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Targeting, Ad Network Spending Increase

Zeroing in by spreading out.

More than nine out of 10 US advertising agencies and advertisers buying online media plan to work with ad networks in 2008, according to Collective Media's "Ad Network Study 2008."

Nearly three-quarters of respondents said that they planned to spend more with ad networks in 2008 than they did in 2007.

Online ad networks represent multiple Websites that sell advertising and let ad buyers reach broad audiences across categories.

The networks are proving popular for both brand and direct marketing.

Ad network usage by both brand advertisers and direct marketers rose by nearly 20 percentage points in the 2008 study to 59.2%. Only 13.4% of advertisers said they only used ad networks for direct marketing purposes in 2008.

Overall, 40% of respondents in the Collective Media study said they planned to increase spending on ad networks by 10% or more in 2008. Three-quarters of those respondents said they would spend 5% or more of their overall online advertising budget on ad networks in 2008, and over one-quarter of agencies and advertisers said they would spend 15% or more on ad networks in 2008.

Behavioral targeting is a technique that depends on the kind of reach that ad networks can deliver.

eMarketer estimates that spending on behavioral targeting will represent a little more than 10% of US display ad spending this year and about one-quarter by 2012.

More than one-quarter of responding agencies and advertisers in the Collective Media study said that they mainly used ad networks for targeting.

Increased ad network interest may also help the ever-changing Internet portal market.

Even with their decreasing traffic, portals still attract mass audiences, which makes them valuable to many advertisers. If portals can build up their ad networks with targeting and tracking capabilities in addition to the central portal destination, they may become one-stop shops for advertisers.

"If the Big Four portals—Google, Yahoo!, MSN and AOL—can make this pay, they have unique advantages over other Web publishers," said David Hallerman, senior analyst at eMarketer. "They have the ability to combine the mass reach of a giant portal with the distribution and targeting capabilities of an online ad network."

"However, success is far from a sure thing," Mr. Hallerman said.

The eMarketer US Online Ad Targeting report will be published next month. Click here to be notified when it is released.

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