How to Build a Vertical Strategy as an Ad Agency

Don’t you dare to say that you never fall for an ad that seems to be customized right for you. This is how vertical advertising works — targeting specific keywords, users’ interests, and behaviors associated with the specific industry.

Whether you are an ad agency that starts a media buying business and wants to choose a vertical specialization or the one that suddenly gets niche clients and demands specific traffic. It doesn’t matter. You’re in the right place to learn what a vertical in media is and how to apply that knowledge to your ad business strategy.

In this article, we will shed some light on how to start a niche ad agency, the verticals basics, best practices and strategies for promotion, and what tools to use.

Essentials: What Is an Ad Vertical and How Does It Work?

First things first, let’s become savvier and get the answer to the “What are traffic verticals?” question.

An ad vertical refers to a specific industry or audience category advertisers target with their ads. Basically, an ad vertical is a niche where you can focus your advertising efforts on particular buyer personas that are most likely interested in your products or services.

So, if some brand, let’s say, sells hiking equipment, they select a travel vertical advertising niche to reach people who’re interested in travel-related stuff. Or some travel blogs might use the travel ad vertical to display relevant travel ads to their readers, which can generate revenue for the blog owner.

In turn, advertising businesses may prefer to focus on one or several ad verticals to offer tailored services and stand out from the competition. Again, using the example above, it may be an ad agency that works primarily with outdoor & leisure brands or travel agencies and only buys traffic relevant to them.

Horizontal vs. Vertical Advertising: Choose Your Fighter

If there is vertical advertising, there should also be horizontal one. In contrast to vertical ads, which are related to just one distinguished niche, horizontal ads encompass a wide range of industries and might also target the general public.

Vertical ads target users likely to purchase a particular product or service as they are interested in an exact topic. By contrast, horizontal ads are handy for general promotion and brand recognition.

Both horizontal and vertical ad networks use various promotion channels. Yet, vertical ones always focus on the channels relevant to their chosen niche. In the meantime, horizontal advertising implies an ample approach for the brand to get the broadest possible publicity.

And, of course, both approaches have their benefits and downsides you have to consider before going for them.

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Pros of Horizontal Advertising

• Wider reach — horizontal ad campaign target a wide audience, so use it if your business needs far-reaching brand awareness.
• Cost-effectiveness — you can create a single advertising message or campaign and use it across multiple platforms and not spend the lion’s share of the budget on individual ad placements.
• Brand consistency — by using the same advertising message or strategy across different niches, companies can reinforce their brand identity and make it more catchy.
• Cross-selling opportunities — if you promote multiple products or services through a single advertising message, you can encourage the customer to consider buying extra items they might not need before.

Cons of Horizontal Advertising

• Lack of differentiation — an opposite to the cross-selling opportunities. If multiple products or services are advertised using the same message, it might cause decision paralysis — the users will simply be unable to choose a product.
• Limited targeting — despite its wide reach, yes. The same message just may not resonate with this broad public.
• Risk of overexposure — if the same advertising message is used more frequently across multiple channels, it may reduce its impact and become less effective over time.
• Decreased performance — if the ad is too broad or generic and, consequently, not relevant to all of the products or services being promoted, it leads to a low conversion rate.

Benefits of Vertical Ad Business Model

• Targeted approach — vertical ad strategy targets a topic-specific audience that ensures a more fitting ad message (meaning — less spending, better results).
• Higher conversion rates — with vertically targeted advertising, the conversion rates are generally higher as the ads reach the people interested in the product or service.
• Better ROI — since vertical ads target a niche-specific audience, ad spending implies less waste, as companies invest in the right ad placements and get a higher ROI.
• Reduced competition — you can focus on a specific audience that existing players may have underserved.

Downsides of Vertical Ad Business Model

• Limited reach — with a vertical advertising model, it is hard to reach a broader audience or expand into new markets.
• Increased cost — vertical ad campaigns are often more expensive than broad ones, requiring more research, planning, and customization.
• Difficult to measure ROI — quantifying the impact of targeting a specific market segment is troublesome due to long sales cycles in vertical markets, difficult metrics, lack of data, etc.
• Inability to adapt — focusing only on a single niche, businesses, and brands may miss out on opportunities to adapt to changing market trends and shifts in consumer behavior outside of their vertical.

As you see, both strategies suit better for different purposes. What to apply – horizontal or vertical ad business model – depends on factors like your business goals, budget, human resources, etc. Yet, spoiler alert: vertical ad strategy is a better option for small agencies. Keep reading to know why.

Why Vertical Ad Strategy is Better for Small Agencies

Because you’re a small agency. The answer is already hidden in a question. Don’t make those round eyes; just think: not so many hands to do everything, so unwittingly, you try to be a jack-of-all-trades.

Vertical niche advertising is more beneficial for small businesses and agencies because it allows them to put their resources and expertise in a narrow, niche-specific area. Thus, here the principle “the less — the better” applies.

Finally, with a vertical niche specialization, you can better fill in any gaps that larger companies can't fill. Your calibrated practices instead of "one-size-fits-all" strategies will set you apart from the competition. You might become a go-to agency for that particular industry and start getting maybe fewer but more quality and long-lasting clients.

Choosing a Vertical Ad Strategy

There are hundreds of vertical advertising verticals. I mean, hundreds, and this is not an exaggeration. But I won’t cover all of them in the article because it will take a month for you to read this post. Let’s just focus on the most effective ones.

A Quick Recap of Mainstream Ad Verticals

As I said before, the list of mainstream ad verticals is huge. But even with that in mind, some of the most cost-effective verticals exist, like real estate, food and beverages, startups, travel, B2B and software, fitness, health and beauty, and home and garden.

Travel and food verticals increased their ad budgets once again after the pandemic in 2020; real estate is still a top topic; fitness, health, and beauty flourish, especially in the online and e-commerce landscapes, and we observe the home renovation boom with almost enviable consistency.

So what strategy is applicable here? Luckily, there are plenty of traffic channels for the mainstream verticals:

• display banners are engaging and attract relevant leads;
• search traffic and contextual targeting works well for most of the mainstream verticals, so utilize Google power and SEO opportunities and maximize your chances to hit that very pain of the consumer;
• push and native advertising allows to add interaction and better user engagement;
• emails or newsletters might bring traffic of better quality and increase the conversion rate because people who opened the letter are more likely to be interested in your message;
• Facebook and Google ads are always before your eyes, in-built natively in the feed or displayed on the first page of the Google search.

Choose a couple of ways or combine them all — it’s up to you.

Specific Ad Verticals and Winning Strategy

Specific verticals are those you hardly find even on the second page of a Google search where, as we all know, it is possible to hide a dead body.

Betting, cannabis, gaming, adult, crypto — finding their traffic on mainstream platforms is almost impossible. They are restricted by Google, Facebook, etc., so working with them is challenging.

However, these ad verticals feature less competition and a lot of money, so you can build your ecosystem without restrictions and earn on display ads. Still, you must note that almost half of the ad strategies mentioned for mainstream verticals aren’t applicable here.

Now you’re wondering: OK, what strategy suits here better?

Gaming, adult, dating, and similar verticals are a perfect match with display ad banners, push ads (I might say they work perfectly with these verticals forbidden or limited in social media), or video format.

These ad types have the biggest impact on the audience and establish solid engagement. Also, make sure you utilize ad networks with adult traffic specialization.

Betting, trading, gaming, and crypto verticals also pair well with push advertising because it works well on various devices. Apart from display banners or video ads, add also native ads which provide a clear and engaging message.

Optimizing Ads Across Different Verticals

The guidelines here are quite similar regardless of the niche and vertical you chose. The points below are primarily about tests, analyzing, and close monitoring. I'm sure you are familiar with most of them, yet let's review the checklist to refresh your memory.

Vertical Ad Business Model From the Tech Side

Unlike search, social media, and TV advertising, to run digital display ads via independent channels like websites, apps, Connected TV, DOOH ads, etc., you need a demand-side platform (DSP), either provided by some tech company or built on your own.

Yet, according to our research, most agencies use up to 4 DSPs simultaneously because a single one doesn’t cover their traffic needs (especially if it is a niche agency). It is inconvenient for campaign management and analytics, as you must ransack them all.

And, of course, this is not a credible story for your business, as your clients will trust you much more if you have a branded solution.

Large and established agencies develop these solutions from scratch by hiring an in-house development team. However, this might not be a viable option for starting ad businesses due to budget limitations.

But what if we say it’s possible even if you’re a small agency? You can still build a proprietary DSP with white-label software.

Benefits of a White-Label DSP for Agencies

Generally, white-label software means you buy technology based on which you’ll develop your personal platform — rebrand it and add custom settings for your needs and goals.

Let’s see why white-label DSP is the perfect solution for the vertical business model and developing the business.

You gather traffic in one place and buy it directly

Lifehack: gather all the supply-side platforms (SSPs) in one place, connect them to Epom ad exchange (we’ll help you to configure everything), and buy the traffic for your clients from us. That is, it is easy to collect all relevant traffic sources in one place. So if you have a vertical ad network, this is exactly what you need to manage your business better.

You (and not the provider) are the platform owner

Yes, you might not own a DSP literally, but you will appear to your clients as its owner. White-labeling implies that you rebrand the platform by adding colors, domains, and logos to make your clients think it’s your tech innovation. Thus, you can stand out from the crowd with personal DSP branding.

You earn money from your clients’ self-serve activities

As you access the admin panel, you can configure custom permissions for your clients where they can bid on the traffic you buy from ad exchanges or directly from the SSPs. Thus, you earn money on the bid margin you put on the traffic you re-sell.

You get the data directly from the publisher

As you grow, you’ll be able to collect data directly from a niche publisher (bidstream data). This is possible thanks to the direct connection, while in the case with providers, you’ll hardly get any extra data.

Consequently, you can process these data and enrich targeting for your niche customers based on the custom parameters. With these customizations, you’ll perform better than your competitors and attract more clients. Profit!

Using Epom White-Label DSP for Your Business

Tailoring Epom white-label DSP to your business requirements is a no-brainer. Start step-by-step.

First, try our flexible free trial, where you pay only for traffic initially. Once you settle in, you might start light with a min commitment of $250/mo for the platform.

As you evolve, you can switch to a more advanced plan with the ability to set up direct SSP connections. There is no need to jump to it right away, but you’ll always have an option as you grow further.