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Vertical Ad Networks: A Trend to Watch for 2008

Posted on Sunday, Dec 9th 2007

I talked about Audience Fragmentation and the Rise of Ad Networks recently. At the moment, the Ad Networks are in the business of amassing large volumes of fragmented traffic, and offering a channel to advertisers to access the publishers who own this traffic.

Expect, in 2008, a trend towards these “mass” Ad Networks gradually becoming of higher quality via segmentation and “verticalization”.

The reality is that old media has started waking up and realizing that Google, Yahoo, AOL and a bunch of upstarts are eating their lunch, even though THEY are the ones sitting with the best advertiser relationships and ad sales forces.

The first of the old media companies to experiment with this phenomenon was Washington Post, through its Blogroll program. Now, if you are a blogger, you are likely to have been approached by many other burgeoning ad networks … Reuters, CNet, NYT, Forbes, Dow Jones … several are noodling entry paths into this business of aggregating fragmented traffic, and selling it to advertisers for a premium.

I started predicting that this would happen back in April 2007, when I interviewed Russ Fradin of Adify. It is, in fact, surprising to me that the Newspaper and Magazine world has taken so long to grasp the opportunity.

This trend, also, as you have heard me say before, is going to be the death nail for Google’s AdSense, because AdSense has really mistreated its small publisher customers.

Now, the old media players won’t have their act together right away. They have some learning and some experimentation to go through over the next 6-9 months. However, by the end of 2008, my prediction is that the vertical ad networks coming out of the shops of veteran media companies should be able to deliver CPMs that will be at a significantly higher level than that offered by Google AdSense, Yahoo Publishers Network, Advertising.com, Blue Lithium, etc.

And that is precisely what we, publishers, are waiting for.

Would Google sit around sucking its thumb, meanwhile? I sure hope not.

At the end of the day, the market is better served when fierce competition drives all players to raise the bar on their offerings. Google, for the longest time, has had an open playing field with nominal competition.

I, for one, can’t wait to see that dynamic change.

I, for a change, am rooting for the old media companies to get their acts together!

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


. A Trend to Watch for 2008
. Evolution

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Great post! You talk about this from a publishers perspective but this also has huge implications for advertisers as well….more targeted opportunities, better CPM and higher ROI.

Rick Jorgenson Monday, December 10, 2007 at 7:29 AM PT

Right on! How nice it is that the Google monopoly on online advertising is about to get its come-uppance.

George Shears Monday, December 10, 2007 at 8:39 AM PT

In the constantly evolving internet venue, it is only a matter of time before savvy entrepreneurs grasp this concept and run with it. Terrific!

Vicki Benson Monday, December 10, 2007 at 10:39 AM PT

The playing field is indeed being leveled as we speak. However, old media will not be the ultimate benefactors… small, entrpreneurial teams will be. A time is fast approaching where Google itself will be considered part of the dying breed, and 2008 will be remembered as a major turning-point.

Frank Newman Monday, December 10, 2007 at 11:14 AM PT

Keep your eyes peeled people because here comes, Rupert the Red Nose Murdock has a very shiny Dow Jones and he is definitely going to be a force in this market. He has recognized this and has told his Journo’s that they are stuffed unless they come to terms with the new wave.
I also believe that you will see a dramatic shift by Google in 2008. These guys didn’t get to where they are by being dumb and not tuned into the market they made their own, so happy days ahead…

Walt Raleigh Monday, December 10, 2007 at 7:00 PM PT

[…] Vertical Ad Networks: A Trend to Watch for 2008 is my piece on monetization of vertical sites and the emerging trend of vertical ad networks brought to light by players like Glam Media, Travel Ad Network, etc. […]

Trend Radar 2008: Verticalization Everywhere - Sramana Mitra on Strategy Tuesday, January 15, 2008 at 9:12 AM PT

[…] and will share his story in all its blood, sweat and tear. Cree’s venture also aligns with the Vertical Ad Network trend that we have been discussing […]

Vertical Travel Ad Network CEO Cree Lawson (Part 1) - Sramana Mitra on Strategy Tuesday, January 29, 2008 at 1:27 PM PT

I would love to see a small business and entrepreneur ad network.

jim Tuesday, February 12, 2008 at 10:11 AM PT

I agree. That is one that would get huge CPMs.

Sramana Mitra Tuesday, February 12, 2008 at 11:16 AM PT

[…] is no question that Vertical Ad Networks is a clear trend, and Adify is perhaps the furthest along and one of the best positioned to ride this trend. […]

Deal Radar 2008: Adify’s Market Taking Time to Develop - Sramana Mitra on Strategy Monday, March 10, 2008 at 9:58 AM PT

[…] Google AdSense was inadequate and compelled him to conceptualize what has now come to be known as a Vertical Ad Network. Battelle clearly pioneered a trend, and deserves tremendous […]

Deal Radar 2008: Federated Media Needs to Focus - Sramana Mitra on Strategy Wednesday, March 12, 2008 at 5:02 AM PT

Sramana;

Read your post on ad networks, and I’d like to schedule a demo of a new product we’ll be bringing out in the next few months. It is in beta testing at one of the largest publisher sites. For the media buyer/planner, our tools can predict the optimal number of impressions to buy on any site in order to optimize revenue.
The tools minimize the possibility of over/under purchasing impressions. We are just getting started in marketing the tools to the vertical networks. Given a budget, we can quickly show what the optimal spend should be on each site being considered in the network.

For the beta test, the main objective is to generate more page views from their in-site promotional ads. We are able to predict before an ad is put into production the impression level at which the promotional ad should be rotated out of circulation because the click-throughs will be insufficient to justify continued use. The models are also showing how to consolidate ads currently using 8 slots into 3 slots, but getting the same number of click-throughs.

dave carpenter Monday, March 31, 2008 at 1:36 PM PT

send me an email, dave.

Sramana Mitra Monday, March 31, 2008 at 6:41 PM PT

[…] Share/Send | No comments Check other articles in the series…Another big funding round in the vertical ad network world: FM raises between $40 and $50M from Oak Investment Partners. Valuation: $200 Million; 2007 […]

Vertical Ad Networks: Evolution - Sramana Mitra on Strategy Monday, April 14, 2008 at 11:48 AM PT

[…] Ad Network (TAN), the largest vertical ad network in travel, just closed a $15 million Series A round of financing led by Rho Ventures, Village […]

Travel Ad Network Raises Series A - Sramana Mitra on Strategy Monday, April 21, 2008 at 12:10 PM PT

I’d love to see somebody challenge Google’s model. Sure would make sense if there’s a player out there who can offer a better deal for advertisers like me (CPA?) and a bigger cut to all the small-time publishers who have no clue how to monetize their site anyway. Whomever gets there first certainly has a shot at snagging a hunk of GoogleProfits.

On that note, any tips for somebody spending $20k per month on Google CPC and wants to divert some of that money toward a vertical network?

casey halloran Friday, August 8, 2008 at 5:38 PM PT

Try Travel Ad Network if your campaign is travel related. Glam if Fashion related. Federated Media if Business related.

Sramana Mitra Friday, August 8, 2008 at 5:54 PM PT

[…] Media, was founded in 2005 by Robert Tas. Sportgenic has more than 350 publisher sites in its Vertical Ad Network and 21 million unique users. The company was ranked the #2 sports entity on Comscore as of July […]

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

“death nail for adsense?”

well, you’re a WINNER!

LOL Monday, April 20, 2009 at 8:26 AM PT

Hi there, I admit without reservation that I was wrong in predicting that old media would be able to get its act together. As we have seen, old media has done an absolutely pathetic job of executing on this opportunity. I have watched at least 2 of them very closely – Forbes and Washington Post. Both have been miserable failures in vertical ad networks. IDG is doing slightly better, but not terribly so. And hence AdSense keeps scoring into an unguarded goal post.

Sramana Mitra Monday, April 20, 2009 at 8:47 AM PT

Nice article… check this one out. Google got sued by a small publisher

Adam Tuesday, June 2, 2009 at 11:23 PM PT

That is a very interesting prediction. I also think we will see more video advertising networks like adwido

Michelle Friday, July 3, 2009 at 11:57 AM PT

well its 2009!
Sramana, have you heard or spoken to anyone at outsidehubmedia.com ?

i have a camping site and wonder if they can help or if they have any reviews

Ron Wednesday, September 2, 2009 at 7:29 PM PT