There are over 300 ad networks

It seems every man and his dog is becoming an ad network these days. The latest to join this rather crowded party is Disney subsidiary SOAPnet.com. In the words of the Wall Street Journal (no link due to paywall):

The business of brokering ads across clusters of Web sites has become one of the  most popular — and overcrowded — niches on the Web. The result is a glut of  networks competing with each other, confusing media buyers and guaranteeing that some sort of shakeout is inevitable.

This tells me now might be a good time for a roll up play (e.g. Index’s recent Adconian), but unless there is some very special secret sauce this is no space for an early stage venture backed company. It is far too mature and competitive – by the Wall Street Journal’s estimate there are around 300 companies calling themselves ad networks.

The fact that Google’s biggest strategic move right now is to enter this market (through Doubleclick) says something about how they see search, which in turn says something about the prospects for a Microsoft-Yahoo! combination.

The current phase of internet advertising definitely feels like it is entering the endgame, where success is all about scale and squeezing the pips.

  • I certainly need to sort out a better advertising deal than we got right now. Any suggestions, anyone (something that actually bring real money)?

  • I certainly need to sort out a better advertising deal than we got right now. Any suggestions, anyone (something that actually bring real money)?

  • Wow, for guys who like each other, we don’t agree on anything!

    The ad network world is going to continue to innovate and consolidate for another decade or more, as it has for the past 10. Until brand marketing is tightly measured (which will take a Long time), CPM ads are extinct, and the networks are all pushed down to pennies per thousand (where lookery is starting and will remain), there will be a lot of turnover.

  • Wow, for guys who like each other, we don’t agree on anything!

    The ad network world is going to continue to innovate and consolidate for another decade or more, as it has for the past 10. Until brand marketing is tightly measured (which will take a Long time), CPM ads are extinct, and the networks are all pushed down to pennies per thousand (where lookery is starting and will remain), there will be a lot of turnover.

  • nic

    Scott – we may not be as far apart as you think. I’m with you in that there will be a lot of growth in aggregate ad network revenues, but my point is that absent some clever innovation I don’t think we will see new companies being formed and becoming very valuable. Clearly there is some clever innovation at Lookery.

  • nic

    Scott – we may not be as far apart as you think. I’m with you in that there will be a lot of growth in aggregate ad network revenues, but my point is that absent some clever innovation I don’t think we will see new companies being formed and becoming very valuable. Clearly there is some clever innovation at Lookery.

  • And I see Lookery as one of dozens of startups that are using web services, cloud computing, and the other new infrastructures to break the ad model yet again. We’re not the outlier you imply.

  • And I see Lookery as one of dozens of startups that are using web services, cloud computing, and the other new infrastructures to break the ad model yet again. We’re not the outlier you imply.