Adify is a vertical advertising platform co-founded by Russ Fradin with former Flycast co-founders, Larry Braitman and Richard Thompson. I interviewed Adify’s CEO, Russ Fradin in 2007.
Adify is an online advertising platform that allows media companies to build and maintain vertical ad network. Advertisers can target specific niche audiences while Adify manages the backend operations. The platform lets publishers set terms about ad space availability and placement. Network operators (media companies) sell the aggregated inventory across multiple small publishers. Typically, Adify takes 10-15% of the revenue, and the rest is split between the ad network (40-60%) and the publisher (60-40%).
Adify promises to score where AdSense failed– by helping publishers monetize targeted inventory with higher CPM ads. The idea of letting advertisers connect with niche communities is a good one and certainly helped Adify in its second round of funding. The company raised $19 million in April 2007 by US Venture partners, NBC and Time Warner. In 2006, the company had raised $8 million from Venrock Associates.
The most important insight in Adify’s investment thesis, however, has been that major publishers have large ad sales forces, limited ad inventory, and great advertiser relationships, which could be much better monetized. By aligning these sales forces with the fragmented inventory in the web’s long tail, Adify hopes to create value for all concerned.
Several Entrepreneurs and global media partners, including The Guardian, The Washington Post, Reuters, Time Warner, NBC Universal, iVillage, Martha Stewart, Forbes, Comcast, IDG, and HotChalk, have either launched or announced Ad Networks on Adify. The latest feather in its cap is Gamers Media- the first vertical advertising network focused on casual gamers. Online gaming is growing, attracting more than 20 million unique monthly visitors. With the estimate that advertisers will spend upto $2 billion on online gamers by 2011, this seems to be a right move at the right time.
Adify, today, powers 91 networks at various stages of evolution. Some, like Martha’s Circle, are performing well. Others like Washington Post are failing, unable to sell the inventory that they have taken responsibility of.
A key learning for Adify and the networks is that it takes time to ramp a network, and the learning curve is high. I have been personally involved with three of these networks, and watched them fumble.
Meanwhile, DoubleClick– that was acquired by Google in 2007– has recently announced that it will offer a vertical ad networks for its DFP clients, which will put them in direct competition with Adify. I had earlier underscored Google’s weakness in this area. It is good to see that Google listened.
There 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. However, the market is still early, and based on my recent interactions with Forbes and IDG, my assessment is that Adify’s market will take at least another 12-18 months to develop.
In the meantime, some of the best CPMs in Vertical Ad Networks are being offered by the rep firms like Travel Ad Network (Travel), Federated Media (Business), and Glam Media (Women). TAN has already been on this series, and I have also interviewed Cree Lawson, its CEO. We will discuss Federated Media and Glam shortly.
For Adify, soon, the dilemma is going to be whether or not to raise more money. They have to allow until mid-2009 for their networks to ramp up and show success, before they should contemplate an exit. Meanwhile, they need the 18-month runway.
In the end, I believe Adify has the right model, and will be a top acquisition target for Google, Yahoo (Microsoft), News Corp, etc.
This segment is a part in the series : Deal Radar 2008