POV: Is the Digital Media Industry Overcrowded with Ad Networks?

By Kapil Ohri , afaqs!, New Delhi | In Digital | July 26, 2010
More than 20 online ad networks are active in India. Is this a good development for an industry that is already fighting the challenge of lower ad inventory costs?

More than 20 online ad networks are active in India. Is this a good development for an industry that is already fighting the challenge of lower ad inventory costs?

Amish Tripathi, National Head, Marketing and Product Management, IDBI Fortis

& #BANNER1 & #

More than the overcrowding, we should see whether ad networks are generating value. I think they are. Remember, ads are a perishable commodity. If a website missed an opportunity to display an ad yesterday, that opportunity is gone. Large publishers often sell their unused inventory through ad networks. And instead of taking a loss, media outlets often take lower-than-usual fees to unload leftover space. It allows advertisers to buy supposedly expensive media for cheaper rates.

This is good for an advertiser. But is this bad for an online publisher? I wouldn't think so. Remember, once an opportunity to display an ad is gone, it's not coming back. So it's better for a publisher to get some revenue out of it than nothing.

Rajat Gandhi, Head, Zed Digital

The last few years have witnessed a mushrooming of ad networks. Anybody with decent skills in selling digital media is setting up an ad network with negligible investments in technology or value. This has resulted in the impression that ad networks are primarily set up to utilise unsold inventories.

Ad networks are often criticised for commoditising inventories. But the internet was always commoditised with many publishers chasing few advertisers. What networks have done is give publishers a platform to monetise inventory and help rationalise rates and create benchmarks for advertisers.

Another criticism is that ad networks are focussed on performance but that is the way online media works. It gives a platform that not only builds the brand but also creates a pipeline, enabling the brand to enter into a direct transaction with its audiences. Ad networks are going through a transitory phase. Gradually, we might see a shakeout in the industry leaving us with 4-5 dominant players only.

Rajan Srinivasan, Vice-president, Sales, Web18

Very few ad networks actually deploy technology - a huge USP with this category. They actually do nothing more than just trade in inventories. This compels them to dig deeper and harder and pushes them down the performance business spiral. Ad networks, like any other business, have their strengths and weaknesses. While they manage to add more meat to a performance campaign, there is little they can do with the 'content or brand' integration as there are multiple agendas (websites) to push for and several constraints (primarily driven by not owning a property) they face.

Again, like any other business, eventually there will only be a few of these 20-plus ad networks who will power 80 per cent of the online advertising business.

Kiran Gopinath, Founder and CEO, Ozone Media

Is the ad networks space in India is crowded? Yes. Is it overcrowded? No. Ad networks have existed in India since 1999-2000 but have attracted marketers' attention only in the past few years. Clearly, the industry is in its nascent stage. Currently, there are many ad networks fighting each other for the same pie. This is set to change and I think that the next year will be critical in this aspect.

With the internet growing as a medium, the chunk of the internet ad budget will grow. Ad networks will give marketers the advantage of diverse audiences and start adding meaningful value to communication plans.

After going through the 'survival' period, each network will be forced to distinguish its offering and play up on analytical intelligence, technological advantages and a niche to cater to. With time, ones that occupy positions of value will unlock more value for themselves and their investors. Those that don't will either merge into the successful ones or simply perish.

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