Ad Networks = Influencer Marketplaces: A history lesson

Malik Reid | Jun 24 , 2017

Ad Networks = Influencer Marketplaces: A history lesson

Influencer marketing platformsarose under the same conditions as Ad Networks. This post is a part of a series that explores the past and present state of advertising, entertainment, and tech to predict its future.

 

The Evolution of Ad Networks

Traditionally, ad inventory was sold and purchased through internal sales teams that made confirmed buys against specific inventory. While the model provided comfort to review and predict, it faced major challenges as volumes grew.... and they grew faster than expected.

Publishers had difficulty engaging with multiple advertisers to sell, while advertisers faced similar bottlenecks to reach multiple publishers. Meanwhile, industry also witnessed gross fragmentation, dispersed audiences, growth in connected devices, and the expanding role of networks.

Beginning in 2000, we saw a rapid expansion of news, user-generated content, blogging and social networking sites, adding complexity for advertisers to manage inventory. The environment was set for the emergence of technology providers to aggregate, categorize, and offer inventory to run optimized campaigns, which led to the emergence of Ad Networks.

Evolution Breakdown:

The Digital Talent industry, from MCNs to influencer marketing platforms to Eleven, emerged under the exact conditions as ad agencies, Ad Networks, and Ad Exchanges. More UGC. More Social Outlets. History just repeats itself. 

This was written in 2014, so it was still early in the game; however, as those social sites grew, so did the influencer economy. Aside from the native ads, brands tried to tap into the influencers.

The Old School Way
“Traditionally, ad inventory was sold and purchased through internal sales teams which made confirmed buys against specific inventory.”

Unfortunately, the traditional entertainment industry has not yet made this leap. Talent isn’t priced on performance because you can’t quantify talent.

Pricing for talent seems fairly arbitrary, but it’s not. It’s because we’re dealing with talent (real people), not Facebook or Google. For example, Pepsi can’t just walk up to Beyonce and say, “I’ll pay you X if you sell Y cans of Pepsi.” That’s not how the talent industry works. Beyonce would look you in the eye and say, “I’m here to entertain. It’s your job to sell the Pepsi.”

You can’t just book a famous artist and expect to sell out a show with no promotion – you still have to do the work. The performance portion is all your business. In the end, you’re still responsible for making something happen with that talent buy.

Digital Talent is different, as it was never regarded as “talent” to begin with; rather, it was looked at as a marketing vehicle, with marketing purposes as its primary revenue source. Influencer marketplaces have adopted a little from both perspectives; though they don’t control the pricing of the talent, it’s your job to "close the deal" after the purchase. Most allow advertisers to see their cost breakdown on an influencer based on metrics like CPE or CPM, although they aren’t necessarily forced to sell that inventory on a fixed method.

Doing things the Old School Way cannot scale.
“While the model provided comfort to review and predict, it faced major challenges as the volumes grew, and volumes grew faster than expected.”

As demand increased, things got worse. Time was wasted, money was lost, and goals were unmet. Imagine going from having to negotiate with Facebook or Google each and every time you wanted to run an ad. That gets really old, really fast.

“Publishers had difficulty engaging with multiple advertisers to sell...”

Before influencer marketplaces, finding a brand to sponsor content was extremely difficult for an influencer, especially without representation. That’s how the “Digital Talent Agent” role came into existence. These influencers were simply looking for more ways to gain sponsorship revenue. Influencer marketplaces solved that by providing an inbound-like strategy to attract sponsorship, but the inbound is limited to the advertisers on that particular platform.

“...While advertisers faced similar bottlenecks to reach multiple publishers.”

If you’ve ever tried to run a campaign with more than 10 influencers, you know the feeling. Shoutouts to all the interns who manually found email addresses of YouTubers before we had marketplaces like Izea, Famebit, or Grapevine.

“...Meanwhile, industry also witnessed gross fragmentation, dispersed audiences, growth in connected devices and expanding role of networks…”

Over a decade ago, Ad Networks began appearing. They were just starting to get mobile ads popping, but they saw a similar shift we’re experiencing now. In fact, fragmented attention is more a problem now than when this came to fruition. Between Snapchat, Twitter, FB, Netflix, Musical.ly, Live.ly, YouNow, and YouTube, who has time to watch commercials?

"Beginning 2000, web saw rapid expansion of news, user generated content, blogging and social networking sites, adding complexity for both publishers and advertisers to manage inventory.

A few years ago, we saw a rise in what we now know as Influencer marketplaces, in an effort to capitalize off the new "Influencer" ad unit. It's the same story!

The environment was set for emergence of technology providers to aggregate, categorize and offer inventory to run optimized campaigns. and Ad Networks were born!"

Boom! Here we are. This is where the game shifted and influencer marketplaces cover this. While they aggregate and categorize publishers for advertisers, they don’t deal with “inventory” at all. Eleven is actually bringing that convention to the talent realm.