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  An early scene in “Men In Black II” has Will Smith telling Tommy Lee Jones that he [Smith] is “the new hotness” and Jones is “old and busted.” Except that during the rest of the thrill-ride Jones proves to The Fresh Prince and all of America that he may be old but he certainly isn’t busted. When it comes to online advertising, specifically what I call the “distributed inventory model” of ad networks, exchanges, DSPs, trading desks and related tools and platforms, DSPs* and Trading Desks are the new hotness, while ad networks are old and busted.

As Jones proves in MiB, the things he knows and does only he can do–and these things ultimately hold the key to winning the fight against galactic crime-lords. The same essentially holds true in digital marketing. Ad networks are lambasted nowadays by agencies, sales people, conference moderators and “Sh*t Digital Marketers Say” videos for being old, stuck in their data/targeting/optimization ways, taking too much margin for what they deliver, among other transgressions. In contrast, exchanges, DSPs, and trading desks are considered innovative, data-driven, and efficient.

 

That is all true – to a degree.

 

Ad networks certainly have faded to the background, mainly because universal access to exchange inventory allowed companies to focus on data, targeting and technology instead of inventory acquisition and management. This trend has been the main driver of digital display innovation for the last 18-24 months and there have certainly been innovative, with many clever and very effective things to come out of this trend.

But here’s where my opinion diverges from the pack. Ad Networks have one main advantage over the new hotness–inventory relationships. While DSPs and trading desks passively acquire inventory from exchanges, matching advertisers to cookies with little regard to site placement, Ad Networks still proactively forge and maintain relationships with their inventory sources. This means that Ad Networks can contractually negotiate specific advantages, like first right of refusal on specific content, cookies or placements, and a guaranteed yield for their publishers. Exchanges cannot offer these benefits. By incentivizing inventory suppliers the Ad Networks get the things that drive success before competitors. Not to mention these things can be done (and have been done for years) on a real-time, not pre-bought, basis.

Combining these benefits is powerful, as they bring stability that can offer advertisers direct primary access to users on specific content and placements. Ad networks are then able to optimize to cookies and content while exchanges and DSPs (mostly) do not, or cannot. Often DSPs have to overbid for lower-value cookies just to deliver campaigns, as many high-value cookies have already been scooped up by the time the DSPs get there. Ad Networks also avoid bidding environments and inventory competitions due to their contractual agreements with the publishers, keeping their prices and inventory stable.

It is important to note, however, that as the climax of “Men In Black II” comes and goes, teamwork is the most important thing to finding success, as it took the unique skills of both Mr. Smith and Mr. Jones together to be successful, and it is the same in the distributed inventory market. Using the new hotness is fine and encouraged–DSPs can be very successful despite my points above–but I guarantee that forgetting about the old and (not) busted is a mistake. Unless you want your digital display campaigns to be obliterated by Vogons. (But that’s a topic for another post.)

*While the actual term DSP (demand side platform) has a narrow technical definition, is has come to colloquially encompass any company that accesses display inventory from exchanges and applies rigorous data and targeting to that inventory.

 

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Over Joel’s now 7-year tenure in digital media, he has led digital media teams at Agency.com, Media Contacts/MPG, Charlotte’s Web Marketing and now Critical Mass, serving clients too numerous to list in a two-sentence bio.  Any success he’s had probably comes from shaving with Occam’s Razor every morning.