By Chuck Richard, Vice President & Lead Analyst - Outsell, Inc. - Hartsdale, New York

Outsell fields questions from publishers caught up in the new ad network arms race, worried they must be doing something wrong if they don't have their own ad network. Which is exactly the problem. A network made up of a single publisher's properties plus its "allies" defeats the purpose of aggregating thousands of dispersed properties that an advertiser couldn't efficiently deal with directly. New network BBN offers a three-way dose of relief from this dead-end trend.

Important Details: Four trade publishing companies have partnered on a new online ad network, BBN (Business to Business Network), that they estimate will reach 10 million users per month. BBN's central principle is to attract brand marketers normally outside the scope of trade advertisers. Cygnus Business Media, Nielsen Business Media, Reed Business Information and The McGraw-Hill Cos. are pooling inventory in BBN to give advertisers greater reach, including six million small business owners according to BBN estimates. People affiliated with BBN emphasize that its scale will be similar to the big business news and finance portals, making it very attractive to Fortune 1000 advertisers that have not historically spent significant portions of their marketing budgets with B2B trade publishers.

Derek Reisfield, a former CBS executive and founder of MarketWatch and the Chairman of the new venture, said the scale of combining these four companies' hundreds of sites will allow BBN to tap advertiser budgets previously unavailable to them through their own sales forces. "It will attract people into the B-to-B category that, for a variety of reasons, didn't feel it provides a solution for them," he said. "We now have a broad reach net with an attractive audience."

BBN will operate as a standalone, privately capitalized entity with none of the four publishing companies holding equity stakes. WPP Group's 24/7 Real Media is providing the back-office and ad serving technology and offering campaign management. BBN hopes to have a dozen salespeople within two years and will provide 100% of the staffing for the network. Phase 1 will offer display ads, with plans to expand quickly to e-mail, e-newsletters, webinars and other live promotions.

"We're about bringing [new] money into B-to-B, not changing the allocation among B-to-B ad buys," Reisfield said. "We're talking about money not spent in B-to-B." To avoid channel conflict, each publishing company can identify specific advertisers, or business units within companies or specific campaigns that it will not allow BBN to sell to. BBN sees small businesses as its primary target audience, filling a gap for companies such as American Express by offering attractive and efficient large scale B2B ad buys not previously available. In the past, the ad agencies AMEX uses had to deal with many individual B2B publishers to achieve similar results.

Implications: You need a scorecard these days to know who's on first in America's favorite pastime, "Let's Build an Ad Network!" Less than a year ago RBI launched the Reed Partner Network, and GlobalSpec announced the Industrial Ad Network (see Insights 21 June 2007, RBI Announces B2B Ad Network, Starting with Electronic Engineering). Forbes.com launched the Forbes Audience Network in November 2007 and in March 2008 topped that by announcing the Business and Finance Blog Network, across which it will sell ads. Never one to be trumped by anyone, Martha Stewart Living Omnimedia announced YAAN (Yet Another Ad Network) a few days later, made up of 25 lifestyle-focused sites such as FriendsEat.com and Christmas-Cookies.com.

No wonder Outsell is fielding questions from publishers caught up in this ad network arms race and worried they must be doing something wrong if they don't have their own ad network. Which is exactly the problem. A network made up of a single publishers' properties plus its "allies" defeats the purpose of aggregating thousands of dispersed properties that an advertiser couldn't efficiently deal with directly. Carried to its logical conclusion, the poor advertisers will face a gauntlet of as many B2B ad networks as there are B2B publishing companies! The other flaw lies in the target advertisers. If these so-called networks are targeting the publisher's endemic, vertical-niche specific advertisers, such as electronics, no competing publisher will want to join the network, limiting their reach.

BBN offers a three-way dose of relief from this dead-end trend. First, it provides scale. The combined revenue of these four companies, $3.9 billion, accounts for nearly 20% of the entire B2B trade publishing industry, which Outsell sizes at $21.1 billion for 2007.

Second, the Fortune 1000 target audience spends very little with B2B trade publishers. Cygnus reports very positive early experience from similar predecessor campaigns it has run that helped trigger the BBN concept. The Fortune 1000 advertisers were very enthusiastic about the quality and engagement of the professional audiences that Cygnus allowed them to reach.

Third, the foundation and design of BBN are based on advertiser needs, that is, listening to the paying customer. BBN addresses the reality of what happens at the big agencies of record for these Fortune 1000 companies. Even though the advertisers often request that a portion of the campaign budget be spent to reach B2B audiences, in reality, the consumer audience and consumer sites are the sexy part of the action and go to the senior account execs. The B2B portion "don't get no respect" and is prone to being dumped on entry-level staffers. These recent grads at the agencies aren't familiar with key B2B trade publishers and often find the path of least resistance to be spending money on Google paid search programs. By aggregating a large B2B audience and working with an industry blue-chip agency, WPP, BBN has a chance to entrench itself into the daily workings of these big-spending advertisers. And the opportunities are definitely not limited to online, as BBN can be a conduit for these advertisers to spread the B2B portion of their budgets across what's alread proven to be more effective, cross-media campaigns including print and events as well.

BBN consists of a closed group of four for the moment but has already been approached by other publishers, and indications are that after about six months, BBN will be ready to expand its membership. Given its fundamentally sound model, we expect there to be a waiting list. Nothing stops another set of publishers from forming a competing network with the same model, but having some of the biggest names in B2B trade publishing already in as founding members of BBN will make it hard for the next entrant to offer as sweet a buy to those Fortune 1000 advertisers.

Links to Outsell profiles of companies mentioned: 24/7 Real Media, Inc., Cygnus Business Media, Forbes, Inc., GlobalSpec, Inc., MarketWatch, Inc., McGraw-Hill Information & Media Services, Nielsen Business Media, Reed Business, WPP Group plc