The world’s largest sports website, ESPN.com, is walking away from advertising networks, opting instead to sell ads directly. After recently leaving Specific Media, the site has turned down offers from other ad networks according to Mediaweek. This is the latest, and perhaps most significant story in a series of anti-ad network sentiment that has been traversing the Internet lately.
The key issue here is that ESPN.com feels it can sell the ad inventory on its site without having to give a commission back to the ad networks. Being a massive site with a highly coveted demographic, they are likely right. The question is, if ESPN.com is successful in going it alone, will other sites follow suit?
Ad networks function by utilizing a large network of advertisers to sell ad space on sites. This allows the site to focus on creating content while the ad network manages much of the business. However, with larger sites now able to hire their own sales teams, ad networks roles in those sites are decreasing.
While reporting that ad network Federated Media (which VentureBeat utilizes) was nearing a $30 million round of funding last week, we asked how it could maintain its base of publishers while taking a 40 percent revenue cut. Upon seeing this ESPN.com news, some of the larger publishers may be asking themselves the same thing.
This discussion is not entirely dissimilar from the one currently going on in the music industry. Quite a few notable artists including Radiohead and Nine Inch Nails have experimented with selling their music directly to fans, bypassing the labels. Such a move allows the bands to make a higher return off of sales — the same outcome ESPN.com is likely to see by walking away from ad networks.
Current online ad networks are also under attack from larger entrants in the arena. Yesterday, Forbes unveiled plans to launch its own ad network for up to 400 financial blogs. Google, also recently started testing out a new service called Ad Manager, a new advertising service that will allow users to take care of their own ad sales and fill in the rest with AdSense ads (our coverage).
Federated Media’s founder John Battelle is very aware of the problems current ad networks are facing. By focusing too much on building impressive platforms rather than addressing the core need of advertising that engages, “ad networks have become the problem,” Battelle notes. He lays out more thoughts in a Q&A with CNET.