ONLINE AD SERVING SOLUTIONS 2006

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					Ad Serving Solutions – A Buyer’s Guide (2006)

Ad Serving Solutions – A Buyer’s Guide <sample>
E-consultancy
January 2006

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Ad Serving Solutions – A Buyer’s Guide (2006)

Table of Contents
1. Introduction 4

1.1 About E-consultancy .................................................................................................... 4 1.2 Acknowledgements...................................................................................................... 5

2. Executive Summary

5

2.1 Further Reading ........................................................................................................... 5

3. The Market

6

3.1 Market Definition and Report Focus............................................................................. 6 3.2 Market Value ................................................................Error! Bookmark not defined. 3.3 Market Growth ..............................................................Error! Bookmark not defined. 3.4 Drivers of Growth and Market Trends ...........................Error! Bookmark not defined.
3.4.1 Online advertising goes from strength to strength ............................... Error! Bookmark not defined. 3.4.3 Consolidation drives down prices as ad serving technology becomes commodityError! Bookmark not defined. 3.4.4 Advertisers seek a more integrated approach ..................................... Error! Bookmark not defined. 3.4.5. Targeting gives greater value and reduces wastage for advertisers .. Error! Bookmark not defined. 3.4.6. Customer-friendly technology and service becomes key differentiatorError! Bookmark not defined.

3.5 Return on investment ................................................................................................... 8 3.6 Strengths, Weaknesses, Opportunities and Threats (SWOT)Error! Bookmark not defined.
3.6.1 Strengths ............................................................................................. Error! Bookmark not defined. 3.6.2 Weaknesses ........................................................................................ Error! Bookmark not defined. 3.6.3 Opportunities ....................................................................................... Error! Bookmark not defined. 3.6.4 Threats ................................................................................................ Error! Bookmark not defined.

4. Costs & Pricing Models

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4.1 Introduction ................................................................................................................ 10 4.2. ASP/hosted solutions ................................................................................................ 10 4.3. Licensed software ..................................................................................................... 11 4.4. Additional service costs ............................................................................................ 11 4.5. Open source ............................................................................................................. 11

5. Finding the Right Ad Serving Technology – Tips & PitfallsError! Bookmark not defined.
5.1 Introduction ...................................................................Error! Bookmark not defined. 5.2 Publisher or Agency technology?..................................Error! Bookmark not defined. 5.3. In-house or hosted/ASP model? ..................................Error! Bookmark not defined. 5.4. Cost versus value ........................................................Error! Bookmark not defined. 5.5 Single or multiple vendors?...........................................Error! Bookmark not defined. 5.8 Pedigree of supplier ......................................................Error! Bookmark not defined.

6. Market Positioning Charts

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6.1 Explanation for Chart 1 – Business Focus ................................................................. 12 6.2 Explanation for Chart 2 – Size & Geographical Focus ............................................... 13

7. Supplier Matrix

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Ad Serving Solutions – A Buyer’s Guide (2006)

8. Supplier Marketplace and Profiles

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8.1 24/7 Real Media – Company & Service details .............Error! Bookmark not defined. 8.2 Accipiter – Company & Service details .........................Error! Bookmark not defined. 8.3 ADTECH – Company & Service details ........................Error! Bookmark not defined. 8.4 Atlas – Company & Service details ...............................Error! Bookmark not defined. 8.5 Bluestreak – Company & Service details ......................Error! Bookmark not defined. 8.6 CheckM8 – Company & Service details ........................Error! Bookmark not defined. 8.7 DoubleClick – Company & Service details ....................Error! Bookmark not defined. 8.8 Falk – Company & Service details ................................Error! Bookmark not defined. 8.9 M3 Media Services – Company & Service details .........Error! Bookmark not defined. 8.10 Mediaplex – Company & Service details .....................Error! Bookmark not defined. 8.11 phpAdsNew (open source) – Company & Service detailsError! Bookmark not defined. 8.12 RedEye – Company & Service details ........................Error! Bookmark not defined. 8.13 Tangozebra – Company & Service details ..................Error! Bookmark not defined. 8.14 TradeDoubler – Company & Service details ...............Error! Bookmark not defined. 8.15 ZEDO – Company & Service details ...........................Error! Bookmark not defined.

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Ad Serving Solutions – A Buyer’s Guide (2006)

1. Introduction
E-consultancy‟s buyer‟s guides are the ideal starting place for anybody researching new suppliers and partners in digital market sectors. They contain in-depth vendor profiles, to help you quickly evaluate suppliers and service providers, as well as market and SWOT analyses to help you put things into perspective. The selection of companies profiled in the report is based on a combination of factors, not limited to but including:  Analysis of capabilities (services / products)  Clients  Experience (qualifications / trade bodies / case studies / client lists)  Expertise (by sector / topic),  UK status (a UK office is preferred, occasional exceptions are made)  Ability to take on and fulfil new projects  Recommendations from trusted sources (or anecdotal evidence to the contrary)  Google visibility  Business model (a high % of turnover should be related to these services)  Company website E-consultancy does not explicitly recommend any of the suppliers featured in these guides, principally because it is impossible for us to work with all of them to form a first-hand opinion. But we do believe, based on an intensive and careful selection process, that the chosen vendors represent quality. Buyer‟s Guides are updated on an annual basis, so the information contained within is recent and thus valid. Send any questions or comments to E-consultancy‟s editor, Chris Lake. 1.1 About E-consultancy E-consultancy is the UK‟s leading online publisher of best practice internet marketing reports, research and how-to guides. It also publishes buyer‟s guides and has a directory of 100,000+ third party internet marketing white papers. Since moving to a paid-content model in 2003 E-consultancy has amassed thousands of paying subscribers, more than 35,000 registered users and 150,000+ unique users sessions per month. Its weekly newsletter is sent to 20,000 users. Subscribers pay from £149 per year to access the exclusive and highly practical content, which helps internet marketers get the most out of their websites. E-consultancy has around 100 events lined up for 2006, including roundtables and monthly „Supplier Showcases‟, where six suppliers pitch to an audience of pre-qualified buyers (typically between 100-200) in a Central London venue. E-consultancy also provides a range of public and in-house training programmes, such as seminars and workshops. http://www.e-consultancy.com/about/

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Ad Serving Solutions – A Buyer’s Guide (2006)

1.2 Acknowledgements We would like to thank the vendors profiled and quoted below for their help in compiling this report and working with us to identify market trends and opportunities. We would also specifically like to thank Dirk Fiebig, an internet advertising consultant and Head of UK Operations for FIVIA, and Richard Coles, of the trafficking specialist, TrafficRich, for their invaluable assistance.

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2. Executive Summary
The recent surge in demand for online advertising is driving forward the market for ad serving solutions. The cost of ad serving technology has fallen but suppliers are still able to prosper by offering a wide range of services to supplement and enhance a core ad serving proposition. E-consultancy: the UK market for ad serving solutions was worth an estimated £28 million in 2005 and will grow by 18% to £33 million by the end of 2006.

Trends within this market include:     Commoditisation of technologies forces prices down and reduces cost of core ad serving as proportion of overall online media spend. Suppliers focus on high-value services which give publishers an improved return on investment. Technology improvements enable marketers to have a more integrated and targeted approach to online marketing. Growing importance of high-quality customer service to ensure differentiation from competitors.

2.1 Further Reading E-consultancy publishes reports and hosts events to help marketers better understand the potential of the internet. Related E-consultancy reports to help you improve online strategy include: 

Managing An E-commerce Team (June 2005)
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Ad Serving Solutions – A Buyer’s Guide (2006)    

Web Analytics: A Buyer‟s Guide (June 2005) Online Advertising Networks: A Buyer‟s Guide (July 2005) Affiliate Marketing Networks: A Buyer‟s Guide (September 2005) Internet Statistics Compendium (November, 2005)

*The above reports are free to access for E-consultancy subscribers.

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3. The Market
3.1 Market Definition and Report Focus The online ad serving solutions market comprises those suppliers that offer technologies and services which facilitate online advertising, whether from a publisher or an advertiser perspective. This report includes both those vendors that are predominantly focused on „sell side‟ ad serving solutions (i.e. for publishers) as well those with a proposition aimed at the „buy side‟ (i.e. advertisers and their agencies). The market can be broadly divided up into these two categories although there are suppliers who cater for both camps. The blurring of the boundaries between sell-side and buy-side technologies is becoming more apparent as clients increasingly find themselves in the position of being both publisher and advertiser. There is consequently a demand for suppliers to deliver a spectrum of services which meet client needs in both areas. David Fulton, Business Development Director, Atlas Europe, said: “While there is convergence of ad serving technologies catering for buy and sell, to establish a competitive advantage requires specialism, thus avoiding the „jack of all trades and master of none‟ situation. Buy side is fundamentally different to sell-side, and while the two are bridging, advertisers and agencies who are demanding more from their media spend do face a challenge if standardising and not specialising.” The Market Positioning charts (explained in Section 6 and included after each vendor profile) can help the buyer to understand the focus of each supplier with respect to their „sell-side‟ and „buy-side‟ capabilities. The charts also highlight whether the supplier is a specialist in core ad serving technology with a relatively narrow proposition focused on this area, or a company which offers ad serving solutions as part of a wider portfolio of services.

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Ad Serving Solutions – A Buyer’s Guide (2006)

Jon Wade, Country Manager UK and Ireland, Falk, said: “The market can be categorised between two types of supplier companies. Generalists, like Falk, attempt to offer solutions across a number of online disciplines (adserving, email, rich media, search). Specialists, on the other hand, tend to focus on just one discipline. The generalist‟s challenge is to provide solutions to the same quality as a company dedicated to just one discipline.” Core capabilities The technology providers featured in this guide have been selected on the basis of criteria which are explained in the introduction and apply to all our buyer‟s guides. At a fundamental level, all the ad serving technologies profiled in this report (Section 8) offer some key areas of functionality, enabling clients to traffic and serve ads as well as offering a varying degree of reporting to their clients. Additionally, the publisher-oriented technologies all offer management of inventory as a core function. Other key services offered by some or all of the vendors include:    Media planning and buying Ad creation Proposal generation

Again, the profiles for each supplier indicate whether or not they offer these, and many other, services and features. For your convenience, the Supplier Matrix (Section 7) gives an at-aglance perspective of who provides what. Rich Media Some suppliers, such as CheckM8, Eyeblaster, Tangozebra and ZEDO, have emerged as specialists in Rich Media, an area which has gained in importance recently as increased broadband usage has enabled advertisers to engage their audience with a level of interactivity which extends beyond click-through. Although regarded as specialists in this area, these companies now generally offer the wider spectrum of ad serving solutions as well as rich media capability. Richard Coles, of the trafficking specialist, TrafficRich, said: “Some companies originally started off with a specific rich media offering but there is now more integration across the different types of ad serving technology to provide a one-stop package of services. Over the last 12 months the trend has moved towards everyone trying to do everything.”

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Download the full version from http://www.e-consultancy.com/publications/Ad-Serving-Solutions-Buyers-Guide Who are the customers? The buyers of ad serving technology are generally either publishers, client-side marketers or their agency representatives.  Publishers can range from small companies to giant media players.
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Ad Serving Solutions – A Buyer’s Guide (2006)

o 

Online Advertising Networks, which sell inventory on behalf of website publishers, are also buyers of ad serving solutions.

Marketers/Advertisers, who engage directly with ad serving suppliers, tend to represent large blue chip advertisers without the need to manage ad serving through their media agency. The Media Agencies wield a lot of influence in this sector, with about a dozen key agencies controlling the majority of media spend.



As mentioned above, the same organisation will often find itself in the position of being both publisher and advertiser. Jon Wade, of Falk, added: “There is a large overlap between the large publishers and the large online advertisers. For example, Microsoft is a large marketer and large online publisher with MSN.” Who is this report aimed at? This guide will be of interest both to those engaged in existing relationships with suppliers and also to those who are looking to buy ad serving technology and services for the first time. It is anticipated that the report will be useful both to small, one-man-band companies as well as to larger organisations. As well as buyers, the guide should be of interest to other parties, including the technology suppliers themselves, their shareholders and online marketing students who want a deeper understanding of this increasingly important sector. Through reading this report, buyers and other interested parties should be able to build a clearer picture of what ad serving is about, the key issues and the most important players in the UK market.

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3.5 Return on investment 3.5.1 The benefits of using ‘best-of-breed’ ad serving solutions Effective use of the latest generation of ad serving solutions and services can offer advertisers and publishers a range of advantages outlined below:  Drive revenue o o o Publishers can maximise the value of their high-quality inventory space. o Discover hidden revenue opportunities. For marketers, greater returns from campaigns. Technology can help marketers improve understanding of relative value of constituent components of online marketing. 8

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Ad Serving Solutions – A Buyer’s Guide (2006)



Integrated tracking across multiple channels (e.g. display, PPC, affiliate email) can enable ROI comparison and ensure that investment is going into the most profitable areas.

o o o 

Increased conversion rates with use of targeting technology which will ensure that “the right message is delivered to the right people at the right time”. Improved customer retention through effective integration with email marketing. Improved and faster decision-making as a result of real-time understanding of campaign effectiveness.

Reduce costs o Less wastage through effective use of geographical, contextual, behavioural and keyword targeting.  Lower cost of conversion.  Frequency capping reduces wastage by the prevention of ads being served repeatedly to users who are unlikely to convert. Lower ad serving CPM costs by leveraging suppliers‟ ability to deliver economies of scale. Use of single technology platform can eliminate double-counting of conversions.  Merchants will end up paying out less unnecessary commissions. Reduce internal costs by using supplier with user-friendly interface and reporting capabilities. Ad serving solutions can incorporate a number of services (for example, management of inventory, online media scheduling and rich media) which reduces the number of suppliers you need to deal with.  This can help you lower direct costs (increased bargaining power with supplier).  And make you more efficient internally because you are dealing with less technologies and interfaces. Scalable technology removes the need for major investment later on. Selection of the right technology provider will save you the trouble of an expensive, time-consuming and resource-intensive migration to another provider at a later date.  Some suppliers can minimise the pain of migration because of their technology and know-how.

o o o o

o o

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

Improve branding

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Ad Serving Solutions – A Buyer’s Guide (2006)

o o o o

Targeting technology allows more appropriate and timely delivery of adverts which leads to better user experience because ads are relevant to interests. Enable combined response and brand-building benefits. Exploit Rich Media opportunities to engage with consumer at deeper level. Help marketers ensure consistent brand experience across different platforms including web, mobile and iTV.

4. Costs & Pricing Models
4.1 Introduction The cost of ad serving solutions will depend on a number of key criteria including the following:     Are you a publisher or an agency/advertiser? The volume of ads being served. Whether you want licensed software or a hosted/ASP solution. The extent of services & solutions you are looking for, over and above core ad serving technology.

The price paid to your supplier may only be part of the cost of the ad serving solution, for example if extensive internal effort is needed to implement, customise and manage the technology. As with any supplier relationship, pricing and costing needs to be weighed up against potential savings that can be made. For example, a hosted/ASP technology will reduce your ISP costs. Similarly, internal savings which can be made through reliable and efficient customer service need to be factored into these calculations. It is also important to consider the costs in the context of potential return on investment, and whether or not a more expensive solution might prove to be of more value in the long term than a cheaper option.

4.2. ASP/hosted solutions Suppliers will typically charge a CPM rate with a monthly minimum charge, or charge a monthly fixed cost which is largely determined by the level of volume. An advantage of the ASP model is that there is reduced potential for internal IT headaches and no software upgrades to worry about.

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Ad Serving Solutions – A Buyer’s Guide (2006)

4.3. Licensed software Larger organisations may want to consider investing in licensed software which can be used and developed in-house. The Supplier Matrix (Section 7) shows which suppliers sell licensed software. As an example, Accipiter charges a one-off fee for a licence with no monthly CPM charges. The cost of the licence depends on the volume with tier upgrades required above certain levels. Buyers need to consider whether or not upgrades are free if they go for the licence option. Also, set-up and training costs need to be fully understood in order to get a grasp of the true cost of the software. Some suppliers charge an annual support and maintenance fee. 4.4. Additional service costs There may be a variety of additional service costs to factor in, depending on the extent of solutions that are required. These might include:  Additional support.  Trafficking services.  Advanced reporting.  Creative alterations.  Search, affiliate and/or email management.

4.5. Open source There is no charge for phpAdsNew which is open source. However, as this supplier makes clear within its profile, buyers need to factor in associated costs such as bandwidth, servers and rack space.

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Ad Serving Solutions – A Buyer’s Guide (2006)

6. Market Positioning Charts
6.1 Explanation for Chart 1 – Business Focus Focus on „sell side‟ (publisher) solution

Where we are now

Where we are going

Focus on „buy side‟ (advertiser) solution
Focus is on ad serving Range of services including ad serving

The vertical axis charts to what degree the ad serving technology provider caters for website publishers (the „sell side‟) versus focusing on solutions for advertisers/media agencies. The horizontal axis charts the extent to which the supplier is focused purely on ad serving as opposed to offering a portfolio of services and solutions which includes ad serving technology. For example, the (imaginary) supplier charted above is focused specifically on ad serving technology for publishers but is planning to broaden its range of services and technologies. The red circle denotes the company‟s current position while the blue circle reflects their medium and long-term aspirations. If there is no blue circle, or if the circles are in the same position, the company is happy with its current market positioning and has no plans to change.

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Ad Serving Solutions – A Buyer’s Guide (2006)

6.2 Explanation for Chart 2 – Size & Geographical Focus

Global focus

Where we are going

Where we are now

Focus on UK market Small compared to main competitors Large compared to main competitors

The vertical axis charts the extent to which the vendor is geared towards the UK market specifically, as opposed to being a more global player with the UK comprising one its markets. The horizontal axis charts the size of the company compared to its competitors. Again, the red circle denotes the company‟s current position while the blue circle reflects their medium and long-term aspirations. If there is no blue circle, or if the circles are in the same position, the company is happy with its current market positioning and has no plans to change.

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