Ad Networks – How Does it Work?

Creating or having your own website is all about sharing your information, products and services to the world. For corporate websites, online storefront generates a different source of revenue for them – mostly targetting the global market. For personal or services websites, there could be other sources of revenues but the most popular is what we call “Ad Networks”.

An advertising network (also called an online advertising network or ad network) serve advertising on your website and share advertiser revenue for qualified clicks each time your site visitors clicks on ads. Treat these companies as advertising agents wherein they will have online advertising inventory. They will invite companies to advertise online and unless it’s specified by the advertiser where they want their ads to be placed, advertising agents will be the ones to help advertisers place their ads online – sites that are most relevant to the advertiser’s campaign.

Online advertising inventory can be found on websites, in RSS feeds, on blogs, in instant messaging applications, in adware, in e-mails, and on other sources.

Online advertising is no longer limited to banner ads, it now includes: rich media, text links, and e-mails. Some of the larger networks include AdBrite, Casale Media, Google’s AdSense, Pulse 360, Right Media’s Remix Media Network, RealTechNetwork, Tribal Fusion, ValueClick, FeedBurner’s Ad Network (FAN) and Yahoo! Search Marketing.

There are two types of advertising networks: first-tier and second-tier networks. First-tier advertising networks have a large number of their own advertisers and publishers, they have high quality traffic, and they serve ads and traffic to second-tier networks. Examples of first-tier networks include the major search engines like Google Adsense and Yahoo.

Second-tier advertising networks may have some of their own advertisers and publishers, but their main source of revenue comes from sydincating ads from other advertising networks.

Ad Networks targets both the advertisers and publishers. The advertisers will be the one to pay for their online campaigns, while publishers can join ad networks so that the ads can be displayed on their site and payments can be made based on either CPM or CPC.

CPM is a type of advertising that pays per impression. For instance if the campaign states $10 CPM, you would be making $10.00 USD per thousand impressions, or 1 cent per ad view. CPC stands for cost per click, and payment is based on the number of clicks delivered from your site. Simply put, in CPM campaigns – publishers will be paid once the ads are displayed. On the other hand, in CPC campaigns – publishers will be paid based on the number of ad clicks it generates.

For the publishers, the most important thing for them is the ad rates of course – how much will they get out of the ads that were placed on their ads, and will they be paid on time. Some ad networks will accumulate the publisher’s ad revenue till it reaches $50 to $100, before a payout is done by the ad networks to publishers.

Not all publisher applications are approved, it is therefore a challenge to website owners to come up with websites that adhere to certain standards in as far as content and design is concern. If and when your application is approved, you will be given an administration page wherein you will be able to check your website ad performance, select which ad campaign will you allow to be displayed on your site, payment history and others.

For advertisers, the primary concern is for their online campaign to be delivered correctly and to the right audience, their brands be protected online and the bottomline is of course – for the online campaign to generate revenue for them in the real world. Some of the things advertisers should watch out for in selecting ad network partners are: advertising rates.,
ad types and formats, targeted advertisements capability, percentage of default ads and flexibility of contract.

Advertisers should also look for ad network partners that are capable in providing comparable and complementary audience composition, reach and frequency, with stringent quality controls and the ability to demonstrate measurable lift in key brand metrics. The key is to be able to measure the impact in the efficiency of your overall online brand marketing objectives.

The entire online advertising ecosystem is a win-win situation for every player. Each have their own role, and everyone should be innovative enough to maximize their online intentions.

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