How to Start a Vertical Market Ad Network and Build a Valuable Asset

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1 How to Start a Vertical Market Ad Network and Build a Valuable Asset Prepared by: Andrew Nester Biz Strategies, Inc. [email protected] Phone:

2 Introduction: Vertical markets, also know as long tail or niche markets, are abundant and most need a dedicated marketing solution. Internet users are getting Internet savvy and specify in more detail what they are looking for with medium to long tail searches. Vertical or niche market ad networks are starting to gain hold as the best solution for advertisers needing to reach a long tail market, control their budgets, improve brand recognition and fill their sales pipeline with qualified prospects. Publishers (website owners) in long tail markets need to monetize their websites and get better market visibility to support their own brand and marketing goals. Even in this down economy there are hundreds of vertical markets that can support an advertising network business. Businesses need to maintain a market presence and generate sales in a cost efficient manner. People will continue to buy but only exactly what they need. Selecting and supporting the right niche market can provide an attractive income while building a valuable asset to sell or aggregate with other vertical market businesses in the future providing an exit strategy if that is ones goal. What is an advertising network? The basic definition of an advertising network is; an online, automated agency or broker, that automatically obtains digital ads from advertisers and automatically places the ads on multiple websites. What is a vertical advertising network? A vertical advertising network is an advertising network dedicated to a specific niche market. Vertical ad networks aggregate publisher websites in a similar market providing advertisers an economical, focused advertising solution across a wide viewer base creating quality leads to fill the advertiser s pipeline while improving brand recognition. Vertical ad Networks provide the publisher base with higher revenue for their ad space inventory on their websites as advertisers will typically pay more for ad views on market specific websites. What determines if a market will support an advertising network business? Demand Demand is determined through good market research which should include: 1. Keyword research to determine how people are searching for products, services and subjects of interest. Start with keywords you feel describes your market of interest then drill down from there to find the medium to long tail keywords. 2. Search Engines. Once you have assembled a list of keywords you should use various search engines to gain a better understanding of your market. This would provide you with page ranking of others in the market, websites that could

3 become clients, market trends and competition. This information supports your website design and marketing plan. 3. Trend Analysis to determine the history of searches and market growth forming a view of where searches and the market are headed for your niche. Google Trends is one of several good tools for performing one phase of trend analysis. Market trend analysis requires separate research. 4. Analytics as used here is for determining how websites in your niche are performing, how many visits per month do they get and supports trend analysis for websites. Most analytics packages will also show you keywords that got the viewer to the site. 5. Competitive analysis. Competition comes from several sources: a. Horizontal ad networks. b. Advertiser and third party websites that merely place ads on a few selected publishers web sites. They are not true ad networks. c. Publishers, website owners, that sell ad space on their web sites direct or through ad agencies. Publishers and Ad Agencies can still be candidates for your service. The above should result in a written needs and competitive analysis for review and determining if the market of interest can support a vertical advertising network. It should also be used to develop your marketing plan and website. How much does it cost to start an advertising network business? Costs vary with potential revenue volume based on the vertical market size, ad network platform licensing agreement, start up and ongoing marketing and support (needed and provided) for a your business. Actual costs would be determined during business plan development and type of ad network solution selected for your business model. Types of agreements available for developing an advertising network business are: 1. Entry level ad serving capabilities Supported by supplier and runs on ad network supplier s server. Cost usually include a start up fee plus revenue sharing ranging from 5% - 20%. Start up fees vary from *FREE* - $3500 depending on your business goals. 2. Strategic Alliance - Shared funding, revenue and support. Cost depends on Strategic Alliance structure. 3. Outright purchase of an ad network platform license. Ad Network solution is customized for your market Pay a lease fee in full for an exclusive market. May include source code for user modifications and ongoing tailoring to support market needs. Typical fees range from $15,000 to $125, Managed Hosting, Technical and Application Support Services. 5. Marketing Support Services. In addition to costs outlined above you have to figure in your operating costs for establishing and running a vertical market ad network business. You can provide services as a virtual business out of your home to start, and stay as a virtual home business, or grow to an office environment with an in house staff as the business dictates. Depending on how you are going to run your business, your experience in the market you are going to pursue, people and support you need, your market penetration goals and agreements listed above your operating costs can start as low as $2,500

4 employing a level one approach and you working for free until the business can pay you. Costs go up from there depending on your business plan and goals. How do I get started? A business plan is a must and the first step. 1. Pick the niche market you want to offer ad serving services to. It should be a market that you have work experience in, a hobby or a market you have a strong interest in and working relationships with others that could support your efforts. 2. Research the market on the Internet: a. Determine if the market of interest is underserved from a marketing standpoint. Do keyword searches to determine how many searches are made for products and/or services in the vertical market you are considering. b. Know the market economics and all market demographics. c. Research potential advertisers and publishers. d. Know targeted publishers website visits per month. e. Know the potential competition. f. Establish pricing goals. (Pricing for ad views can typically be higher for good reach in a vertical market) 3. Write your marketing plan. 4. Determine whether to develop or lease an ad network platform. 5. Determine what outside support you will need. Managed hosting technical and application support, marketing, funding and/or other. 6. Prepare a business plan. 7. Put funding in place. 8. Put agreements in place. 9. Develop a website. 10. If you chose to lease an ad network platform find a network solution provider that supports vertical ad networks. Some examples are: Start the marketing process. 12. Make money, have fun. How long does it take to be profitable? Good question. There are a lot of variables that come into play that will determine when a vertical market ad network might reach profitability. Your business plan should cover all the possible variables and give you the path to profitability. However, if you started with an entry level ad serving approach you could be profitable in 3-4 months. Most other plans can take 6 months plus. Market penetration is the pacing factor for determining when you will achieve profitability.

5 What leads to success? Demand + Relevance + Desire + Knowledge + Planning + Perseverance = Success Conclusion: In this down economy vertical market ad networks are becoming a larger part of businesses marketing programs. It has been proven that vertical market ad networks produce higher quality of leads as visitors to the websites they serve are already focused on what they are interested in. Vertical ad networks can produce six figure incomes for their owners while building a valuable asset. The further the reach into a vertical market the more focused ad views they provide makes the business more valuable. Adify a leading vertical ad network platform that services approximately 175 vertical markets with different levels of partners sold to Comcast in 2008 for $300M. Can your vertical ad network grow to a similar value? Probably not, unless you can build it to a level that a large media company like Comcast would be attracted to your niche. However, it can grow to a value of $2M plus in a *very* short period of time while providing you an attractive income. Start your Vertical Advertising Network today. For more information on how to move forward contact: Andrew Nester Web site: [email protected] Phone: The Vertical Market Ad Network is a Biz Strategies, Inc. solution.