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| The Rising Influence of Vertical Ad Networks – Adify Gets a $300M Pay Day by Rachel E. Happe, IDC On Tuesday, April 29th, Cox Enterprises announced its acquisition of Adify for $300M, a solution provider that enables the creation of vertical ad networks. This news comes on the heels of an $85M investment in Glam Media (on top of a previous $30M investment). This is a lot of money for two emergent companies. In research IDC completed last year titled "Modeling the Digital Marketplace: Scenarios, Forecasts, and Prognostications", we predicted the growing influence of vertical ad networks for the following reasons: - Rapid growth of online advertising; - Observation of the rapid fragmentation of user behavior; - The changing power of search gateways and the leveling off of queries; - Publisher dissatisfaction with commodity advertising; - Changing terms in affiliate share of revenue at large networks; - Growing importance of technical infrastructure for marketing; - Exploding number of online advertising options making the landscape extremely confusing. In a recently released profile of Adify, IDC identifies why vertical ad networks are becoming more appealing and why Adify is in a unique position to take advantage of this trend. In part, vertical ad networks give advertisers a replacement for the volume they get with traditional broadcast channels but that simply do not exist on the Web today. Because of fragmentation, advertisers need to place ads at hundreds or thousands of sites in order to 'see' as many viewers as they would with TV or print advertisers. For publishers, vertical ad networks give them, in essence, collective bargaining power with the advertisers that more effectively prices the value of their inventory. All inventory is not created equal and for a small publisher with great content, it is nearly impossible to sell their inventory at premium rates if they go it alone. Aggregating with other high quality, vertical publishers gives them an appealing package for advertisers who do not want to negotiate with each individual site. Both Glam and Adify are building robust infrastructure technology that enables the aggregation of inventory, packaging, pricing, buying, serving, and payment processing required. While Glam is also a publisher, Adify focused on the infrastructure only making them an appealing partner for publishers who are concerned about the growing competition they are getting from Google and Yahoo as publishers. Many smaller vertical ad networks like Travel Ad Network and SureHits may in fact move toward using Adify infrastructure and act only as the sales and marketing arms that target specific verticals. The purchase by Cox clouds that neutrality, but because most of the Cox companies are traditional media channels, Adify may be able to maintain its neutral position online. IDC believes competition in the vertical ad space will continue to increase and that aggregators of content, advertising, and users targeted at specific verticals or users – such as GlobalSpec and theknot.com will continue to gain power in the digital marketplace. write your comments about the article :: © 2008 Computing News :: home page |