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The Network Defect—And Why GrowthSpur Is Different

September 12, 2009

There’s a good essay—accompanied by vibrant comments—at MediaPost about the perceived evils of online advertising networks. It’s entitled “Ad Networks are for Idiots—And Here’s The Math to Prove It,” and that gives you a pretty good idea of its argument.

Indeed, most ads placed on sites by online networks are pretty crappy (“Lose Weight in 30 Days!”), and pay equally lousy revenue to site operators. As MediaPost reports, remnant ads that flood sites from ad networks pay a 27-cent CPM (cost per thousand), while ads sold directly by premium sites bring in more than average CPMs of more than $20. That’s a huge difference.

We’re watching the debate over networks with great interest at GrowthSpur, because a big part of what we’re doing is building ad networks for local sites. But the networks we’re building are nothing like the networks described by MediaPost.

Rather than pushing lowest-common-denominator national ads into local sites, GrowthSpur’s networks will ties together groups of sites in specific local markets. Those sites will sell ads themselves to local businesses who want to reach readers on all of sites in a local network. So instead of generic “Thin Thighs in 30 Days!” ads, a GrowthSpur partner can sell an ad to Joe’s Pizza that will run on multiple local sites serving actual local customers that Joe’s Pizza wants to reach. Big difference: Local ads, sold to local advertisers, by local sites, for local audiences.

In other words, rather than taking tawdry, generic network ads that pay pennies, sites in our local networks will be getting highly relevant ads from local businesses. They’ll be selling ads to businesses they know well and deal with regularly. And they’ll be able to offer advertisers broader local audiences via these local networks—and get a whole lot more than 27 cents for their efforts. We think that’s a win for everybody involved.

Local ad networks are just part of the GrowthSpur program. We’re also starting to work with local sites on providing tools and training to help them make money. But with ad networks being lambasted in articles like the one in MediaPost, we thought it was worth pointing out why the local networks GrowthSpur is assembling are different and better. A lot better.

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