Nothing quite beats a recession for weeding out those areas of the marketing budget that cannot prove their ROI.
It is one of the reasons why online advertising now accounts for £1 in every £5 spent by marketers, and is forecast to overtake TV advertising by the end of the year - not bad progress for an industry that has only been around for a decade or so.
Advocates of the medium point to the accuracy of measuring the effectiveness of online ad campaigns, and the speed at which marketers can tweak them, as factors that make the sector such a rapid growth area.
Yet this expansion has created a rather fragmented and bewildering market. The number of potential advertising spots has mushroomed, which makes identifying the best ones for a campaign - and then agreeing terms and conditions for each one - very difficult for most marketers, especially when time is already at a premium.
This is where ad networks come into the picture. There are an estimated 70 to 80 of them operating in the UK today; almost half of all display ads were booked through them last year, according to the Internet Advertising Bureau. Ad networks make the job of buying online ads far more efficient by distributing a campaign on behalf of the advertiser across their group of sites.
However, the most successful of today's ad networks have improved their offering so that they deliver more than just reach or access to a ‘premium' site. Many sell on the basis of what their targeting technology - enabling advertisers to reach a specific group of users relevant to their campaign - can offer, or their ability to optimise a campaign while it is live.
For Daniel Stephenson, head of digital marketing at the COI, the main reason for using ad networks is to improve the performance of government campaigns. ‘On a granular level, that's improving our engagement metrics, expanding our reach and taking advantage of some new technologies to significantly improve our targeting. We're not expecting people to quit smoking from seeing one banner ad, but hopefully we can engage them [and create an ongoing relationship].'
In working with ad networks, marketers face the same challenge they have in managing any media owner: how do they get the most from their relationship with them to deliver truly effective campaigns? ¬
As with most media, marketers very rarely deal with the ad network directly; usually it is managed through a media agency. What's more, there is often more than one network involved in a campaign, although there is little agreement in the industry about the optimum number to use.
Colin Petrie-Norris, managing director, international, at ad network Specific Media, recommends only working with one or two, and treating them as your partners, rather than working with them all. However, Stephenson points out that the COI deliberately avoids having a ‘set list' of networks; instead, it chooses the right network for each campaign as it arises. ‘We keep it broad because we have a diverse range of audiences and issues to work with,' he explains.
Bigger media agencies advise brands to stick with networks accredited by the Internet Advertising Sales House (IASH), the industry body that regulates internet advertising.
At the last count, it had 21 members, which are audited every six months by ABCe to ensure they are abiding by the code (not placing ads on sites inciting hate, for example).
A potential problem that can arise from using several networks - especially when they sell on the same sites - is the ad appearing multiple times. One way of avoiding this is to ensure good communication between everyone involved in the campaign.
This can be tricky, especially as most media agencies admit they like to keep clients and ad networks separate, but there are benefits to greater co-operation and communication between each of the parties involved beyond minimising duplicated impressions.
‘We recently launched a recruitment campaign and opened up registration data from the government department in question to the network so it had better insight into eligible leads, rather than just driving hard clicks,' explains Stephenson. It also meant it could tweak the campaign as it progressed, so ads reappeared in front of potentially interested recruits.
Not communicating with everyone involved can turn a campaign into a game of Chinese whispers. ‘If the client is not being absolutely transparent with the agency, so they know only three-quarters of what's going on, it means the agency is not being absolutely transparent with us, so we end up only knowing half of what's going on,' argues Richard Sharp, UK managing director at ValueClick Media.
Neither should the creative agency be left out of the communication. ‘We work better with ad networks and media agencies if we have an understanding of where the content is going to appear, so we can build a level of intelligence into the advertising and deploy a different creative message, depending on the site it appears on,' says Stephen Hess, chief executive of digital agency Weapon 7.
Spreading the word
Last year, the agency produced a campaign for the Natural Confectionery Company together with PHD, ad network ad2one and the ADSDAQ ad exchange to raise awareness of the brand. Alongside other marketing activity, consumers were encouraged to interact with the Cadbury-owned brand via banner ads offering them a free sample.
‘As specific coding was required to make the banner interactive, our creative people had to know what websites it was appearing on, and this information enabled them to design a banner that was extremely effective,' explains Hess.
The campaign generated more than 6700 sample requests and 20,000 unique visitors to the site.
It is this level of transparency - about the audience a marketer wants to reach, the product and the objectives - that ad networks would like to see more often in campaigns. For marketers, the question of transparency regarding ad networks is more associated with knowing what sites their ad will appear on.
Most network buys are ‘blind', as networks usually sell on the basis of different categories (such as motoring), audiences (such as women) or across the whole network, rather than on a site-by-site basis.
‘It's quite a big concern for us,' says Abby Penlington, European marketing manager at Visit London. ‘We are funded through the Mayor of London's office, so we have to be careful [about where our ads appear].' The organisation addresses the problem by briefing its media agency, OMD, about which sites it considers inappropriate.
Some networks are willing to disclose some of the sites they plan to use in a media buy. ‘We have been in an unfortunate position where brands have appeared alongside content that might not be considered suitable,' says Paul Nasse, digital buying director at Zed Media. ‘So now we like "blind" networks to inform us of what sites they're using and, within those, what areas the ad will feature alongside.' However, brands continue to find themselves advertising around controversial content, which remains a challenge for the industry.
Marketers wanting to get the most out of their relationship with ad networks should tap into their expertise as much as possible. Targeting, such as by behaviour or geography, offers marketers a more sophisticated way of using networks and ensuring their ad appears in front of the right audience.
This can be highly effective, as Zuzanna Gierlinska, head of Microsoft Media Network, explains. ‘We ran a retargeting campaign recently for a FMCG brand,' she says. ‘By being specific with our targeting and hitting the right audience, we managed to deliver significantly above its targets. It was something it had not done before and it gave the brand confidence that networks can deliver.'
The COI also used retargeting in a campaign for the Department of Health, developed with i-level, to encourage people to quit smoking with NHS support. Users who had not gone any further than the landing page were retargeted with the ads, delivering a 50% improvement in the click-through rate.
Behavioural targeting is generating most interest among marketers, however. ‘This takes you away from contextual targeting - the classic way of targeting users via digital media (so an ad for football boots would appear on a football site) to target a user based on past behaviour,' explains Ben Wood, managing director of Diffiniti. ‘We are also looking at sequential targeting models, based on what somebody is doing online.'
When Vauxhall launched its Insignia car last year, it ran a campaign across Windows Live Hotmail and Messenger to reach users who had recently conducted a car-related search or visited a vehicle-financing site. Behavioural targeting increased brand awareness by 10.9 percentage points and online ad awareness by 12.6 percentage points.
Earlier this year, German airline Lufthansa approached Specific Media about running a campaign to boost sales. The ad network used behavioural targeting to identify users from past airline campaigns who were more likely to respond to their ads and created a Lufthansa ‘targeting group'. ¬
Specific Media was able to identify the target group without installing ‘pixels' on Lufthansa's website - software tags that help networks track user activity on the site and then across their network. Generally, however, networks would like to be able to do this for every campaign.
‘It's a lot more "finger in the air" without it,' warns Mark Wright, managing director of GMW Media. The ad network has been delivering campaigns for Hiscox Insurance that have exceeded on their targets by 20%-30% every month for the past 10 months. ‘Because our technology is implemented into the campaign, it allows us to delve into the analytics a lot more and optimise the campaign. We understand user habits more, the sites they're looking at, and can target those sites and areas to get better results.'
Nasse would like to see more of this proactive behaviour from networks. ‘We see improvements in results, but we're often concerned we're the ones instigating it rather than people coming to us,' he says. ‘We want the networks to understand what segments are converting for us and optimise their inventory to those placements.'
One of the attractions of online advertising is that it is a lot cheaper than its equivalents above the line. This is particularly true now, when margins are tight and media agencies are able to squeeze more from media owners.
Paying for results
Online display ads have traditionally been purchased on a CPM (cost per 1000 impressions) or CPC (cost per click) basis, but to make their spend go further, many advertisers are looking for CPA (cost per action or acquisition) campaigns, so they only pay the network when a consumer takes an action (registering their interest in quitting smoking, for example).
‘What we tend to do is go straight to CPA deals, so we don't pay for the inventory or impressions, but only actions,' explains MEC Interaction business director Clare Hutchings.
However, Mike James, managing director of ad network Adconion UK, warns advertisers against treating networks as the lowest common denominator. ‘Remember, you get what you pay for, so the cheapest option is often not the best. Some networks have their own internal bidding system, which means that unless you're paying an appropriate rate, your campaign won't get shown,' he says.
‘Sometimes cheaper rates can also mean lower-valued inventory on which your ad will be placed - this could undermine your offer and ultimately damage your brand.' Also, more expensive campaigns often incorporate video or another form of ‘rich media', which can be very effective at brand-building (see box).
Ad networks have come a long way since their days of being described as ‘the Wild West' or ‘a lazy media buy', but there is still more that the industry could do to ensure each campaign is delivered as effectively as possible.
Ultimately, many networks are looking to develop longer-term relationships with marketers and agencies rather than maintain the status quo. From their perspective, this would generate an ongoing revenue stream, but the networks also claim it would help them deliver more effective campaigns.
As Wood puts it: ‘It's a truism that the most effective campaigns are the ones where, rather than having an old-fashioned, linear relationship with the client at one end, the agency in the middle and the media-owner at the other end, there is instead a more entrepreneurial structure with a core team consisting of the client, media agency, media owner and creative agency.
‘It's just better when everyone works together to make the campaign as successful as it can be.'
The two-minute guide to online ad networks
Advertisers typically ‘buy blind' on an ad network, so they don't know what sites their ad might appear on.
Networks can also offer a more targeted buy than ‘run of network' (when the ad appears anywhere on any of the sites on the network) or ‘run of category' (when the ad appears anywhere on the sites featured in a particular category, such as ‘sport') can deliver.
Behavioural targeting is generating particular interest. Mike James, managing director of ad network Adconion UK, explains: ‘Once you start to drill down, you will notice that some users didn't reach the ‘thank you for your purchase' page. Why not take another shot at targeting them, perhaps with a different offer? Or if they successfully performed the desired action, why not up-sell them a different product?'
How an advertiser pays for an ad on a network can vary. Traditional measures include CPM (the advertiser pays every time 1000 impressions have been served) and CPC (the advertiser pays when a user clicks on the ad).
A more popular measure in the current climate is CPA (cost per action), which is when an advertiser pays every time an action is taken.
Another measurement, advocated by video ad network VideoEgg, is CPE (cost per engagement). Under this model, advertisers only pay when a user ‘engages' with the ad (which it defines as the point at which a user initiates the video).
Behavioural targeting identifies users
Movie-search website FindAnyFilm.com was developed for the UK Film Council by digital agency Blue Barracuda to encourage the legitimate consumption of films.
To promote the site's launch in January, Blue Barracuda devised the display creative, and planned and bought the online marketing campaign.
It enlisted The Exchange Lab, which sells media across several ad exchanges, to target specific users who had visited illegal download or file-sharing sites. It then served them an ad for the FindAnyFilm service when they visited a legitimate site.
‘We didn't want to put advertising on the download sites, but [nevertheless] send them a positive message about downloading films reliably and legally,' explains Martin Talks, chief executive of Blue Barracuda.
FindAnyFilm is now ranked as one of comScore's top 20 movie sites. ‘We set out to help more people find and enjoy more films, and the results are testament to our getting there,' says Peter Buckingham, head of distribution and exhibition at the UK Film Council.
Visit London video engages tourists
To encourage leisure visitors planning a short break or holiday to visit the UK's capital, Visit London used a video campaign to reach users in its key European markets: France, Germany, Italy and Spain.
‘We were looking for ways to re-engage our target audience with a more interactive campaign,' explains Abby Penlington, Visit London's European marketing manager. The ad was distributed by video ad network, VideoEgg, to social media sites. ‘It was a real pull as it meant we could show a bit more of what London has to offer than an ordinary banner.'
The campaign surpassed Visit London's objectives: ‘The average campaign engagement level was 2.29%, when the average VideoEgg campaign reaches only 1.8%, so the campaign did really well on this level,' says Penlington.
The average time users spent watching a video was 16 seconds, an indication that they were prepared to engage with the content.