an ad tech company. Its vision was to become a “personalization platform” combining its Dotomi demand-side platform, ad serving, tracking, mobile advertising, affiliate marketing and it traditional media network.

That vision, however, was still a work in progress at the time of its acquisition by Alliance. "We view that transformation as still being in process today," Epsilon CEO Bryan Kennedy told AdExchanger at the time. In other words, Conversant was still in the process of integrating, and now it’s up to Alliance to finish that job and further integrate Conversant’s assets with its own.

CPXi: The Media Company

If Conversant worked to streamline its business and focus on its personalization tech and services, CPXi has taken the opposite tack, essentially diversifying itself into what CEO Mike Seiman described in a previous interview as a media company.

These holdings include a publishing division called Consumed Media, which launched in September, and agency-like services like direct-response campaign execution. But CPXi also has a large programmatic discipline, from ad serving to managing inventory through its exchange, bRealTime.

The technology for these elements come from AppNexus, though CPXi also builds its own components, such as features that better support rich media, to tack on top of its AppNexus-powered advertising stack.

Specific Media: Multiscreen And Multiformat

Like CPXi, Specific Media defines itself as a media company. It’s owned by Interactive Media Holdings (IMH), which also has in its portfolio the video platform Vindico and the social network MySpace. While these are technically separate entities, Specific taps into them, using Vindico’s video viewability platform Adtricity and data assets from MySpace.

Specific’s emphasis is its ability to place advertisements across screens and formats including mobile, video and audio. And like its peers, it recently built out a self-serve ad platform called Programmatic from Specific, which was released in February, and designed to provide a one-stop shop to purchase mobile, desktop, audio and video inventory.

“Programmatic from Specific was getting into self-serve for clients that wanted it,” said company CMO Jon Schulz. While he declined to specify how many clients are using it, he said the adoption rate is what Specific originally expected.

“I’d define that as more people talking about it than actually going down that path,” he added. “There are a lot of things you can’t do in a self-service model in terms of unique ways to approach and attack the market,” he said.

Undertone: High-Impact Emphasis

While basic display dominated many ad nets, Undertone’s focus has been on the flashier, more exotic units designed to capture consumer interest. And this will continue to be Undertone’s focus over the near term, said Franchi. Even its recently-released programmatic platform, Virtuoso, is built to feature creative ad units.

“We put a lot of emphasis on creative for most of our campaigns,” he said, adding that Undertone, which has its own in-house creative team, builds most of that output.

Undertone’s immediate focus is pushing that out into mobile environments, which is notorious for having ineffective and antiquated display units. “Doing more on mobile is where the business will actually grow,” Franchi said. Over the long term, he plans to hone in on the advertorial possibilities in wearables.

 

 

 

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