How Ad Network Affiliates Shoot Themselves in the Foot

If you're not working for an ad agency that handles media planning and placement, pretend that you are for a second.

You send out Requests for Proposal for a new product campaign. The proposals come back. Some proposals are from content sites and some are from ad networks. In looking at several of the network proposals, you find that many of them look similar. That is, you see that several ad networks are recommending similar ad inventory on some of the same sites.

Now, pretend that you're a site owner or chief revenue officer at one of the sites that has been duplicated across multiple network proposals. Your site might be in that critical stage where it's not yet generating the revenue to support its own direct sales force, or it might have been a conscious decision to avoid employing sales reps (for whatever business reason).

Many content sites you might be competing with have direct sales forces, and they sell around a third of their inventory (typically, the contextual and sponsorship inventory considered "premium" by media buyers) through that sales force. The rest is farmed out to networks and exchanges. But your site doesn't have a direct sales force, and you're in a situation where a number of potential sellers can offer your inventory to ad agencies.

This can become problematic. Put yourself in the agency's shoes again. You've seen a single site show up on five network proposals. If you use media partners that execute on the exchanges, you might even be getting access to that site's inventory through an exchange buy, in addition to the inventory offered on any proposals you might accept. As an agency, you don't want your buys duplicating with one another. This is usually the case regardless of the goal (awareness, direct response, engagement).

So, as an agency media buyer, your approach to putting that site on a media plan will be to zero in on the lowest-cost proposal and buy the site through the network that is able to get you the inventory at the lowest price.

A site owner might think that using multiple networks and exchanges will expose their inventory to the widest possible range of potential buyers. And it will. The problem is that the inventory will almost always go to the lowest bidder, so your attempt to mitigate risk by using multiple sellers is undercutting your ability to sell at the highest possible CPM.

Media buyers scratch their heads when they see several ad networks pitching the same site. They understand the need to mitigate risk, but they don't understand why inventory is served up to them with different pricing. What's more, they don't understand the factors that would cause two networks to price the same inventory differently.

In this way, sites that use multiple ad networks can run into monetization issues if the ad networks aren't actively kept from cannibalizing one another's business.