Vertical Ad Networks – Huge potential for a good reason

PlayerSearch partners with Fantasy Sports Ventures to serve our sports focused ads, many tech sites partner with John Battelle’s Federated Media and many women’s focused sites partner with Glam Media. It appears that FSV is going to be the dominant ad network for sports sites. They have 90+ sites signed up, have raised a good amount of capital and, most importantly, they have the right rolodex full of contacts at the large brand advertisers from their 10+ years of experience working with the NFL. Oh, and they have no real competition at this point…that helps! In an interview with CNET, John Battelle makes an interesting comment about the range of CPMs that vertical ad networks can provide. This seems to apply very well with my positive experience so far with FSV.

John Battelle: “The industry is really good at direct response advertising on-line. The problem with vertical ad networks is that until you have engagement, integration, and proof of that consumer awareness, you are just going to keep devolving down to direct response pricing, which is sub $5 cost per thousand (CPM) for an ad.

We want it at the kinds of CPMs that supported the magazine and the cable industry, which is above $20, $30, $40, $50 cost per thousand. Advertisers will pay that once they feel like they’re getting that value for it, and once the media is created that proves that value, and it’s not just the publisher’s job to create that media, it’s the publishers working in partnership with the marketers and that what we try to do it with them.”

Techcrunch covers this interview here.

With Google AdSense a small site can hope to get about $1 CPMs…FSV has done an excellent job in less than a year of executing on direct response banner ads, as John describes them, that garner about $5 CPMs. So FSV immediately adds value to their affiliates by doubling the CPM that we could get otherwise. One of the challenges I see with any vertical ad network is that the quality of each site varies dramatically…so 2+2 is still 2 in many cases – marketers don’t want their brand/ads on poor quality sites and if that happens they certainly aren’t willing to pay a premium CPM for it. So adding up 10 million page views across 100 sites is not as valuable to marketers as going to Yahoo or MSN and getting the same reach on a single site. And as John points out, the engagement brand advertisers are looking for is currently very fragmented on most networks.

PlayerSearch brings a very unique value proposition to the FSV network. PlayerSearch can direct traffic to each affiliate by including their content in the search results and can improve their site to keep their users coming back more often by providing a much better search experience for their users…both actions increase page views for the affiliates which increases ad revenue for both the affiliate and FSV (FSV wins twice…once by serving ads on the search results pages and a second time by serving ads on the affiliate sites that receive the traffic from the search results; this is not unlike Google that wins twice as it serves Google AdSense on many sites that it sends traffic to). In addition, the high quality content (human editor approved) and user interface provides a high quality advertising environment for brand marketers. Once we are able to build the reach (assuming it is a matter of when, not if!!) we can work with the brand marketers to create high value promotions beyond banner ads that are worth the $20+ CPMs that John is talking about. That is the potential and the goal…now we just need to get there!