Online Advertising Networks

Introduction to Online Advertising Networks

An online advertising network or ad network (also called affiliate network or advertising affiliate network) is a company that connects advertisers to websites that want to host advertisements. The key function of an ad network is the aggregation of ad space supply from publishers (e.g. websites) and matching it with advertiser demand. Note that before joining an advertising network, publishers will need to choose between programs that offer different mechanisms for triggering a payment (see the Online Advertising Terminology section below): CPM (Cost-per-mille), CPC (Cost-per-click) or CPA (Cost-per-action).

The Online Advertising Market

The advertising network market is large and growing. This growth has resulted in many new players entering the market, and has encouraged acquisitions of ad networks by large companies wishing to expand in this market. For example, in 2007 Google acquired the ad network DoubleClick for $3.1 billion (see Reference [1] below).

Ad networks are primarily involved in selling space for online ads. This online advertising inventory comes in many different forms, including space on websites, in RSS feeds, on blogs, in instant messaging applications, in adware, in e-mails, and on other sources. The dominant form of this inventory is third-party websites, who work with advertising networks for either a fee or a share of the ad revenues.

The advertising network serves advertisements from its ad server, which responds to a site once a page is called. A snippet of code representing the advertising banner is called from the ad server. In most cases, ad networks deliver their content through the use of a central ad server. Large ad networks include a mixture of search engines, media companies, and technology vendors. Advertising networks often make use of contextual advertising, and other technologies to increase the relevance of advertisements to the Websites on which they are displayed.

The Role of Contextual Advertising

Contextual advertising is a form of targeted advertising that appears on websites or other media, such as content displayed in mobile browsers. The advertisements themselves are selected and served by automated systems based on the content displayed to the user.

A contextual advertising system scans the text of a website for keywords and returns advertisements to the webpage based on what the user is viewing. For example, if the user is viewing a website pertaining to sports and that website uses contextual advertising, the user may see advertisements for sports-related companies, such as memorabilia dealers or ticket sellers. 

Contextual advertising has made a major impact on earnings for many websites. Because the advertisements are more targeted, they are more likely to be clicked, thus generating revenue for the owner of the website (and the server of the advertisement). A large part of Google's earnings is from its share of the contextual advertisements served on the millions of webpages running the AdSense program.

Largest U.S. (Online) Advertising Networks

On January 14, 2010 comScore, Inc. (www.comscore.com) released its December 2009 Ranking of Top Ad Networks based on their reach among U.S. Internet users in December 2009. Their research estimates that the total U.S. Internet Users in December 2009 totaled 205.7 million: including home, work and university locations. The ranking showed that AOL Advertising remains the top ad network, reaching 187 million U.S. Internet users, or 91 percent of the total audience, followed by Yahoo! Network (180.9 million) and Google Ad Network (178.1 million).

However on March 31, 2010, users of the Yahoo! Publisher Network (YPN) received an e-mail notifying them that the service would stop serving ads on April 30, 2010. Users who wished to continue displaying advertisements were referred to the Chitika ad network (see Reference [3] below).

December 2009 Ranking of Top Ad Networks (comScore)

Advertising.com Publisher Network
Advertising.com is the technology, data and insights arm of AOL Advertising. The largest online advertising network offers revenue sharing, CPA, and CPM payment options where publishers can set the minimum.

Join the Advertising.com publisher network:
http://www.advertising.com/publisher/our-network

Advertising.com (AOL Advertising) {Wikipedia}
http://en.wikipedia.org/wiki/Advertising.com

Chitika Advertising Network (replaces the Yahoo! Publisher Network)
After the abrupt termination of the Yahoo! Publisher Network (see Reference [3] below) users were referred to the Chitika ad network. All Chitika Premium ads are Pay-per-click (PPC) and claim to be fully compatible with AdSense because they are non-contextual and do not look like AdSense units.

Get Started with the Chitika Publishers' Program:
http://chitika.com/publishers/

Yahoo! Publisher Network {Wikipedia}
http://en.wikipedia.org/wiki/Yahoo!_Publisher_Network

Chitika (Advertising Network) {Wikipedia}
http://en.wikipedia.org/wiki/Chitika

Google AdSense (Google Ad Network)
Google AdSense is the most popular and widely used contextual advertising network. They serve CPC ads (image or text) based on the content the webpage. Since, advertisers bid on keywords, the CPC rate varies from one ad to another.

Sign up for a Google AdSense account:
http://www.google.com/adsense/

Google AdSense {Wikipedia}
http://en.wikipedia.org/wiki/AdSense

Google Affiliate Network {Wikipedia}
http://en.wikipedia.org/wiki/Google_Affiliate_Network

ValueClick Networks
The ValueClick Media segment provides a range of online media solutions in the categories of display advertising, lead generation marketing, and email marketing, and sells various consumer products directly to customers through company owned e-commerce websites.

Join ValueClick Media for Publishers:
http://www.valueclickmedia.com/publishers

ValueClick {Wikipedia}
http://en.wikipedia.org/wiki/ValueClick

Microsoft pubCenter
Microsoft pubCenter offers you the chance to include contextual advertising on your website from a leading network of premium online advertisers.

Microsoft Advertising Solutions for Publishers:
http://advertising.microsoft.com/for-publishers

Microsoft adCenter {Wikipedia}
http://en.wikipedia.org/wiki/Microsoft_adCenter

Online Advertising Terminology

CPM (Cost-per-mille)
Cost-per-mille is also called Cost-per-thousand (CPT) or Cost-per-impression (CPI), where advertisers pay for exposure of their message to a specific audience. Per mille means per thousand impressions, or loads of an advertisement. 

CPC (Cost-per-click)
Cost-per-click is also known as Pay-per-click (PPC). Advertisers pay each time a user clicks on their listing and is redirected to their website. They do not actually pay for the listing being displayed, but only when the listing is clicked by the user.  

CPA (Cost-per-action)
Cost-per-action or Cost-per-acquisition advertising is performance based and is common in the affiliate marketing sector of the business. In this payment scheme, the publisher takes all the risk of running the ad, and receives payment only for the number of users who complete a transaction by making a purchase (or signing-up for a newsletter, etc.). 

Other References: Online Advertising Networks

[1] "Google Buys DoubleClick for $3.1 Billion" {The New York Times}
By Louise Story and Miguel Helft , April 14, 2007
http://www.nytimes.com/2007/04/14/technology/14DoubleClick.html

[2] December 2009 Ranking of Top Ad Networks {comScore, Inc.}
Reston, VA, January 14, 2010
http://www.comscore.com/Press_Events/Press_Releases/2010/1/comScore_Releases_December_2009_Ranking_of_Top_Ad_Networks/

[3] "Yahoo Publisher Network To Be Axed, Customers Referred To Chitika Instead" {TechCrunch}
By Robin Wauters, March 31, 2010
http://techcrunch.com/2010/03/31/yahoo-publisher-network-to-be-axed-cust...

[4] "Contextual Marketing: The Real Business of the Internet" (Harvard Business Review)
Excerpted from the Harvard Business Review, November-December 2000
By David Kenny and John F. Marshall, March 26, 2001
http://hbswk.hbs.edu/archive/2124.html

[5] Contextual Advertising {Wikipedia}
http://en.wikipedia.org/wiki/Contextual_advertising

[6] (Online) Advertising Network {Wikipedia}
http://en.wikipedia.org/wiki/Advertising_network

[7] Online Advertising {Wikipedia}
http://en.wikipedia.org/wiki/Online_advertising

[8] A-Z List of Ad Networks and Affiliate Programs {About.com}
From Gregory Go, former About.com Guide
http://onlinebusiness.about.com/od/affiliatemarketing/tp/online-advertis...

[9] Top 10 Commandments of Affiliate Marketing {About.com}
Ten best practice tips for a profitable affiliate marketing business
From Gregory Go, former About.com Guide and contributor Lynn Truong
http://onlinebusiness.about.com/od/affiliatemarketing/tp/affiliate-progr...

[10] How to Make Money From Your Website {The Site Wizard}
By Christopher Heng, thesitewizard.com
http://www.thesitewizard.com/archive/makemoney.shtml