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Tuesday, April 22, 2008

24/7 creates B2B Ad Network

24/7, the WPP owned ad network solution has announced a deal with a number of US business media shops to create a b2b ad network. This may be a sign of the growing maturity of online advertsing in b2b or it could be a signal that b2b publishers are finding that driving online traffic is much easier than driving online revenue. Desperate to get some revenue traction moving, this deal gets done. We don't know the details of the financial arrangements but we can speculate on the issues.

And there are some risks. There a number of problems with ad networks that tend to bite publishers on the proverbial backside. The first is that you start to lose your relationship with your own customers. Second, ad networks not only trouser a commission on all they sell, but also sell your inventory at a heavily discounted price.

Some publishers might judge that the yield doesn't matter when there is so much unsold inventory about. But it does. Ad networks set the benchmark pricing for the industry. What do you think when one of your reps is sitting in front of a customer hoping to close an online order at £50 cpm and the customer says, "but I'm already on your site through the ad network - and I only pay £3/cpm."

There is a role for ad networks, but the b2b world should be very careful of playing with the devil. If ad revenue from traffic is only worth a handful of pounds cpm, this is not going to be a very profitable business to be in. A web site with a million page views a month serving five ad positions a page creates 5m ad impressions. At £5 cpm (and that would be extraordinary for an ad network rate) and inventory sold out (also unusual)thats a max revenue of £300k/year - less than half the revenue of a not very profitable monthly business magazine.

We need to think through the ad network model for b2b so that the premium audience is not wasted on a network pricing strategy


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