Ad Network Consolidation

Earlier this year, I wrote about the consolidation of spending on ad networks.   We’ve seen increasingly concentrated spending over the last several years, with the top five ad networks (by AA|RF spend) earning 71% of total ad network spending last year.  For the first half of 2008, the trend continued, with the top five’s share growing to 75%.  Narrowing it further, 60% of all ad network spending went to the top three.

In Avenue A | Razorfish’s 2008 Digital Outlook Report, we provided this commentary on ad network M&A:

With spending on ad networks increasingly concentrated with the largest players, it will become increasingly difficult for small ad networks to break through. Ad network efficiency is largely a matter of matching the right advertiser to the right placement, and the likelihood of being able to do so increases as a network increases its ad inventory and number of advertisers. This means the largest players should be able to best monetize ad space for publishers (and provide the most relevant inventory for advertisers). The bigger and more efficient the large networks get, the more ad dollars will be directed to them. It will become more difficult for second-tier players to earn ad budgets, and therefore less necessary for the larger players to acquire them.

I think that’s still accurate.�