JupiterResearch Finds Recent Consolidation will Strengthen Online Ad Network Market Despite Negative Reputation Issues

Business Wire, April 21, 2008

NEW YORK -- JupiterResearch, a leading authority on the impact of the Internet and emerging consumer technologies on business, has found despite negative feelings from advertisers, both independent and conglomerate ad networks will remain major players in the online ad market. The big four--Google, Yahoo!, MSN, and AOL--captured 60 percent of US online ad spending in 2007. With their wide-scale acquisition of third-party ad network companies in the past year, the major players may be able to offer true one-stop shopping in the near term, as indicated in a new report "The New Ad Network: Managing Relationships During Industry Evolution" published by JupiterResearch.

According to the report, ad networks do provide low-cost reach, however, only 23 percent of online advertisers using networks believe they are more cost-effective than individual sites, with many hoping to decrease use in the near term. As brand advertisers have increased spending on online display advertising, networks have increased offerings such as mobile and video advertising, full-service creative implementation, targeting, and custom integration with brand name partners' web sites. As much as one-quarter of all online ad spending flows through networks, and the majority of large advertisers and agencies have a contract with an ad serving company.

"The impetus for acquisition is obvious - for the conglomerates, the potential to improve their portfolio of offerings to both advertisers and publishers as well as overpower their competition theoretically lies in the control of ad servers and ad networks," explained Emily Riley, Online Advertising Analyst and lead author of the report for JupiterResearch. "Success will vary depending on expertise in sales and operations as well as across technology and inventory offerings."

Despite lingering negative reputations, ad networks can be sophisticated partners - advertisers that use networks are more likely than are other advertisers to believe factors such as improved measurability and tools tying online advertising to off-line behavior will play a pivotal role in improved advertising, and ad networks excel at and continue to improve on providing these features.

"After acquiring ad networks and ad servers to round out offerings, the near future of online advertising will look somewhat like pre-cable TV, with an oligarchy of powerful conglomerates controlling prices, audiences, and thus advertisers," said David Schatsky, President of JupiterResearch. "Much of the premium content on branded Web sites will remain beyond their grasp, but relationships with such sites will continue to strengthen."

The complete findings of this report are immediately available to JupiterResearch clients online at www.jupiterresearch.com. For details on JupiterResearch's methodology, visit www.jupiterresearch.com/bin/item.pl/methodology or email press@jupiterresearch.com to request a detailed methodology statement. For additional information on this report or JupiterResearch's Online Advertising research service, visit www.jupiterresearch.com or contact Kieran Kelly, Senior Vice President of Global Sales and Client Service, at 1-800-481-1212 or researchsales@jupiterresearch.com.

About JupiterResearch

JupiterResearch provides unbiased research, analysis and advice, backed by proprietary data, to help companies profit from the impact of the Internet and emerging consumer technologies on their business. The company helps online businesses make critical decisions about technology selection, spending, staffing, and Web site effectiveness; advises consumer-facing companies with online advertising, marketing, and customer service strategies to understand, attract, convert and retain customers; and guides technology vendors and service providers on market opportunity, positioning, product definition, and pricing. JupiterResearch is headquartered in New York City and has offices throughout the US and Europe. For more information, visit www.jupiterresearch.com.