Mar. 31, 2008

Traditional media companies are now launching vertical ad networks in which they sell ad bundles of space on their Web sites and on independent sites with complementary content. The idea is to generate additional advertising revenue that they otherwise would simply not get.

They hope to attract advertisers by featuring blogs that have been prescreened for credible content.

As an example, Martha Stewart Living Omnimedia has put together an ad network that's made up of 25 lifestyle-focused sites such as FriendsEat.com and Christmas-Cookies.com.

According to the Interactive Advertising Bureau, the rise in vertical ad networks comes as traditional media companies, particularly publishers, try to compete for online ad revenue with giants such as Yahoo and Google. The massive reach of those companies gives them an advantage in luring big chunks of the $20 billion-plus being spent annually on Internet advertising.

Media companies' niche networks draw just a sliver of that audience. For instance, Martha's Circle had 3.9 million unique visitors in February, according to technology company Adify, which specializes in vertical ad network infrastructure.

In addition to working with MSO, Adify has about 65 other clients, such as Warner Bros., which has a mom-focused vertical ad network; International Data Group (IDG), which has a technology-oriented network; and iVillage, which has both health and parenting-focused ad networks.

While vertical ad networks can't match the reach of Google or Yahoo, they offer advertisers "a more targeted audience" with selected sites that are aligned with the network's overall theme, says Joelle Kaufman, Adify's head of media operations.

"All these networks have such different personalities," she says. For example, "IDG (sites) have cutting-edge widgets, while Martha Stewart has high-quality, beautifully designed sites."

Finding partners for Martha's Circle took some work. "They are really vetted," says Wenda Harris Millard, MSO's president of media. The company uses what it calls "careful curation" to be able to assure advertisers such as Ace Hardware, Macy's and Bank of America that their ads won't run next to inappropriate content.

Ad space on the partner site typically is sold in packages with space on MarthaStewart.com and MSO's company-owned sites and blogs, which also include The Martha Blog and The Bride's Guide. Advertisers can create their own specialized bundle as well with a la carte site selection.

In its 2008 digital trends predictions, trade journal Advertising Age said: "Expect media companies to continue to invest in this space. While a magazine or TV (network) might have great reach in their specialized offline space, it's rather difficult to garner that scale online — so they seek to aggregate and sell related sites."

Kaufman predicts that this year will bring "tremendous interest from media companies and entrepreneurs — as well as from advertisers — who want to reach the right audience."

Yahoo's ad network had 157 million unique visitors in February alone, according to ComScore Media Metrix. Google's network had 147 million. Smaller sites that link up with companies such as MSO and Forbes have financial incentives to join such a network.

"Generally speaking, those independently published blogs and websites are of good quality," says Adify's Kaufman, but they often don't have the clout to get a meeting with major marketers or top-tier ad agencies. By joining a branded network, they can bring in more money.

While vertical ad networks are a relatively new concept, many more are expected to come on line in 2008.

Source: Interactive Advertising Bureau