Tuesday, October 28, 2008

Ad Networks on the way out ...

In the US anyway ...

http://online.wsj.com/article/SB122514803617173825.html?mod=fox_australian

Other ad networks "are in severe trouble and could be closing their doors in the back half of this year or the beginning of '09. People are bracing for the worst," says Ross Sandler, an Internet analyst at RBC Capital Markets.

When I was at adtech in April I was shocked at the amount of ad networks in the US - it was out of control. Funny thing was, none of them really had a point of difference. They sold eyeballs simply because they were there to be sold.

VC liked ad networks as there was a promise of low initial setup and large immediate returns. Problem is - there's really no long term asset in an ad network as you don't really own any IP - you sell banners on sites you don't own, through technology you don't own via agencies you don't own. Effectively you're an agent and not much more.

Yes, there are some great ad networks ... but not many. You could count on one hand the good networks in AU. Most have offerings that are primative at best - failing to capitalise on the gap for strong vertical buys and the need for exclusivity. Not to mention transperency ... but that's another matter.

In AU there's a lot of these operators - not as many as the US - but more than we need. How long until this space thins out?

1 comment:

Wembley said...

Oh you make some good points here, but not enough of them:)

Ad networks are everywhere and they are/will consolidate.

The premise that technology will make better decisions, at scale, than humans is a pretty compelling premise unless humans can get intel processors in their brains.

Also behavioural targeting is best delivered by high reach ad networks as it requires scale.

As an Ad network guy I tend to agree most will go. Be a shame though as the portals provide absolutely nothing interesting to talk about.