This speech was originally delivered at the Festival of Media in Valencia, Spain, on April 21, 2009.

Ad networks must evolve. They need to do more than they traditionally did, and do it better. Even though Adconion was founded as an ad network in 2005, I say “they” because we don’t put ourselves in that category anymore: Adconion is now an audience and content network.

Some might call this semantics, or marketing spin. On the contrary, it’s a new iteration and mindset that both ad networks and their partners, from brands and agencies to publishers, will derive immense benefits from.

The Industry Change

Scale will always be valuable – reaching a critical mass of Web users – but on its own it’s now woefully inadequate to all stakeholders in the online advertising ecosystem.  The first step in evolving the ad network model is to do the original business, just better; basically, helping brands and publishers more quickly and efficiently achieve their goals of effectively reaching a defined target audience.

It’s worth noting that agencies and publishers are under mounting pressure: brands are using fewer agencies even as marketing dollars are continuing to move online, and agencies have fewer resources to service more needs, all with a huge emphasis on performance. Publishers are squeezed by the challenging macroeconomic environment and generally declining CPMs.

Agencies in particular should look to evolved ad networks for support. Data is more valuable now than ever, and networks with flexible technology can build customized reports for agencies. These custom reports offer deeply nuanced analytics and new levels of granular insight into campaigns, and –above all – the audiences agencies seek to reach.

Combining Audiences with Data

A focus on understanding and reaching audiences is why Adconion now calls itself, in part, an audience network. We’ve aggregated a worldwide audience of nearly 300 million unique users, and using our own technology and ad server, have a wealth of very detailed data about these users. Combining this reach with tailored reporting and lots of quality data is incredibly valuable for agencies. Adconion empowers agencies with this formula, enabling rapid optimization, and other networks do and will seek to do the same.

We recently took our focus on audiences and data a step further by creating a deep technological integration with BlueKai, the intent-focused data exchange. This offers agencies even more insight into particular categories of Web users with proven intent from high-quality sources.  An example of the way evolved ad networks will deliver value to agencies is the Adconion Audience Exploration Report, a new product that identifies for advertisers which BlueKai users are interested in or have purchased their products, even if the advertiser is not currently targeting that type of user.

Enriching ad space – which has become a commodity – with data is a major key to the future of online advertising, driving better performance and higher CPMs. The same run-of-network ad unit, with no targeting is far less effective and valuable than the same ad unit powered by behavioral targeting or retargeting. Add rich media video, with the wealth of new information one can capture regarding video engagement, and it jumps again. This is win/win/win for agencies, publishers and the networks themselves.

The New Marketing Service: Content Delivery and Monetization

Of course, advertising also needs to expand into new formats to engage users and drive value to agencies and brands; branded video entertainment is one such format. Last year Adconion launched RedLever, our digital studio, which creates and distributes branded video for agencies. Earlier this year, RedLever developed Shop Girls of Madison Lane, a dramatic fashion Web series, for TRESemmé.  RedLever embodies the content piece of our evolved ad network model, combined with audience reach and understanding.

Indeed, content delivery and monetization is one of the new marketing categories that networks are naturally predisposed to move into. Adconion has Adconion.TV, our video content syndication and monetization network. Launched in Q3 08, it distributed Michael Eisner-backed Vuguru’s Web comedy series, Back on Topps, in addition to combining it with rich media advertising.

Between static ads and video, networks are well-positioned to be “content agnostic,” serving all types of material using the ad network infrastructure. Scale is crucial to unlocking larger video budgets, and coupled with the precise targeting enabled by a traditional ad network structure, there is tremendous opportunity.

Because video consumption online is increasingly fragmented, the majority of video consumption comes from the “push model:” where video content is pushed to web users and not pulled by them from portals like YouTube and Metacafe. Networks can deliver branded video – or any type of content – to Web users wherever they are online, whether it’s email, a social network or reading the news. This type of pushed content will be more discoverable and more compelling to users while simultaneously being tremendously valuable to brands.

This “push model” is like the new online television network: matching audiences with content bundled with advertising.

Conclusion

Ad networks sit at the nexus of brands, agencies and Web users. By leveraging strong relationships with agencies and the technology they already have in place, networks can and will propel the online advertising industry forward, in addition to stimulating the digital economy and pushing advances in content consumption along. To do so, however, they must evolve beyond simply serving ads – which is to say, beyond being “ad networks.”