ESPN Sparks Media Companies Battle Against Ad Networks
Business Monday, March 24th, 2008ESPN is, in a way, pioneering a revolt by traditional media companies against the ad networks. ESPN.com, which has stopped Specific Media and other networks from serving ads on the site, is rallying support from other big publishers. Forbes Inc. and Turner Media are also expected to announce a similar move as reported by MediaWeek and Mercury News.
The reason for this backlash from big media companies is commoditizing of their brand and, supposedly, high value content by ad networks. These publishers feel that the ad networks are cashing on their brand value to attract advertisers and their content is undervalued when compared with the long tail of publishers for serving ads.
If these companies are able to garner support from other big media companies and publishers and execute their own ad networks, it can seriously impact the earnings of the ad networks like Google, Yahoo etc. Although it seems unlikely as the publishers are best at producing content and ad networks at selling advertisements, but Sarah Chubb, president of Conde Nast’s online division, CondeNet, differs. She says, “We’re pretty good at selling advertising, too.”
Can ESPN and others change the rules of the game? Highly unlikely as none of the publishers can afford to lose advertising dollars by leaving their inventory unsold. The Ad inventory is like an airlines seat which loses its revenue every time it flies vacant. Moreover, the value of content is uncertain in nature and keeps changing. Since ad networks do a good job of filling the unsold inventory, they are the best bet for publishers for earning extra dollars. Another reason is the problem of scale and reach for these publishers which will invariably be lower than those of ad networks.
The best solution for these publishers would be to look at a hybrid model of selling high value advertising themselves leaving the rest for the ad networks.
Short URL: http://www.betadaily.com/?p=4061
Posted by