In March 2006, the largest percentage of Digital Media related financings have been in Online Advertising Infrastructure technologies. 28.1% or $93 Million was invested out of the total $331.4 Million in Advertising Infrastructure deals. This constituted 10 deals out of a total 48 media deals: AdBrite (Sequoia), AdKnowledge (TCV), Federated Media Publishing, Flytxt, Insider Pages (Sequoia), mFoundry, turn.com, TXT4, and a very high profile Sequoia-Accel deal in Israel, focused on cellular adverstising infrastructure, Upsteed.
Now, Online Advertising is clearly a market that has been created by the entrepreneurs and VCs in Silicon Valley over the last 10 years, and it still has plenty of wind in its sail. Google was the first real success in this market, combining Advertising Infrastructure with Search, now a proven winning formula.
Today, Microsoft legitimizes Massive, an in-game advertising play with a decent sized exit price tag.
In the 12 months to come, expect to see some more M&A in this general area, as some of the 50-100 odd ad infrastructure deals out there get picked up, after which the remaining will crash. Meanwhile, the competition will be fierce amongst those playing in this bubble to differentiate and survive.