Overcoming the Learning Curve – Ad Network vs. Ad Exchange
January 16th, 2012 / Banner Network, Design, Digital Advertising, Digital Campaigns, Digital Media Buying/Planning, Web Development by Jordan Yospe - Digital Media DirectorMany advertisers we talk to everyday have a general understanding of the display advertising space. They know the jargon of CPM, skyscraper, and ad networks. HyperX prides ourselves on our core products of search engine marketing, web and banner creative services, and specifically our niche banner advertising networks that allow advertisers to get in front of their potential customers. This includes the HyperX Local Ad Network, which we’ve run campaigns on for 20+ markets and hundreds of clients with direct relationships on the sites we advertise with.
We also understand that online marketing is an adapting and changing environment, and enjoy the challenges of each new day. Because of this, as of late HyperX Media has been launching new services in banner engagement tracking, White Labeled Ad Serving, Lead Generation, Pre-Roll Video advertising, Behavioral Targeting, and Retargeting. We are also helping client to leverage the power of the internet, including RTB (real-time bidding) and Ad Exchanges. We view the Ad Exchange environment as complimentary to what we offer with our Hyper Targeting network advertising campaigns, and enjoy helping clients navigate the waters of both. That’s why we wanted to give a few recommendations on the Pros and Cons of RTB Ad Exchanges.
For those not familiar with Ad Exchanges, inventory on the internet has shifted to act much more like a stock market trading floor. Companies have emerged that buy and sell data, and allow for, within nano-seconds, the bidding on inventory online. This has presented an interesting new challenge to marketers, with more control than ever but also more options than ever, which can lead to a machine gun approach where we’re hoping to hit the target. Companies are calling their products “Trading Desks”. Websites put all their unsold direct inventory on the table, and advertisers come in and bid. Highest bidder wins. Period.
There are a lot of intricacies we won’t go into, including cookies advertisers can utilize to bid on specific behavioral or demographic/psychographic information. However, in layman’s terms, here are the pros/cons of this environment:
Pros
Low-cost CPMs to the Advertisers, for a start. For the most part, most inventory on ad exchanges can be purchased for very low Cost Per Thousand’s (CPMs), often below $0.50. Campaigns and sites with a low Click Through Rate (CTR) can still deliver an effective Cost Per Click (CPC)
Transparency. With some ad networks, advertisers don’t always know which sites are serving their ads. This includes our own Hyper Local or Hyper Targeted ad network in many cases. With some ad-exchanges, advertisers can see the sites, and sometimes the pages, they’re running on. This makes display advertising management seem much more like managing an Ad Words or Cost Per Click (CPC) campaign, where the advertiser can find variations of sites/creative that are performing and optimize to those.
Lastly, ad exchanges offer standardization and efficiency. Ad sizes are uniform; the ad buying and selling process is simple. There will only be a single bill. And everything is done in real-time.
Cons
Ad exchanges typically won’t provide premium real estate. Sites tend to save those placements for direct sales. That’s where our HyperX Local product has a huge advantage. We only purchase on proven placements, and only buy Above the Fold inventory (ATF). Some exchanges do have premium inventory, but the CPMs get higher with that type of control and in most cases advertisers are better off working directly with the sites.
Ad exchange inventory is most often for low-value, non-premium/unsold placements. Many impressions are at the bottom of the page, below the “fold” of a typical monitor screen. So a served ad that counts as an impression may not have been seen by a consumer.
Ad exchanges can trigger bidding wars between advertisers due to the pricing structure’s nature. Price volatility is unavoidable and ad inventory will sell at fluctuating prices, as opposed to the set CPMs advertisers negotiate for with an Ad Network. The bidding system also means the highest bidder wins the impressions, so buyers with smaller budgets can be at a disadvantage.
