Example 4,056,345 of Why Ad Networks are Bad Businesses
Long time readers of this blog know of my disdain of the business of ad networks. Overture was sold in a fire sale to Yahoo in the heart of the search boom. In the year leading up to the acquisition revenues doubled but profits halved, as Yahoo and MSN squeezed the firm dry (and MSN eventually left).
Here’s what I wrote more than a year ago:
“Long time readers know that I despise the economics of pure ad networks. There is one exception: if you are the category leader, an ad network piece can be cream on the cake. But as a stand alone business it sucks.
As members of your network get bigger, they leave. In Federated Media’s case this has happened with Digg, who has moved the majority of their inventory over to Microsoft.”
And now Techcrunch has done the same, figuring it can do better by offering a self-service ad system and putting its CEO in charge of direct sales.
Good luck to Oak Investment Partners getting a return on their $50m investment in Federated Media.
