Ad Networks

Ad Networks Ain’t Dead. But What About the Trading Desks?

Alan Schanzer is one of the founding members of New York’s digital media industry. In 1999 Alan started MEC’s digital media practice, The Digital Edge, growing the agency to over two hundred professionals across North America by 2008. Now the Chief Client Officer for Undertone, Alan remains client facing while also driving ad product strategy for the company.

We asked Alan about the future of both the ad network business as well as the agency trading desks.

The Makegood: The viability of the ad network business has been called into question over the past couple of years. However, the health of the business seems sound, especially with companies like Undertone experiencing rapid growth. What’s going on in the network business that nobody seems to understand?

AS: The simple answer to that question is that networks, particularly networks that challenge themselves to be great companies with great products supported by great  talent, are very valuable to both the supply and demand side of the business.

Over the past 10 years, there have been network based businesses that have given the word network a bad name. They have made it much more difficult for those companies that serve and respect brands. We are in the business of matching great brands to great consumers at scale through the organization of premium web inventory that would otherwise go under monetized or not monetized at all. We invest heavily in differentiated ad products and technology and great talent. That’s our winning formula and if we stick to those values, we’ll continue to be a very healthy growth company.

The bottom line is this: Ad networks like Undertone are meeting a growing demand for the services that we provide and through innovation we will meet that demand every day. That drives growth for us and companies that share the same values as Undertone.

The Makegood: According to some of the larger media agencies they are now buying about ten percent of their online display ads through their trading desks. Where do you think that will top out?

AS: It’s really anyone’s guess. From my perspective, I’m actually seeing a slight pull back from the trading desk model already. It’s has been very difficult for the desks to prove out the value they are delivering for brands outside of the mass acquisition of relatively low value impressions. As the web becomes a friendly home for brand advertisers, more sophisticated ad formats and high quality inventory (and audiences) will fuel top of funnel spending. Not to mention the need to blend in video and mobile formats.

For many reasons, some technical, some based on core competency, these will be difficult services for the desks to provide. Either way, Undertone’s core business serves the market with a set of solutions that generally complement a trading desk solution. We have a product called Undertone Direct Connect that provides a trading desk with the opportunity to acquire inventory from Undertone through the preferred RTB method.  For trading desk managers that recognize that finding inventory outside of the exchange marketplace is important, this has proven to be a very valuable offering.

We know the overall growth of volume through the trading desk will continue. For clients interested in high volume reach on relatively mid to low quality inventory, the value is clear. It will be interesting to see how long that business holds the interest of the larger media agency and how much times passes before the biggest marketers attempt to bring trading in-house (and why not?). I’m not convinced that the desk will be the long term solution to the deep business challenges facing the modern media agency of the future but again, only time will tell.

The Makegood: Thanks, Alan.