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There have been plenty of forecasts about the rosy future of online advertising recently, not least figures released by ZenithOptimedia last week which say the internet will account for 20% of UK advertising revenue within three years.

What isn't clear from this and other forecasts is the increasingly prominent role that Online Advertising Networks will play in this fast evolving landscape.

According to research included in our 2007 Online Advertising Networks Buyer's Guide, ad networks now account for 25% of UK display advertising spend and, over the course of 2006, will bring in an estimated £120 million in revenue for the 40-plus networks now operating in Britain.

Media planners, both for brand and acquisition purposes, are increasingly using networks for greater reach and frequency.

The major portals are still generally very effective but networks (which represent thousands of websites typically beneath the very top tier) are becoming a more significant weapon in the advertiser's arsenal. 

In the grander scheme of things, networks still account for only 6% of total online ad spend (which includes search and classified advertising) but this figure is likely to increase as advertisers seize the chance to reach the long tail of the internet. The networks are making it much easier to do so.

The cause of ad networks has been aided significantly by developments in behavioural targeting which means this type of advertising can be extremely cost efficient.

Bradley Moore, media director at digital agency Blue Barracuda, said: "Behavioural targeting gives everyone a far better chance of getting to the CPA that search and affiliates are able to drive."

Despite the growth of ad networks, they still have a long way to go to win a more substantial share of the market, particularly as far as brand advertising is concerned.

As discussed in our buyer's guide, what might help the networks' cause further is more transparent and efficient selling of ad space.

It will be interesting to see how much success online ad exchange AdECN, currently negotiating with some leading networks, has on the UK market with its auction system of selling ads.

Market trends

E-consultancy's Ad Networks Buyer's Guide (available to subscribers or on a pay-per-view basis) identifies the following key market trends:

  • Ad networks develop as ‘long tail’ marketing vehicles.
  • Formation of industry body IASH welcomed as advertisers push for greater transparency.
  • Behavioural targeting increases ad networks’ effectiveness.
  • Squeeze on margins prompts trend towards consolidation.
  • Auction model set to drive efficiency in buying and selling.

The guide also contains profiles of 21 different networks plus a section on tips and pitfalls to help advertisers identify the most suitable network or networks for their needs.

Linus Gregoriadis

Published 14 December, 2006 by Linus Gregoriadis

Linus Gregoriadis is Research Director at Econsultancy. Follow him on Twitter or connect via LinkedIn or Google+.

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