

Ask HN: Who knows about Ad Networks? - cme

I'm a young entrepreneur who just launched a start up. In my niche I see an opportunity for an Ad Network, but I don't really know much about how to set one up. Could anyone mentor me on this?
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jasonmcalacanis
The ad network business is very crowded, the margins are getting lower and
Google is crushing it in display ads of late.

There is very little room for new player in this space, and the players who
have reached scale are very well funded.

Ad Networks will be a 'winner take most' market, and I do not suggest trying
to play in it unless you have:

a) deep pockets b) some amazing technology that is really innovative and
groundbreaking c) a disruptive business model d) massive domain knowledge
(which you just said you don't have).

This is not the best beach to surf IMO. Any niche you've found that reaches
any kind of scale will be taken by the bigger players who have hundreds of
sales executives each.

The opportunity for bootstrapped ad networks is long over.

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cme
hey jason, thanks for the response. Do you think this still applies even if
I'm not looking to grow this into a huge network? and instead just want to set
up a private invite only type? I'd hope to focus on quality in this network,
right now there really aren't any players in the niche I'm in.

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jeremyrwelch
There's really no room for a private, invite-only type network -- at least not
one that would make enough money to be worth your time.

One key you need to understand about the display biz now -- advertisers aren't
as focused on buying sites anymore. Instead, they think of it as buying
"audiences." Buying from a couple exchanges will give an advertiser reach to
95+% of the web. Add in some unique data with the built in targeting of the
exchanges, and you can make both very broad and very very granular buys.

There are actually players in your "niche", you just can't see them because
they are way too big. The large buying platforms are capable of targeting
users (audiences) on a very granular level.

The only real model that works now is:

A) create unique tech (dynamic creatives a la Like.com) or gather a unique
data set (preferably do both)

B) charge a premium for use of your unique tech / data while buying on the
exchange

With any other approach you either won't make much money (so big players not
interested) or won't find clients / leverage (big players too ingrained
already and will crush you).

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zachster
Check out OpenX <http://www.openx.org/>

In addition to setting up your own private label network, you can buy and sell
inventory on their exchange. This lets you appear bigger than you are. For
example, if you are able to sign up a publisher in your niche, you can
immediately start trafficking relevant ads to show him you're capable. You'll
make more money attracting Advertisers in your niche to buy those impressions,
but that's a chicken/egg problem that being part of an exchange helps with.

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jeremyrwelch
Open X is definitely a good tool to get you up and running cheaply, but isn't
as full featured as some of the other ad servers (ie. DFP)

Keep in mind that the entire display ecosystem is already on / moving towards
an exchange-based model (rather than a network based model). Most networks now
buy a lot of their inventory directly from the exchange.

So if you're looking to start your own network, you should be thinking about
building it on top of the exchanges, and you should also have some unique
offering: expertise in display / optimization, unique data set, etc.

~~~
zachster
There are a lot of plugins for Open X offering additional functionality. A
case could be made that as OSS, it's got the potential to face more challenges
than DFP, though obviously offer some additional ones as well (like having to
manage your own servers).

It sounds like the poster has a niche market he (or she) understands. In that
situation, I don't think technology needs to be a selling point.

~~~
cme
Yea I'm in a niche, I see an opportunity and feel that I have the connections
to bring publishers and advertisers together and create my own (small)
network, but not sure how to set it up (the technology side). I'm thinking
about doing an invite only type of network and focus on the targeted
advertising advantage.

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sachbh
I used to manage product/ operations for a large display ad network and now
have an online ad startup. I am happy to help you with questions. Not sure I
can answer them but should be able to at least point you in the right
direction.

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nedwin
I'm working on an ad network for the second time in 2 years. The key in my
opinion has been around sales, assuming you're a premium network.

It took me 2 years to understand the sales process and to make the right
connections at brands and agencies to make it work. YMMV.

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grantjgordon
Ad networks are tricky. I did a _lot_ of research on them and even built a
small one at my last startup. They're easier the start than ever, but also
riskier to grow than ever. Contact me directly if you want to chat.
grantis_omega(at)hotmail.com

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physcab
While I don't actually setup the networks, I do work with the ad sales team at
Grooveshark (mostly in development for new proposals). This doesn't directly
answer your question, but here's a few things I've learned:

1\. Setting up a network outside of Google Ads is all about traffic. Most of
the networks have minimum traffic quotas and won't really talk to you until
you satisfy their requirements.

2\. Most use Google's DFP (DoubleClick For Publishers) to serve/price ads.

3\. Be aware that the lower quality ad networks are susceptible to malware
intrusion which sometimes run through their ads and you will have no control
over when they infect your users.

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jeremyrwelch
1\. True regarding minimums. But ultimately depends on what your objective is.
A company like Retargeter doesn't have minimums as high as some of the larger
networks due to the type of campaigns they run.

2\. Many use DFP, but many also use Microsoft ATLAS, Open X (an open source ad
server), among others.

3\. Definitely true. Shouldn't be a problem as long as you stick to the more
well known names in the space. Another concern with lower quality networks is
click-fraud.

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iisbum
A quick way to get started might be something like this:
<http://buysellads.com/privatelabel>

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happybuy
On a similar note I was wondering if anyone had experience (as an advertiser)
and had an opinion on the most cost effective advertising network for text
ads?

Google Adwords seems overly competitive for certain keywords and seems to
result in overpaying for traffic. As an alternative, Microsoft AdCenter has
been effective - but I was wondering if anyone else has had experience on
other networks?

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acabal
I'm curious about this too. I've been toying with starting an ad network in my
niche as well, but I'm still not sure if I want to head in that direction
because I don't know enough about the process.

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jeremyrwelch
I'm an expert in online display advertising -- including networks, exchanges,
data, etc. Happy to talk in private, or can answer questions here.

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amstrad464
What's the best way to reach you privately to discuss about technology that
works with ad exchanges? Also, are there any blogs/resources for someone
interested in building something similar to invitemedia? Thanks

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niccolop
you'll need to contact a buyer at an agency. Be wary of being a 'remnant of
remnant' ad network, your CPMs will be extremely low. Email me if you need any
help.

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ari_
Post your email in your profile and I will be in touch. ari

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cme
The response has been great, my email is cpj1357@GMAIL.COM

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cme
Thanks!

