Price war in internet advertising
xpect this to escalate into a full-fledged price war and shake out where some of the lesser networks bite the dust for lack of inventory
Ad Networks Facing Fierce Fight for Inventory
Ad dollars are chasing the internet more and more, and ad networks are now confronted with serious competition for premium inventory and soaring prices, according to a New York Post article published in E-Commerce Times. While some ad networks are benefiting, others are getting squeezed – depending on their business model. Ad networks are seeing a surge in demand – especially as many advertisers launch holiday campaigns for the fourth quarter – with some confronting a shortage of inventory, or, rather, inexpensive inventory. According to Burst CEO Jarvis Coffin, “Our CFO is fond of saying that you don’t have a supply problem, you have a pricing problem.” Some publishers are getting savvy, with some holding back their inventory because they can get a better deal if they wait. Some ad networks, to entice publishers, are starting to offer rate “guarantees” – a minimum price at which they will sell the space.
Those feeling the squeeze are the resellers, those that buy all the inventory from a publisher and turn around and sell it for more. The profit margin has shrunk because of the intense competition.
The article notes that Jumpstart Automotive Media, which sells space on automotive sites, is a beneficiary, having signed long-term exclusive agreements with partners such as eBay Motors and Automotive.com to sell their ad space. Automakers the likes of Ford and GM – which have shifted large amounts of advertising dollars online – have been on a buying spree, and Jumpstart has sold all its available ad space for the fourth quarter.
As reported on Marketing Vox