The ad networks continue to play a big role in the way European agencies and advertisers buy online display advertising. It is estimated that ad networks will handle about one billion euro in display spend this year alone. But how long will this dominance last? With the emergence of DBO (Forrester’s new all-encompassing acronym) and DSPs, how will ad networks continue to add value as agencies and advertisers look to shift display budget through these new platforms.

Tribal Fusion believes it has the answer: the ad network 4.0 model. Doug Conely, Director of Strategy and New Business Development at Tribal Fusion, took time to speak to ExchangeWire this week about the make-up of an ad network 4.0, the role ad nets will play in the evolution of the display market and how much of an impact DSPs and RTB are likely to have.

Can you give an overview of Tribal Fusion’s offering? Is it a performance-based or a brand ad network?

DC: Tribal Fusion has a relatively mature set of technologies and business operations that allow us to offer solutions throughout the marketing funnel to our agency clients. We’re primarily a CPM network but some clients work with us on a performance basis because we can drive unduplicated conversions for them. However, you can’t get results at the bottom of the funnel without filling the top so other clients use our contextual and interest based channels to reach their audiences at scale.

There are nearly eighty ad networks in the UK market. Is that number sustainable – and will the display market’s move towards a more measurable media buy signal the end of the middlemen and arbitragers?

DC: As with any industry, there will always be legacy relationships and niche objectives driving some fragmentation. For example, the move to platforms will actually lower barriers to entry for small, focussed teams to provide some services. Our hypothesis is that the very best of the networks – those that add value to agencies at scale – will pull away from the rest over the next 12-24 months. Of the smaller networks, those that can’t adjust fast enough to flat revenues or the disruption of new technology will probably disappear one way or another.

You describe Tribal Fusion as an 'Ad Network 4.0’. What exactly do you mean by that?

DC: We thought long and hard about a marketing line for the UK business when we decided to increase our investment here but have decided against that for the moment. The Ad Network 4.0 concept comes from two observations. Firstly, we think there have been three previous distinct waves of ad networks: site representation sales house; blind networks; and audience networks. The market is ready for the model to evolve. Secondly, we realised that the networks that survive and thrive through the current wave of disruption will be those that can add value across multiple areas. Developing excellence in all those areas is required to be considered “Ad Network 4.0”. We’re not 100% there ourselves yet but we know how to get there.

What will ad networks need to do to remain competitive? Is it better technology? Better targeting, optimisation and audience insight?

DC: All of the above and more! We think networks will also need to offer more assurances around providing a brand safe environment, particularly as buying shifts to platforms. However, the final challenge will be in building the dynamic teams and processes required to work in the complexity of this environment while under the pressure of delivering results to advertisers and yield to publishers on a daily basis. Bringing all that together is what Ad Network 4.0 is all about.

What’s your view of DSPs (Demand Side Platforms such as Invite Media and MediaMath)? Do you think they will have a major influence on how ad inventory is bought by agencies in 2010?

DC: They make sense to us as an outsourced service provider to agencies while they get their internal processes in order. However, longer-term, we expect the larger agency groups to bring this in-house, as with search. We expect this topic to get a disproportionate share of mind in the UK in 2010, relative to revenue, and don’t expect that to change until the supply landscape is more consolidated.

Do you think the re-launch of the DoubleClick Ad Exchange has succeeded in attracting greater numbers of agencies, publishers and ad networks onto exchange trading platforms in the UK?

DC: This has been coming for a long time so I doubt it has changed many minds, but it will certainly have added some urgency. We don’t expect the volumes to follow until there are clear and widely understood case studies of the value to publishers, professional services around the platforms are more credible and agencies have more mature operations on them.

What’s your view on RTB? Has Tribal Fusion any plans to use RTB to trade ad inventory?

DC: My personal view had been that the online display market would be too small to support the infrastructure required for some time. However, our own development team has proved me wrong and we are testing our own solution today.

It is clear that this will become an important trading strategy in the future, and networks will have to adjust accordingly, but what is not clear, at least in Europe, is how quickly supply will migrate to platforms that support RTB. We’re yet to be convinced that the performance will live up to the hype – for advertisers or publishers - so we don’t expect it to replace other supply sourcing techniques entirely.

Do you think Behavioural Targeting works in the UK? Does contextual still return better campaign results?

DC: From a direct response perspective both behavioural targeting and contextual targeting are just variables in the optimisation algorithm. We see segments from both appearing in the best performing list of attributes and this varies from campaign to campaign and over time.

From a brand perspective contextual targeting is as valid as ever if your brand objectives require you to be associated with a particular topic while behavioural targeting lets you drive awareness at scale irrespective of content. There is value in both.

What trends are you presently seeing in the market? Is online video advertising set to be big again in 2010?

DC: One macro trend is that we feel the landscape is moving back in favour of brand advertisers and those that offer premium branding environments after lurching too far towards direct response over the last 24 months. A healthy balance between the two objectives is good for both advertiser results and publisher yields.

As for video, we do expect it to become increasingly important on buying plans throughout 2010 but we still don’t expect it to represent a high percentage of the total market. Mobile display will be similar this year too. We have a mobile product live today and are trialling a new video format. We see both as useful components of an integrated campaign rather than standalone products today.