Classified advertising network or ad network

Classified advertising network or ad network is a company that connects advertisers to web sites that want to host advertisements. The key function of an ad network is aggregation of ad space supply from publishers and matching it with advertiser demand. The words "ad network" by itself is media neutral in the sense that there can be a "Televsion Ad Network" or a "Print Ad Network", but is increasingly used to mean "online ad network" as the effect of aggregation of publisher ad space and sale to advertisers is most commonly seen in the online space.
The advertising network market is a large and growing market, with the top 20 companies earning about $2 billion in revenues during 2007. This represents around 13% of the total display advertising market, forecasted to grow to 18% by 2010. This growth has resulted in many new players in the market, and has encouraged acquisitions of ad networks by large companies entering the market. For example, Google has acquired an ad network called Double Click for $3.1 billion.
Ad networks are primarily involved in selling space for online ads to appear. This online advertising inventory comes in many different forms, including space on websites, in RSS feeds, on blogs, in instant messaging applications, in adware, in e-mails, and on other sources. The dominant form of inventory remains to be third-party websites, who work with advertising networks for either a fee or a share of the ad revenues.
An advertiser can buy a run of network package, or a run of category package within the network. The advertising network serves advertisements from its ad server, which responds to a site once a page is called. A snippet of code is called from the ad server, that represents the advertising banner.
Large publishers often sell only their remnant inventory through ad networks. Typical numbers range from 10% to 60% of total inventory being remnant and sold through advertising networks.
Smaller publishers often sell all of their inventory through ad networks. One type of ad network, known as a blind network, is such that advertisers place ads, but do not know the exact places where their ads are being placed.
In most cases, ad networks deliver their content through the use of a central ad server.
Large ad networks include a mixture of search engines, media companies, and technology vendors.
Types of Classified advertising networks
There are three types of classfied advertising networks:
1. Vertical Networks: They represent the publications in their portfolio, with full transparency for the advertiser about where their ads will run. They typically promote high quality traffic at market prices and are heavily used by brand marketers. The economic model is generally revenue share. Vertical Networks offer ROS (run -off-site) advertising across specific Channels (example: Auto or Travel) or they offer site-wise advertising options, in which case they operate in a similar fashion to Publisher Representation firms.
2. Blind Networks: These companies offer good pricing to direct marketers in exchange for those marketers relinquishing control over where their ads will run, though some networks offer a "site opt out" method. The network usually runs campaigns as RON or Run-Off-Network. Blind networks achieve their low pricing through large bulk buys of typically remnant inventory combined with conversion optimization and ad targeting technology.
3. Targeted Networks: Sometimes called “next generation” or “2.0” ad networks, these focus on specific targeting technologies such as behavioral or contextual. Targeted networks specialize in using consumer clickstream data to enhance the value of the inventory they purchase.
There are two types of classified advertising networks: first-tier and second-tier networks. First-tier advertising networks have a large number of their own advertisers and publishers, they have high quality traffic, and they serve ads and traffic to second-tier networks. Examples of first-tier networks include the major search engines. Second-tier advertising networks may have some of their own advertisers and publishers, but their main source of revenue comes from syndicating ads from other advertising networks.
While it is common for websites to be categorized into tiers, these can be misleading. While Google is in the clear majority of advertisement impression served, other networks that could be labeled as tier 2 actually dominate over these tier 1 ad networks as far as the number of customers reached.