“Online publishers are producing more inventory than the market demands…”

That’s an incomplete, and thus incorrect statement. Publishers are producing more inventory than the market demands *at the current price*. It’s simple economics — advertisers want to buy a certain number of ads at a $10 or $20 CPM. They will likely buy ten times as many ads at a $1 or $2 CPM (which, incidentally, may still be a higher CPM than what an ad network would provide.)

Of course, like the article mentions, many of the larger sites want to maintain the illusion of having “premium” brands, like Martha Stewart Living Omnimedia. I would argue that the market is finally realizing that $20 of premium is worth less than $5 of cheap.

That being said, they are also filling a need. Honestly — if you had 100 million ad impressions to sell every month, could your sales staff even come close to selling out every month, especially at the “premium” price? How about 500 million? 1 billion? I’m not making up these numbers — a very popular site can reach those levels.

The quote from Aaron Pilhofer is right on the money, but I’ve seen that TV sales people generally aren’t trained in the art of selling web ad inventory. Until that changes (and everyone should be working on that now), ad networks can help pay the bills. (As a side note, I would argue that the Pilhofer quote applies just as much to classifieds as it does to sales.)

It’s also fun to think about starting your own local AdSense, but do you have any idea how much work that would require? Tons of development, a diversion of focus from the main TV site, stiff competition in the marketplace… it’s a fascinating business idea, but based on what I’m seeing on most TV sites, it’s waaaayyyy beyond their reach.

But there is an arguement for many sites to use an ad network to grab some national ad money, or money that can be used to sponsor a special section (Say, a P&G buy to sponsor some special section across 50 sites).

The problem with a lot of the local ad networks that are being launched is that they’re being launched by companies who can’t sell the inventory they already have. Or even worse, they’re selling the network ads at a CPM 75% or more off the premium price.