I'm a young entrepreneur who just launched a start up. In my niche I see an opportunity for an Ad Network, but I don't really know much about how to set one up. Could anyone mentor me on this?
The ad network business is very crowded, the margins are getting lower and Google is crushing it in display ads of late.
There is very little room for new player in this space, and the players who have reached scale are very well funded.
Ad Networks will be a 'winner take most' market, and I do not suggest trying to play in it unless you have:
a) deep pockets
b) some amazing technology that is really innovative and groundbreaking
c) a disruptive business model
d) massive domain knowledge (which you just said you don't have).
This is not the best beach to surf IMO. Any niche you've found that reaches any kind of scale will be taken by the bigger players who have hundreds of sales executives each.
The opportunity for bootstrapped ad networks is long over.
I'm actually having trouble finding a decent ad network for an image hosting site I run, Google denied my application because of lack of textual content and others like Ad Dynamo keep showing place holder ads for the same reason. I just want to display some text ads based on a few keywords.
hey jason, thanks for the response. Do you think this still applies even if I'm not looking to grow this into a huge network? and instead just want to set up a private invite only type? I'd hope to focus on quality in this network, right now there really aren't any players in the niche I'm in.
There's really no room for a private, invite-only type network -- at least not one that would make enough money to be worth your time.
One key you need to understand about the display biz now -- advertisers aren't as focused on buying sites anymore. Instead, they think of it as buying "audiences." Buying from a couple exchanges will give an advertiser reach to 95+% of the web. Add in some unique data with the built in targeting of the exchanges, and you can make both very broad and very very granular buys.
There are actually players in your "niche", you just can't see them because they are way too big. The large buying platforms are capable of targeting users (audiences) on a very granular level.
The only real model that works now is:
A) create unique tech (dynamic creatives a la Like.com) or gather a unique data set (preferably do both)
B) charge a premium for use of your unique tech / data while buying on the exchange
With any other approach you either won't make much money (so big players not interested) or won't find clients / leverage (big players too ingrained already and will crush you).
ad networks thrive on volume because of the margins involved, so it's difficult to succeed without locking in large players, especially because high volume sites are probably already leveraging existing networks.
In addition to setting up your own private label network, you can buy and sell inventory on their exchange. This lets you appear bigger than you are. For example, if you are able to sign up a publisher in your niche, you can immediately start trafficking relevant ads to show him you're capable. You'll make more money attracting Advertisers in your niche to buy those impressions, but that's a chicken/egg problem that being part of an exchange helps with.
Open X is definitely a good tool to get you up and running cheaply, but isn't as full featured as some of the other ad servers (ie. DFP)
Keep in mind that the entire display ecosystem is already on / moving towards an exchange-based model (rather than a network based model). Most networks now buy a lot of their inventory directly from the exchange.
So if you're looking to start your own network, you should be thinking about building it on top of the exchanges, and you should also have some unique offering: expertise in display / optimization, unique data set, etc.
There are a lot of plugins for Open X offering additional functionality. A case could be made that as OSS, it's got the potential to face more challenges than DFP, though obviously offer some additional ones as well (like having to manage your own servers).
It sounds like the poster has a niche market he (or she) understands. In that situation, I don't think technology needs to be a selling point.
Yea I'm in a niche, I see an opportunity and feel that I have the connections to bring publishers and advertisers together and create my own (small) network, but not sure how to set it up (the technology side). I'm thinking about doing an invite only type of network and focus on the targeted advertising advantage.
I'm not just talking tech -- I'm talking biz model. Most major advertisers buy directly from the exchange now, and the poster will have a hard time both A) selling to clients and B) making enough margin to stay in business if he doesn't understand how this works.
I'm definitely trying to learn as much as I can about this before jumping into it, but I have made some great connections takes to my existing business thats within the niche.
I would strongly recommend you do NOT use OpenX. I used it for a few years, but eventually got fed up with the constant security problems. They do not promptly release patches for known security problems, so after seeing a particularly widely available remote exploit go unpatched for months early this year, I had to replace it with DFP.
This is a problem with the downloadable version, which is written for the LAMP stack and grew over something like 10 years as an open-source effort. Not surprisingly, YMMV (as with all OS software).
The hosted version (called OnRamp) would be the place to start - it's free, performs better (it's not all PHP), and gives you easy market integration (which the original comment was referring to). OpenX may or may not be what you're looking for, but at least you can test the waters without any initial investment other than creating an account and setting up a few tags.
I used to manage product/ operations for a large display ad network and now have an online ad startup. I am happy to help you with questions. Not sure I can answer them but should be able to at least point you in the right direction.
Ad networks are tricky. I did a lot of research on them and even built a small one at my last startup. They're easier the start than ever, but also riskier to grow than ever. Contact me directly if you want to chat. grantis_omega(at)hotmail.com
While I don't actually setup the networks, I do work with the ad sales team at Grooveshark (mostly in development for new proposals). This doesn't directly answer your question, but here's a few things I've learned:
1. Setting up a network outside of Google Ads is all about traffic. Most of the networks have minimum traffic quotas and won't really talk to you until you satisfy their requirements.
2. Most use Google's DFP (DoubleClick For Publishers) to serve/price ads.
3. Be aware that the lower quality ad networks are susceptible to malware intrusion which sometimes run through their ads and you will have no control over when they infect your users.
1. True regarding minimums. But ultimately depends on what your objective is. A company like Retargeter doesn't have minimums as high as some of the larger networks due to the type of campaigns they run.
2. Many use DFP, but many also use Microsoft ATLAS, Open X (an open source ad server), among others.
3. Definitely true. Shouldn't be a problem as long as you stick to the more well known names in the space. Another concern with lower quality networks is click-fraud.
On a similar note I was wondering if anyone had experience (as an advertiser) and had an opinion on the most cost effective advertising network for text ads?
Google Adwords seems overly competitive for certain keywords and seems to result in overpaying for traffic. As an alternative, Microsoft AdCenter has been effective - but I was wondering if anyone else has had experience on other networks?
I'm curious about this too. I've been toying with starting an ad network in my niche as well, but I'm still not sure if I want to head in that direction because I don't know enough about the process.
What's the best way to reach you privately to discuss about technology that works with ad exchanges? Also, are there any blogs/resources for someone interested in building something similar to invitemedia? Thanks
you'll need to contact a buyer at an agency. Be wary of being a 'remnant of remnant' ad network, your CPMs will be extremely low. Email me if you need any help.
There is very little room for new player in this space, and the players who have reached scale are very well funded.
Ad Networks will be a 'winner take most' market, and I do not suggest trying to play in it unless you have:
a) deep pockets b) some amazing technology that is really innovative and groundbreaking c) a disruptive business model d) massive domain knowledge (which you just said you don't have).
This is not the best beach to surf IMO. Any niche you've found that reaches any kind of scale will be taken by the bigger players who have hundreds of sales executives each.
The opportunity for bootstrapped ad networks is long over.