My buddy Paul Fisher of Advent published some research last week showing that venture capital investments into ad technology are over $580m so far this year. Moreover Europe counted for 45% of the total in this sector, which is a lot when you consider that we only account for around 20% of venture investment across all sectors (by any sensible long term measure we should be nearer half, but that is another story).
There are some interesting looking businesses on Paul’s list, many with the general idea of pushing the web models to new areas – widgets, video and so on. I’m sure lots of them will go on to be very successful (including DFJ’s contextWeb) but I can’t shake the thought $580m is a lot of money to invest in companies that are largely chasing extensions to a market that is already largely consolidated – albeit a very large and fast growing market.
Which is why my thoughts have been turning to ideas and models that are more revolutionary, and I have become interested in permission based marketing/VRM and more recently publisher based tools for ad optimisation. What the online ad industry needs more than anything is a way to drive much higher eCPMs, and both VRM and publisher based tools offer the possibility of much, much, tighter targeting, based on the availability of a higher volume and quality of data than has been available to most current approaches.