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Vertical Ad Networks: Evolution

Posted on Monday, Apr 14th 2008

Another big funding round in the vertical ad network world: FM raises between $40 and $50M from Oak Investment Partners. Valuation: $200 Million; 2007 Revenue: $25 Million; 2008 Revenue Forecast: $60 Million. Not bad!

My previous coverage of Federated Media is here, where I said that they need to focus and also roll-up some publishers to get to a better business model.

Interesting set of sub-categories emerging in the segment:

1. Ad Networks that power the Vertical Ad Networks (e.g. Adify)
2. Media Brands’ Ad Networks (e.g. Forbes powered by Adify)
3. Vertical Ad Rep Firms (e.g. Federated Media, Travel Ad Network)
4. Vertical Media – Vertical Portal + Ad Network + Ad Sales Force (e.g. Glam Media)

Of these, the maximum valuation has been awarded to Glam because of its comprehensive set of services, and vertically integrated business model. I pretty much agree with that being the best business model, which tells me, very clearly, that Federated Media, armed with the new cash, should go get itself morphed into a vertically integrated business, finance, technology media company along the lines of what Glam has done in Fashion.

Similarly, Travel Ad Network should also roll up a bunch of travel properties to get a better footprint, and a vertical integration. The Travel space is slightly more complicated, because of the considerable clout of the vertical search engines, of which, Kayak also intends to pull together a vertical ad network.

What, then is Adify’s destiny? I had suggested a merger with Kosmix to get its own Google-esque (Vertical) Search + Ad Network portfolio.

Right now, sub-category (2), i.e. Large Media Brands’ Ad Networks is the farthest behind. However, in a year from now, that situation is expected to change, as they learn to play their cards better.

This segment is a part in the series : Vertical Ad Networks

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[…] Similarly, Travel Ad Network should also roll up a bunch of travel properties to get a better footprint, and a vertical integration. The Travel space is slightly more complicated, because of the considerable clout of the vertical search engines, of which, Kayak also intends to pull together a vertical ad network.[From Vertical Ad Networks: Evolution – Sramana Mitra on Strategy] […]

Vertical Ad Networks Are About Advertisers | Venture Chronicles Monday, April 14, 2008 at 2:16 PM PT

there seems to be a lot of consolidation in regards to developing a vertical ad network. But it still seems like they’re unable to sell a big portion of their inventory. So the next question is: is it because of lack of good ad sales people or are advertisers still wary of such vertical ad networks as in the lack of transparency. I seem to hear agencies complaining of lack of inventory. Now the inventory is there and they don’t buy them. Why?

vanguyafo Tuesday, April 15, 2008 at 3:46 PM PT

Depends on the vertical. Travel is doing very well. Technology and Business, on the other hand, is lagging behind seriously. The networks are new, except Federated Media. Forbes is just launching in a test campaign mode.

As I have said earlier, the market is just developing. It will take 9-18 months for the CPMs and sell-through rates to get to interesting levels.

Sramana Mitra Tuesday, April 15, 2008 at 3:50 PM PT

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Catching Up on Readings - Sramana Mitra on Strategy Saturday, April 26, 2008 at 6:01 AM PT

[…] Readings: *Vertical Ad Networks: A Trend to Watch for 2008 *Vertical Ad Networks: Evolution *Building A Vertical Ad Network Powerhouse : Glam Media CEO Samir Arora * Conversation With Travel […]

Paid Content : Deal Radar 2008: Sportgenic Wednesday, September 24, 2008 at 2:24 PM PT

[…] Readings: *Vertical Ad Networks: A Trend to Watch for 2008 *Vertical Ad Networks: Evolution *Building A Vertical Ad Network Powerhouse : Glam Media CEO Samir Arora * Conversation With Travel […]

Deal Radar 2008: Sportgenic - Sramana Mitra on Strategy Wednesday, September 24, 2008 at 9:37 PM PT
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