DIGITAL MARKETING HUB v2.0 - AdExchanger

Digital Marketing Hub v2.0
BMO Capital Markets
But since the advent of the ad exchange model (see below) successful ad networks
have been evolving at a faster pace and those that haven’t have perished or been forced to
consolidate. First, they have used their own data assets culled from the cookies they drop on
users’ browsers (as well as third party, purchased cookie data) to tap into exchanges to further
improve performance of impressions for their advertisers. Second, the technology they use to
do this has advanced to compete alongside demand-side platforms (see below again) to offer
more programmatic and real-time bidding capabilities. Put simply, successful ad networks are
adapting to the exchange-based, programmatic world that has emerged in recent years and
adapted to become even more technology and data-driven and move increasingly away from
the idea of simply being an “outsourced sales team.”
Exhibit 43. Top 10 Ad Networks Unique Users (in millions)
250
Apr-11
Apr-12
200
150
204.4
196.4
195.2
185.5
179.1 179.8 179.3 178.1 174.3 172.8 172.3 173.1
167.2
171.8 170.4
138.6
100
119.6
50
0
Google Ad Network
Rubicon Project
Advertising.com
AT&T AdWorks
Yahoo! Network Plus
ValueClick Networks
24/7 Real Media
PulsePoint
Specific Media
Microsoft Media Network
Source: comScore (Rubicon Project, AT&T AdWorks and 24/7 Real Media did not have data for April
2011)
Like the phrase “agency,” we see “ad network” as both a business model that comes in
various flavors, but also a catch-all phrase for a basic business arrangement. For example,
if two people lease an office and start working on behalf of a brand on some part of their
marketing work, those two people are already an “agency” in some form in our mind; that is
the basic idea of multiple people working for a brand. Likewise, if a company starts selling
and delivering ads on behalf of more than one website or publisher, they’ve already put together
an “ad network”; even if that’s just your sister and mother’s blogs.
“Twists” on the Basic Ad Network Model
In addition to the different specializations of ad networks (vertical networks, mobile networks),
there are several business models that we would consider “twists” on the basic
model. Each of these monikers regularly stand alone as unique business models, however, in our
mind, they are all related in the sense that they don’t deviate from the basic model of connecting
advertisers to large, aggregated audiences from across other third-party digital properties.
A member of BMO
Financial Group
56
June 7, 2012