Razorfish's Lanctot: Ad Networks Will Thin Out in the Next Year

As the economic downturn turns toward the ad industry, analysts and are online publishers are expecting the worst. Forecasts of boon times in the next year have been flatlined and some even expect a decline in online ad spend in 2009. PEHub spoke with Jeff Lanctot, chief strategy officer for interactive ad agency Razorfish, to get a sense of how ad executives are reacting to the downturn. Lanctot has more faith in display advertising than most, but thinks that things aren't looking so good for another stalwart in online advertising: ad networks.

Lanctot thinks that the most measurable online advertising (search) will succeed, but is confident that display advertising will be fine. Of course, Razorfish is invested in the success of display ads, announcing new social banner ads in August. Lanctot says that display builds familiarity with brands, which should not be discounted.

But while he sounds a bit bullish on display, Lanctot opines that ad networks ought to start worrying. He estimates that "dozens and dozens" of ad networks won't make it through the downturn and says that the glut of networks will thin out as the economy tightens and advertisers become more focused on efficiency:

“There are probably more than 300 ad networks up and running and they aren’t differentiated on technology. It’s all about arbitrage; they buy inventory for a low price and sell it for a higher price and add little value in between. I think there will be a real shakeup in that business over the next year. In a downturn, it becomes imperative for people to become more efficient, and in an efficient marketplace, I don’t think there is room for these players."