Will ad networks have to build out their own buying platforms to survive? Is the UK ad network market too bloated? What effect will RTB have on the European display market? Mark Connolly, Commercial Director at Adconion Media Group, spoke to ExchangeWire last week about these very subjects, and how he sees the display market developing over the coming months.

Can you give an overview of Adconion’s offering?

MC: Adconion Media Group is the world’s largest independent audience and content network, reaching over 350 million unique users a month – that’s more than 1/3 of the total global Internet population. We’re ranked number three in comScore’s global rankings.

As a leading network, we offer the complete range of targeting and optimisation solutions. However, Adconion is also an international leader in evolving the ad network model into an ‘audience and content distribution platform’. This means being more than just a ‘go between’ for brands and publishers, and acting as more of an ‘audience aggregator’ – bringing together brands and content with relevant audiences. To this end, Adconion is able to create, distribute and monetise branded online video content and entertainment.

What differentiates you from your competition in the UK market?

MC: There are many advertising networks in the UK market and a few video networks. One of our main points of differentiation is our ability to offer the entire spectrum of products – ranging from ‘bread and butter’ solutions, including a host of targeting products, display advertising, and performance optimisation, to a host of more complex online video solutions – including in-stream/pre-roll video ads and in-banner video ads – via the recently-launched Joost Video Network .

The Joost Video Network allows us to offer the reach and quality of a video portal with the scale and efficiency of a network. In other words, not only do your ads and branded entertainment reach large audiences and appear exclusively with premium content in brand-safe environments, but we’re also able to leverage our experience as a network to reach TV-size audiences with precise targeting.

At the same time, we offer the ability to track campaign performance and engagement – so you get a campaign that not only gives you fantastic ROI, but is also super accountable and measurable.

Also, unlike many video networks, we own our own video player and ad serving technology, and we have an exclusive relationship with a branded entertainment studio in the US – which gives us the ability to be a ‘one stop shop’ for all video campaigns in the UK.

In addition, we have the ability to offer clients simultaneous multi-market campaigns, with a single point of contact, through our global sales team.

You operate in several European markets? Is there a massive difference in the way display advertising is bought and sold in different European countries?

MC: In the main, I would say ‘no’. Yes, each market is different in its approach to networks and internet advertising – not to mention cultural differences. However, in terms of purchase differentials, everyone buys on the same metrics (i.e. CPMs, CPAs and CPCs) across all markets.

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?

MC: Admittedly, the UK advertising network market is relatively easy to enter, with low costs of entry – and, in theory, anyone could set up as an ad network. The points of differentiation between these – and the question of their sustainability – are less about the number of networks, and more about the quality.

Is this number sustainable? Possibly; if there are still eighty ad networks at the end of 2010 – after two of the most turbulent years in advertising history – then the market will have spoken and deemed a need for eighty networks.

Does the display market’s move toward more measurable media signal an end to ‘middlemen and arbitragers’? No – however, it does mean an end to those that are low quality.

The main purpose of an ad network is to provide agencies with a single buying point for a wide portfolio of websites – if this were to be taken ‘in-house’, agencies would need to staff up and build relationships with each and every website. Ad networks commoditise these relationship and costs in an effective manner, selling across a wide range of sites, targeting multiple sectors. And because we have the technology, we are able to optimise advertising campaigns to meet our clients’ needs – so if one site in the network is not performing, we can move the ads to sites that are performing well against the advertiser’s campaign criteria.

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

MC: Yes, it is all of these things, but it is also product diversification into new media opportunities, such as online video. It’s also about better customer service and building long-term sustainable relationships. Plus, extensive, high quality reach of online audiences.

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?

MC: Demand Side Platforms and ad networks have a lot in common – most DSPs, and ad networks like Adconion, offer proprietary technology, data and optimisation, and we all have the common goal of benefitting our clients’ performance. We think there are good reasons why an agency would use a DSP; however, we believe the best way to use a DSP is to use a DSP and an ad network. That allows agencies to diversify the technology and data they’re relying on and expand their reach, because there isn’t an ad network or a DSP out there that reaches 100% of the internet population.

LucidMedia recently announced it was bringing its own DSP to market? Do you think ad networks will have to build out their own DSPs to survive?

MC: I think each ad network has the opportunity to define its own future. For Adconion, we’ve chosen to expand our product offering so we can offer brand marketers and advertisers solutions throughout the marketing funnel. At the top of the funnel, our video products combine the power of the moving image with the scale and targeting of the internet to create effective branding campaigns for our advertisers. In the middle of the funnel, our display solutions and targeting capabilities, based on our own internal data and data from 3rd party partners, create effective evaluation and consideration campaigns. Finally, at the bottom of the funnel, our direct marketing and retargeting solutions help capture and upsell customers.

Are the lines between agencies and ad networks becoming more blurred? What effect do you think that will have on the display market?

MC: I don’t think so – in fact, I think that, generally speaking, they’re actually becoming more defined.

This ties in with the question of whether there’s a need for eighty ad networks in the market. When faced with eighty-odd networks contacting them every day, agencies need to decide who they want to work with – as such, the agency’s role is to determine the right network that will give them the reach, optimisation and frequency needed to meet the success metrics of their advertisers.

Conversely, the role of networks is to effectively offer a ‘one stop shop’ for their agency clients to optimise campaigns across a portfolio of websites, with success metrics paramount.

Do you think RTB is going to have a major affect on the way online display is bought and sold? Does Adconion have any plans to use RTB to trade ad inventory?

MC: Adconion was one of the first ad networks to support RTB, deploying our in-house technological solution in early 2009. Today, we have RTB enabled on three networks/exchanges, and our RTB technology is tightly integrated with our ad serving, targeting and optimisation capabilities to maximise the return we get from every impression we bid on, win and serve. The advantages of RTB are the ability to increase campaign scale and efficiency – with RTB, you pay an optimal price, and you’re buying the right user.

We find RTB to be particularly effective in re-targeting and behaviourally-targeted campaigns, where it can be used to increase volume and increase unique user reach, respectively, and we expect to see its effect on this market grow. We package RTB with all of our audience targeting solutions, which allows us to apply RTB whenever its relevant, depending on each campaign’s targeting parameters and campaign objectives.

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

MC: Yes, I think behavioural targeting does work effectively in the UK – public research from a range of companies has indicated that there is always a significant uplift in click-through rates when behavioural targeting is utilised.

What trends is Adconion presently seeing in the display market?

MC: Across the board, we are seeing a blurring of responsibilities of who owns display advertising within an agency. Currently, most agencies book online in-stream/pre-roll video ads through their TV departments; in-banner and network advertising are booked through the online team.

As agencies get to grip with online video and where it sits within their organisation, many agencies will re-assess which department is responsible for all display campaigns. We believe this will be a key trend through 2010.