OPINION: Ad networks, RIP

While most of us in the digital world have been proselytizing at clients, trying to get them to embrace social and mobile, Facebook and Google have both been working hard to make the ‘ad network’ irrelevant. It’s time the networks wake up.

If you take into accuont the level of behavioral data, hyper-targeting capability and social intelligence that Facebook and Google can leverage to drive their ad delivery platforms, it’s fast becoming evident that very soon the good old ad network is going to seem like a Blackberry in an Apple/Android world. Was good but not good anymore.

The idea of ‘Audiences’ and ‘Inventories’ are being actively pushed out in favor of ‘fans’ and ‘stories’.  The CTR as a metric is being seriously challenged and metrics like PTAT are permeating the digital world.

Where does this leave the good old ad network?

Networks brought value by ensuring that clients could reach audiences based on behaviour, track them, target them and follow them across the web. It was brilliant! All you needed was a couple of techies to white-label a system and a solid sales guy who knew a few insiders at an agency or a client..and presto! You were on your way to making the big bucks. Brands were happy because it brought them efficiencies in buying. But when it came to targeting ROI, an open debate remained.

But those days are soon to be history. Consider the following hypothetical yet very possible scenarios:

1. Facebook extends its advertising into Facebook Connect-enabled publishers to drive highly targeted, social-driven advertising, and offers premium ad dollars for the same to publishers. With almost all of the top publishers leveraging Facebook Connect to drive social traffic, it only makes sense to drive both traffic and ad dollars together. Combined with the ad exchange that Facebook launched, the platform is poised to become a targeting + delivery engine on steroids.
2. Google integrates its GDN/AdMob/DoubleClick offerings into a singular offering that basically does everything that any ad network/DSP can do. Guess the engineers in Palo Alto are already working toward this.   
3. Third and most importantly, as media consumption becomes primarily driven by mobile, ecosystem owners start to exert more contol over the user experience. Apple has just done this with its IDFA (identifier for advertising) in iOS6. What’s more, Apple’s iOS6 even allows users to limit tracking. (I just enabled that feature, BTW.)

These scenarios are but a few among the probabilities of where we are headed. So where does the ad network stand?

With minimal innovation, countless networks, brands striking deals directly with publishers and social platforms driving audience behavior, the entire ad network ecosystem is fast approaching a point of being considered irrelevant or even obsolete.

Networks and agencies have been myopically focusing on packaging audiences and over-selling cost efficiencies. The network world has basically forgotten why it exists in the first place: to focus on driving reach based on audience behaviour, which BTW has long gone social and mobile.

Ad networks might currently be a US$20 billion industry, but if found to be laggards without a response to this fundamental shift in media consumption habits, it’s only a matter of time before they face the same fate as your friendly Blackberry. Our brutally unforgiving industry runs on an ‘innovate or die’ mantra. So before you go the RIM way, wake up and do just that…innovate.