Brian O'Kelley wrote an interesting piece for Clickz this week on why ad nets are an essential part of the online ad eco-system. He argues that ad networks are entitled to earn good margin on ROI delivered to agencies and advertisers, highlighting proprietary technology, performance delivery and quality service as grounds for excelling ad nets to charge top dollar. He's right, you know. But the comments below O'Kelley's article indicate some of the concerns among agencies and advertisers - with regard to ad network inventory and pricing transparency. All is not well in ad land - and tensions are beginning to appear in the traditional buying chain.

There is a developing battle going on at the moment between the ad net and agency DSP for ad spend. Slowly but surely ad net margins are getting squeezed by the emerging DSP market. Agencies, who remember have the client direct relationship, are implementing fairly robust exchange strategies now. They are looking to put a lot more of their spend through these automated channels (either through 3rd party vendors or their own platforms). Who will suffer most from this shift of budget to the DSP? The ad network of course. Price and inventory transparency remain the key drivers. But transparency remains a tricky subject especially in the European DR market. A lot of ad nets are selling blind because premium publishers don't want to them repping their non-premium inventory - for fear of sales channel conflict. The agencies are demanding more transparency and less of the black box sales patter.

This is a difficult place to be for the ad networks. The industry Cassandras who called the death of the ad network 12-24 months might not have got it quite right, but you feel there is a big shake-up about to come. There are a couple of reasons for this? The biggest reason, which I've already touched on, is the rise of the agency buying platform. Ad agencies are taking a more pro-active role in buying and optimising media on behalf of the client instead of outsourcing the process. Another big factor for the shake-out is the rise of the so called data economy. For years, data was given away without a thought. Its economic value was never fully appreciated by publishers. The data leaks will soon be plugged up by revenue hungry publishers and ad nets will have to pony-up for its use. And questionable tactics like burying scripts in ad tags will never capture enough data.

Ad nets do have of course access to large volumes of actionable data, but thrity-day cookie decay and regualr cache clear-outs will ultimately force their hand. Publishers will be looking to be compensated for data use. I'm not saying ad nets are in danger of disappearing. But there are too many ad nets in the UK - and with automation becoming the trend there will eventually be no business need for 80 middle-men. The bigger technology-driven and well financed operations will survive and prosper. And they won't be satisfied with being on a media plan. Some will, but others will be looking at this from a different perspective. I envisage a future where agencies and ad nets are going head-to-head for advertiser budget.

Imagine for a minute you are top-performing DR ad network with solid tech, data and expertise. Are you going to let a third-party or agency DSP suck all your business away and leave you as an ad-hoc outsourcing solution? Of course not. The ad nets will go straight to the brands and advertisers, and try to distinguish themselves from their agency competitiors. How will they do this? They could build out a DSP proposition similar to Lucid Media or licence tech to compete with agencies trading in the exchange marketplace. The data "blind spot" could be covered by establishing attractive rev share deals with publishers. Basically the uber ad net will need to play heavily on the tech and data angle. People in the industry say ad nets and DSPs can co-exist in one harmonious space. I'm saying it's possible but there will be less ad nets in the market and their business model is going to look a lot different than today. Arbitraging inventory will no longer cut it especially if agencies continue to put more and more budget through ad trading platforms.