Of course, ESPN is in a better position to do so than the vast majority of web publishers – they reach a highly desirable demographic, have relationships with hundred of leading brands, and already have an advertising sales staff spread across broadcast, print, and online. Nonetheless, it begs the question of whether or not the furious acquisition and investment (see Glam and Adconion’s $80M+ recent fundings) in ad networks is justified, or whether they are simply the slumlords of the online ad market.
[img src="" caption="" credit="" alt=""]Taking a step back, the role of the ad network has traditionally been to fill inventory that the publisher can’t sell on their own – which, can often be 100% if the publisher is of a size where they don’t have the resources to hire salespeople or do it themselves. According to MediaWeek, unsold ads – known as “remnant inventory” – can account for up to 20-70% of all ad space at a given time. However, for big brands like ESPN, there is something to be said for these networks diluting their brand – if you're an advertiser why pay a $10CPM for a premium placement when you can go to an ad network like ValueClick, RightMedia, Specific Media, etc. and pay $0.25CPM?
Can that thinking spread to small and mid-size publishers as well? It comes down to math. If you bring online advertising in-house and can only sell 1/4th of the inventory that your network did, but at a 10x better CPM, it’s a profitable move. Further, your site will feature advertisers that are more likely to connect with your users, since you’re selling the ads directly to sponsors that match your demographics. With online advertising expected to see continued growth through the rest of the decade (see eMarketer projections), getting the math to work in your favor might not be so inconceivable.
Of course, this model is a stark contrast to much of the typical direct marketing (i.e. – click here to win a free iPod) ads sold by the ad networks. And, If Steve Rubel is right in that the online ad sales position will soon become an overly specific and irrelevant job, bringing online ad sales in-house might not require additional resources – rather, it would be an expected skill of your existing sales staff.
While all of that provides some justification for the likes of ESPN and other established publishers pulling the plug on networks ads, I don’t think it’s yet feasible for the so-called long tail of publishers to go it alone without the support of an ad network or boutique agency. Even if you’re serving a few million impressions per month, the minimum buys for most direct advertisers far exceeds the inventory you can provide, which is where the ad network's aggregation of sites becomes the value proposition for both the advertiser and the publisher.