Adify joins Cox Enterprises
Adify Customers, Partners, Employees and Investors –
Early Tuesday morning (4/29/08), we announced that Adify has agreed to be acquired by Cox Enterprises. Cox issued a press release and the Associated Press has written about the transaction. The transaction is expected to close in early May.
When we founded Adify in October 2005, our vision was to enable entrepreneurs, venture-backed startups and major media companies around the world to extend their reach by creating and managing their own premium media networks. This vision sprung out of our management’s deep experience with ad networks in the mid / late 90s and our insights in the early part of the decade about what publishers and brand advertisers require as budgets continue to shift to online.
From day one we realized building a technology platform and services company for our customers had to be as much about the service as the technology. We spent over a year building the first version of the product and helped our first customer launch their network in December 2006. In the year and a half since we launched we have been truly blessed to be able to count 108 networks as Adify customers – from one-person driven networks building category leaders in their specific areas of expertise to the largest media companies around the globe and many folks in-between. As we have grown our customer base we have focused deeply on our network partners and their constituents – advertisers and publishers. We have continued to build and improve the technology adding more features and functionality while continuing to invest heavily in our integrated account services to ensure our network partners’ successes.
As Adify began raising our third round of financing to fund our expansion, Cox Enterprises, based in Atlanta, expressed interest in acquiring us. Although Adify was not seeking an acquirer, Cox’s history, resources, and people demonstrated that it would be a very compatible business partner and the perfect home for our company. Cox is a 100+ year old diversified media company with a long history of investing in new media businesses, serving the advertising community and, above all else, a company-wide dedication to customer service. Their known reputation for superior service all starts with a deep commitment to investing in their employees. Operating Adify independently within Cox will enable us to continue building Adify by giving our company considerable new resources to deliver superior value to our customers and to compete in the online advertising marketplace.
Our management team is committed to partnering with Cox and their many brands and continuing to build Adify for many years to come. I love this business and I love our customers. Adify’s commitment to the future of vertical ad networks and the people who build and buy them is stronger than ever with the enthusiastic support of Cox Enterprises behind us.
All too often high-tech companies build nice businesses and sell them with the founders packing their bags and leaving their early customers “high and dry.” We do not plan to have that happen here.
To all of our employees, the next phase of our development promises to be exciting – thank you for your continued commitment to our customers’ success.
To our investors, thank you for trusting our idea and trusting us.
To advertisers who advertise on Networks powered by Adify to reach over 80 million unique visitors worldwide on unduplicated, quality websites, thank you for taking the step to advertise on the quality mid and long-tail.
To publishers in Networks powered by Adify, thank you for joining, writing and developing great content and great audiences.
To all our network partners, thank you for trusting us to help you build your businesses over the last 2 years. We would not be here today without you and we hope to continue repaying your trust for many years to come.
Russ Fradin, CEO
Lehman Research Looks to the Future of Online Advertising
In its latest equity research report, the investment bank Lehman Brothers has identified “what is becoming an increasingly important component of the online advertising value chain – vertical advertising networks.”
The independently-commissioned report, written by Lehman Brothers Senior Research Analyst Douglas Anmuth, views vertical ad networks as “a natural evolution driven by the fragmentation of the Internet”. The change, according to Anmuth, is being motivated by growing advertiser demand for specific audiences rather than mass reach. Because advertisers are willing to pay a premium to reach these specific audiences, Anmuth predicts that vertical ad networks “are well positioned to take a larger share of the online advertising market.”
Supporting this prediction are recent statistical trends. Anmuth notes that, during 2007, the vertical category grew by 43% to reach a 39% share of overall advertiser billings. Contrastingly, the portal category’s growth was negative, slipping 5% to end at a 19% share of overall advertiser billings.
Why are portals losing market share to verticals? The reason has to do with media fragmentation, and the challenge that it presents for advertisers.
Website visitors’ level of engagement with online content tends to be stronger when they are visiting smaller “long tail” sites and blogs, rather than when they are visiting large portals. This is evidenced in the below graph from eMarketer, which uses interaction rate (the total number of unique interactions per impression divided by the total ad impressions) to measure engagement.
This higher engagement is likely due to the specificity and uniqueness of content that long tail sites provide: only they meet the insatiable hunger for niche content that characterizes the Web’s most passionate users.
The challenge for advertisers lies with the sheer number of long tail sites, and the difficulty in reaching their widely-dispersed visitors. As noted in the Lehman Brothers study, advertisers are increasingly recognizing that vertical ad networks provide a convenient means to reach these highly-engaged individuals. The value of verticals is especially compelling for traditional brand advertisers, who, notes Douglas Anmuth, “have a greater sensitivity about the placement and context in which their ads appear”.
The Lehman Brothers study also describes the emergence of “white label” network management solutions:
These “white label” solutions make it easier for a leading category publisher, such as Forbes in finance, or Martha Stewart in home and living, to launch a vertical ad network without significantly investing in technology. They also enable the main publishers to focus on the advertising relationships without having to build and maintain the technology to handle the ad-serving, yield management, and the analytic tools. Forbes and Martha’s Circle are using Adify’s vertical ad network solution for their vertical networks.
Anmuth’s recognition of Adify as the leading white label provider in the vertical space is furthered by the fact that over 100 vertical ad networks currently run on the Adify platform. The Lehman Brothers study bodes well for advertisers, networks and publishers who have aligned their strategies with this emerging trend.
Enough Already - Figure out the difference between performance and vertical ad networks
In the last couple of days, very smart reporters have written articles deploring the proliferation of ad networks in light of announcements from Forbes and ABC SOAPNet and others. The problem isn't the proliferation of ad networks, but rather the proliferation of web sites and the audience tendency to spend more than 60% of our time on smaller sites that address specific interests we have at that moment. Performance ad networks have existed since the mid-1990s to aggregate together unsold, remnant inventory from large sites into packages that delivered incredible reach for direct response advertisers. There are many of them and media buyers have to decide which combination of inventory and technology will meet their direct response needs.
Vertical ad networks are another entity entirely because they are composed of unique, high quality inventory that is cultivated, reviewed and enhanced through alliances with major media companies or very focused, savvy entrepreneurs. For the media buyer, this is an exact answer to the fragmentation and proliferation problem. Trusted editors are affiliating their brand with high quality content that attracts complimentary audiences that media buyers can access through trusted, long-term sales relationships. Determining which Vertical Ad Network to work with is easy - what audience do you want to reach? Which major sites reach that audience? Do they have extended reach with mid- and long-tail sites? Or do you know a specialist who has unique, high quality inventory reaching that audience?
All ad networks are an answer to the ever expanding growth in number of web sites. Vertical ad networks do the expensive work of finding the highest quality web sites focused on very specific audiences and then building a community that shares traffic, content and revenue in order to deliver that audience efficiently to premium advertisers. There will be "enough already" when new web sites stop emerging on the web. Until then - welcome the Vertical Ad Networks and insist that they live up to their value proposition of cultivating and binding unique, high quality content that attracts a common and valued audience.
Ad Mark Tech - Adify will satify and gratify
Michael Katz, the author of Ad Mark Tech, captured the gist of what makes Adify interesting and compelling.
From his blog...
...Two and a half years ago Adify recognized that there was a tremendous adoption of the internet by every day users. In addition a huge volume of the audience of advertisers wanted to broaden their online reading. As a consequence, advertising dollars began to move online at a very fast pace. Media companies that had existing relationships with solid advertisers were running out of inventory due to demand for editorially based advertising. Basically there were more advertising dollars than there was premium advertising space. At this time, Adify spotted that every major media company would have this problem....
For more - please visit AdMarkTech.com
Ride the net's long tail through tough times
On iMediaConnection:
The key to ad buying in a recession is to spend efficiently. Here's how vertical ad networks can help make that happen.
These past few weeks there has been a lot of talk about the changes happening with the world's financial markets. In January 2008, the NASDAQ bounced around, falling 317 points (12 percent), and even the venerable Google, the bellwether of online advertising stocks, fell from 685 to 584, an almost 15 percent loss. Tuning in to the evening news, you can hear talk of the R word (recession), and Google Zeitgeist reports a huge jump in that term's search popularity in 2008.
Of course it's still very early to say what will happen to the global economy, and we probably won't know that we're in a real recession until we've been in one for several months, but this current financial situation actually offers great opportunities for savvy advertisers. Compared to previous recessions, the key difference today is the opportunity to leverage the long tail of the internet to maximize the impact of advertising campaigns and reach target customers who spend more and more time on more and more sites.
More on iMediaConnection.
Intra-network content syndication with Adify Widget Share
What distinguishes a vertical ad network from a performance ad network? Three things:
1. Unique, high quality websites with passionate, engaged audience that cannot be efficiently reached directly by advertisers
2. Premium Rates
3. Publisher control over ads AND advertiser real-time visibility into sites
Great vertical ad networks become MEDIA NETWORKS that serve their visitors when the network makes visitors aware of other quality content of interest. These networks drive traffic around their network and monetize it through premium quality advertising. The publishers in these networks are part of a loose confederation of experts and thought leaders on particular topics.
Today (March 25, 2008) Adify unveils Adify Widget Share - our content syndication platform to enable Adify Network Builders to syndicate any kind of web-ready content – HTML, Javascript, Flash, iFrames, RSS, JPEG, GIF, etc. – within their community of invited and accepted publishers. Some networks are creating badges signifying membership in their exclusive community. Some networks are creating widgets of real-time RSS headlines of new information across the network – such as the RSS widgets IDG has created for their new IDG TechNetwork that can be seen at Datacenterknowledge.com and Datacenterlinks.
Many of Adify’s innovative Network Builders are building and syndicating widgets to deliver quality content throughout their networks and increase traffic to all their publishers. In addition, the debate over the role of ad networks (and the differences between networks) raged as Forbes and IDG unveiled new vertical ad networks (powered by Adify), Martha Stewart spoke of the responsibility of brand stewardship as part of her vertical ad network and ESPN opted out of all remnant ad networks. It’s clear that all ad networks are not equal. Some of the industry watchers are noting that Vertical Ad Networks are a compelling value proposition that publishers, advertisers and media companies need to consider. We expect that Adify Widget Share will further differentiate Networks Powered by Adify and extend the value of Vertical Ad Networks.
Comparing Apples to Oranges with Google AdSense CPM
Publishers are often striving to optimize their earning potential, and they face difficult choices while evaluating different ad network partners. If they’re considering the possibility of joining a premium ad network, or evaluating the performance of the networks they’re currently using, it’s critical that they compare performance metrics consistently across networks. If they have to make “apples to oranges” comparisons, they may form an inaccurate perception of which network is delivering real value for them.
Of all the performance metrics they’re likely to compare, eCPM (effective cost per thousand impressions) is perhaps the most important. But which eCPM measure are they using? The industry standard practice, shared among virtually all ad networks and ad industry associations, is to use Ad eCPM. For example, if a publisher has an Ad eCPM of $1.00, they’re making an average of $1.00 for every 1,000 times an ad is displayed on their site.
Here’s the challenge: the popular remnant ad network AdSense uses a different metric that they have named Page eCPM. This metric calculates a publisher’s revenue based on the sum value generated by all the ads they have on a given page.
If a publisher’s site has more than one ad per page (as most sites do), their Page eCPM will always be higher than their Ad eCPM. In fact, the non-standard Page eCPM metric typically runs 100% to 200% higher than the widely-accepted Ad eCPM metric. Thus, if the publisher is using AdSense to monetize their leftover inventory, they should be careful when they compare. They may get an inflated perception of how AdSense has been performing for them.
How can a publisher get an accurate understanding of their true AdSense eCPM? There is a way to find Ad eCPM in the AdSense interface, but it requires a little digging in the data. Here’s a hint: it can’t be found in the Account Overview.
The publisher should log into AdSense and click on Advanced Reports, under the Reports tab. Down the left side of the screen, they will see “Show Data By”. Below it, they should open the drop-down menu and select “Individual Ad”. From there, they can adjust the date range and other preferences, and then click “Display Report”. The resulting report will show Ad eCPM in the second-to-right column.
It can indeed be disappointing to view the true remnant eCPM, compared with the eCPM a publisher thought they were earning with AdSense. But there’s no reason to despair. AdSense is a very efficient seller of last resort. There’s no reason not to continue using AdSense, or another remnant network, to monetize leftover inventory. But publishers deserve the opportunity to participate in high-eCPM buys from brand advertisers too. An Adify-powered premium vertical network can bring that opportunity.
The Long Tail Starts Wagging the Dog
"Why does a dog wag its tail? Because a dog is smarter than its tail. If the tail was smarter, the tail would wag the dog."
Wag the Dog. (2008, March 1). In Wikipedia, The Free Encyclopedia. Retrieved 01:14, March 8, 2008
AdAge.com recently announced that for the first time in four years, Avenue A/Razorfish saw a shift in their ad dollars from portals - down to 19% from 24% - to smaller sites and blogs of the Long Tail. Just as was seen in the past in other media channels, such as television and print, large, mass-appeal properties are beginning to lose their efficacy to engaging, niche sites. With this admission from a prominent agency, the question that should be heavy on the minds of advertisers and agencies is – if the Long Tail is starting to wag the Internet Dog, how are you going to grab some Tail?
AdAge.com’s article implies that many advertisers are indeed trying to grab some Tail, but they haven’t quite figured out how to best get the job done. Jeff Lanctot, Vice President of Media and Client Services for Avenue A/Razorfish, pointed out that spending on smaller sites was accomplished not only through ad network buys, but also through direct buys. While ad network channels may provide reach, they are not known for their quality or transparency and they source most of their inventory from the unsold impressions of the large sites. On the other hand, as the Long Tail grows, how can advertisers and agencies be expected to sift through millions of niche websites to find one worthy of a direct buy? And to complicate matters further, even if they do find that needle in the haystack, that particular publisher may not even know what an insertion order is. With the speed of technology and constantly evolving ad types, part-time and hobbyist publishers will likely never get past Adsense if they go it alone. So while both ad networks and direct buys can admittedly get you a piece of the Tail, they are hardly safe and scalable methods of doing so.
Figuring out how to tackle that tricky Tail isn’t about taking risks or doing all the dirty work yourself. It’s about leveraging the expertise and efforts of category professionals who have made it their full-time job to bring together the best of the Long Tail under a brand reputation – Grab some Tail!
Vertical Ad Networks and Ad Exchanges
With new vertical ad networks launching (almost) daily and confusion about the role of Vertical Ad Networks, Performance Ad Networks and Exchanges, Adotas published Adify's analysis and analogy to help advertisers and agencies create a balanced, high return portfolio for their online advertising spending.
Over the last twelve months, there’s been a lot of attention on a new category in the online advertising ecosystem – the ad exchange. Acquisitions by Microsoft (ADECN) and Yahoo! (Right Media) and new offerings from Doubleclick reinforce that there is a real role for ad exchanges. It is a mistake to overstate this role, especially in reference to other parts of the advertising ecosystem. Historical analogy demonstrates exactly what the strengths and weaknesses of exchanges will be – can drive prices lower but require very knowledgeable buyers staying informed about all the factors influencing “asset” value. Vertical Ad Networks seem to be launching daily and the reason is that a quality vertical ad network is like buying into a mutual fund, rather than directly on an exchange. The vertical ad network builder is the mutual fund manager and drives value for themselves and their advertisers by tracking all the details and complexity in managing the publishers to deliver a high performing publishing community that efficiently and expertly reaches your target audience.
The United States economy has fluid capital markets facilitated by multiple exchanges – NYSE, NASDAQ, Chicago Mercantile and more. Individual investors are welcome to purchase equities (and options) on these exchanges through their licensed brokers. Yet the majority of individual investors, holding investments in their 401Ks, IRAs and brokerage accounts, have better risk-adjusted return from mutual funds – leading to a proliferation of mutual funds to address every segment and risk profile investors might have.
When an advertiser wants to maximize the return of their advertising investment, they need their Agency Media Planners & Buyers to create a balanced portfolio mixing direct investment in large on-target sites + reach to engaged, targeted audiences through vertical ad networks + broad reach from low cost remnant networks. The share of voice and audience engagement is highest on the premium, topically relevant sites of Vertical Ad Networks while the reach is highest through direct investments and remnant networks. This is the appropriate balance for high return online brand advertising campaigns where audience engagement is critical.
For example, if a major car manufacturer wants to reach safety-conscious Moms with a campaign about their minivan’s safety ratings and features, they might buy on a major news portal – and access a portion of the 5.5M unique visitors that reach that portal. If they added a targeted, premium vertical ad network for Moms to that campaign, they’d add another 4M unique visitors – for an unduplicated reach of 8M unique visitors a month. Already, the premium network is adding more efficiency to the media buy. Then factor in that only a portion of the 5.5M unique visitors on the destination site are moms and they may be on many different pages of that site which dilutes that 5.5M into a much smaller number. But the 4M in the premium vertical ad network are on mom-related sites and are much less diluted. So, the probable value of that blended campaign is much higher than the campaign that only accesses the destination sites.
Traditional performance ad networks and newer behavioral networks add reach to a campaign, but the vast majority of their inventory is unsold inventory from the large destination sites – so this is an excellent complement to the destination buy in order to reach more of the 5.5M unique visitors on that destination site. That said, according to comScore, the duplication between performance and behavioral networks and networks powered by Adify is less than 5% of the sites and 10% of the impressions.
There are no better advertising mutual fund managers than the knowledgeable editors and entrepreneurs extending their reach through the creation of Vertical Ad Networks. Mark Elderkin, of the Gay Ad Network, is arguably one of, if not the, leading authority on reaching the online Gay and Lesbian audience. Martha Stewart’s taste and editorial prowess is legendary – why wouldn’t you want to leverage her to reach your audience? Robert Kadar in Health, The Guardian Editor-in-Chief in travel, Forbes Editor-in-Chief on Business – these experts and more are working for you doing the hard work of selecting, monitoring and optimizing performance of publishers in your advertising mutual fund – your vertical ad networks. When you evaluate these alternatives for increasing your reach, you must consider the editorial expertise as well as the numbers – quality counts if you want a strong return on your brand advertising dollar.
You rely on informed and well-incented experts for your financial portfolio. It’s no different with your advertising portfolios. Exchanges are potentially part of that equation for deploying your advertising investment dollars but the continued fragmentation of the Internet creates meaningful value for advertisers who leverage skilled, well-incented advertising mutual funds for every campaign. Those advertising mutual funds are the emerging category of vertical ad networks.
Everything in its valued place
MediaPost's Behavioral Insider featured an interview with Adify CEO Russ Fradin about Making a Place for Placement in considering Behavioral Targeting.
Advertising 101 teaches that success is achieved by controlling placement, optimizing frequency and reach and creating memorable creative. Place your brand in the wrong context and you damage brand equity and potentially create PR nightmares. Saturate a market with your message and you are ignored as background noise – frequency must be controlled. And without reach, what’s the point of the message in the first place?
Recent news evangelizes the considerable virtues of behavioral targeting. It’s intuitively obvious that reaching a consumer who has shown some indication that they’d be interested in your product/service/offer is more valuable that anyone who might randomly be interested. Some vendors have their own “audience” definitions for advertisers to match their own customer analytics again (see Tacoda, Revenue Science). Other vendors help you define your own audience off visitors to your web site (X+1).
But what they don’t emphasize is on what sites your ads will be shown – the pitch is that wherever your customer is on the Internet, these BT ads will find them. Of course, the BT networks serve their advertising mostly across the Top 20 Internet properties where they can efficiently buy inventory to serve these ads – and they buy the cheaper, remnant inventory from those properties which ensures the ads are shown near sub-prime content.
Two problems - first consumers are spending more and more of their time OFF the Top 20 sites. The myriad of behavioral targeting capabilities are limited to approximately 36% of the online visitor time online. Second – your precious brand is associated with sub-prime content.
The rumbling that Google is entering the BT arena is one option to address the 64% of the Internet that your consumers are visiting. Of course, Google isn’t in the business of selecting those sites that have the most premium content, placement or even necessarily content relevant to your business (although they are exceptional at matching the context of your ad to sites designed to attract it).
Adify’s extensive behavioral targeting capabilities enable our advertisers to define their profiles based on their extensive analytics. And all the ads served through BT campaigns on Adify are served on the premium, editorially reviewed, niche sites in premier Vertical Ad Networks such as Warner Brothers MomLogic, Reuters, PeerFlix, Martha’s Circle, Sustain Lane, Advanced Student Marketing, Break and more (over 90 more, actually).
Behavioral Targeting is a good idea for advertisers. But like every other type of advertising, placement, frequency and reach must be balanced. I would argue that online, quality of placement and content is equally important to on-target reach. Advertisers need to complement their large network BT campaigns with appropriate premium vertical ad networks to reap the rewards to insightful, compelling and in-context advertising campaigns.