Ad networks in the UK play a powerful role in the £770 million display market. My recent industry-informed post on the actual size of the UK ad network market suggested a figure of about £264 million - with the top ten ad nets generating £216 million. They're extremely profitable, but they earn their crust by offering agencies and advertisers an aggregated buy of UK ad inventory. How long they can maintain that position is anyone's guess. With the advent of exchanges and SSPs, you start to wonder when these automated channels will break the back of your typical middle-man ad network.

I would wager a large sum of money that it will be in the next twelve to twenty-four months. But the good ad nets will survive. The guys that can add value through audience targeting and technology driven solutions will continue prosper in this market. The ad network 4.0 model being pushed by Tribal Fusion is a good example of where innovative ad nets are now looking to position themselves. Doug Conely, Head of Global Data Network at Tribal Fusion, does an interesting post on market strategy planning being used by Tribal Fusion to understand the shifting sands of the European display market. He provides handy graph on the various options available in the market, and where Tribal Fusion would like to operate.

There are four quadrants. The bottom left, Conely describes as the "zone of death". This is where the bulk of site reps and sales houses currently operate. In the era of audience buying and content optimisation, this is not the place for an ad net to be. And you would assume any ad net that depends on this space for future revenue is effectively dead in the water. This could explain why some ad nets have chosen to build out automated offerings. The writing is clearly on the wall.

Tribal Fusion operates in the top right quadrant where most performance based players ply their trade. Technology is the key to success in this area of display universe - with agencies looking more to these tech-focused offerings to put their spend through.

What about agency trading desks and DSPs - potentially the biggest threats to the ad net model? Conely says they operate in the bottom right corner, a traditional no-go area for ad networks. He describes it as the innovative space, and with new technology innovation an easy route to market. But he warns DEMs, platform management specialists, and possibly even remarketers that without proprietary tech there's little hope of growing a sustainable business:

The bottom right quadrant has been a historical no go area. You could operate there with good sales, services and marketing but you will get found out eventually and compared to a player with in-house tech or better tech integration. Interestingly, this is where there will be most activity for a while. There are plenty of platform providers for new entrants to build businesses relatively cheaply and enter the market. I would put the agency trading desks here. With some exceptions they generally haven't built their own tech or integrated it into legacy platforms.

Here's the visual explaining the display market from the perspective of an ad net 4.0: