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Vertical Ad Networks Take Root, Grow

Recent statistics and funding projects are a continued testament to the strong momentum of vertical ad networks' industry-specific approach to placing and distributing ads.

According to Adify's Vertical Gauge for Q3, released at the end of last month, brand advertising CPMs for various verticals continue to rebound from their depressed state in early 2009. Food CPMs are up 91% from the previous quarter, nearly doubling the category's Q209 average CPM of $3.63 to $6.94 in Q3 2009.

Real Estate CPMs ($7.62 in Q3 2009) are up 17% from Q2, a continuous increase since the vertical climbed 100% from Q4 2008 to Q2 2009, Adify also noted. Another top performing category is entertainment, where CPMs grew 8% between Q209 and Q309, representing the fourth consecutive quarter of rising entertainment CPMs.

Some Setbacks

Not all of the verticals performed well. Both automotive and healthy living and lifestyle verticals contracted substantially this past quarter. Still, though, that may be more of a reflection of economic trends than a vertical ad platform strategy, according to Adify. In another example, fluctuation in automotive CPMs ($12.47 in Q309) may be a result of the US CARS (Cash-for-Clunkers) program, which shortened the sales cycle for buying a car, focusing advertisers on search keywords rather than display branding campaigns to reach the target audience. In general, "we have seen tremendous growth in the amount of time users spend on vertical ad networks this year," said Russ Fradin, Adify president.

The firm's findings also lend credence to a study conducted earlier this year by comScore, Inc., which found that the collective reach of a group of vertical ad networks had increased substantially in the past year, from 21.5% of the total US internet audience in March 2008 to 57.1% in March 2009. These findings indicate that vertical ad networks are a growing phenomenon in the online advertising space, writes MarketingCharts.

"As more vertical ad networks prove their ability to effectively reach specific target audiences by aggregating mid-tail publisher sites, the industry will likely give greater consideration to these emerging ad delivery channels," noted Lesle Litton, VP, media at comScore.

New Categories

The ever-increasing types of vertical categories or subcategories are another sign of growth. A year-old start up called Bizo has closed on a $6 million equity funding round and is aiming to expand its efforts aimed at senior-level executives. The San Francisco-based company brokers ads targeted to qualified browsers whose demographics appeals to advertisers such as American Express and Hoover’s.

Bizo uses cookies to make sure the viewers are qualified, and also purchases user data from various sources. Unless you’re a top-level exec whose browser cookie says you have lots of money and like to spend it, you're not going to see Bizo's ads, said CEO Russell Glass (via Venture Beat). "We are putting 100% of the impressions in front of execs."

A more typical example of a new entrant to the vertical category market would be Burst Media's launch in September of an entertainment vertical ad network, which delivers nearly 70 million ad impressions each month. Many of the 150 websites in the Burst Entertainment Network have been pre-qualified to run custom advertising creative and rich media ad units such as expandables, in-banner video - in addition to customer sponsorships and placements.

Expanding Reach

Already established verticals are also reaching new milestones with their networks. This summer, the Grocery Shopping Network's reach expanded to 6.2 million consumers monthly - up from 1 million a year ago - and moe than 75 million impressions per month. Composed entirely of grocery-store websites, the Grocery Shopping Network uses standard delivery tools including DART and enables CPG companies to reach the consumers at the middle tier of independent grocers via its 5,500 store websites across the country.

Another example is Zillow, which expanded its newspaper consortium to launch an advertising network aimed at consumers looking to buy, sell or renovate homes. The ad network combines the audiences of Zillow and the 250+ newspapers' websites to reach as many as 63 million consumers who own homes, are shopping for homes, or are looking to dive into a home remodeling project.

Using the network, a San Francisco furniture retailer, for example, can simultaneously target local and national prospects searching for San Francisco homes on Zillow, as well as the local online readers of Bay-Area papers such as the San Francisco Chronicle, San Jose Mercury News and the Contra Costa Times.

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