Fred Wilson discusses the rise of third-party ad networks and wonders if in the near future publishers will be earning better eCPMs from ad networks then from deals their own internal salespeople can sell.
I think this is a case that can’t be generalized. There will always be some high value CPM campaigns out there that can’t be automated through a third-party ad network, and the advertiser will have to work directly with the publisher’s sales team on negotiating and implementing custom campaigns.
Of course, there are ad networks and rep firms that do this already, thus alleviating the need for many publishers to have a sales team, but in the case of very large publishers, they keep more profit from having some employees on staff to sell and implement direct campaigns.
But I think Fred is on to something, which is that algorithms and markets are improving and many publishers are getting results from networks that rival or beat what an internal salesperson can do.
I do think we’ll see a continuing shift though where closed networks like Google Adsense, Valueclick, and others won’t be able to provide the CPM that an open advertising exchange can provide. Why? Because it’s about advertisers and valueing impressions. At some point as exchanges grow they’ll reach and surpass the scale of the larger closed ad networks.
Not to mention the difficulties publishers have in trying out, implementing, correctly measuring, and managing multiple ad networks on who all have different systems. I live that pain.
