As I'm back evaluating new opportunities in the internet advertising space with my time freed up, I thought a great way to understand what companies may provide value in the future, might be to review some companies I've worked with in the past.
I started my career on the internet in '97, creating large numbers of very simple web sites (jokes sites, chat room sites, and related), and making money placing advertising on them. While I made some excellent money doing this, it didn't feel like this business was sustainable, defensible, or that i was creating enough value to make it viable long term.
When the Ferber brothers from Advertising.com (then Teknosurf) approached me about coming to work with them and explained the vision, there was something I could really get behind, and feel good about in regards to the companies ability to create value. The math and technology they proposed building to more efficiently match thousands of ads to tens of thousands of website placements created economic value, as well as enabled us to efficiently bear risk (thereby removing much of the risk from our advertiser and web publisher partners). The creation of value in this manner ultimately lead to a succesful, profitable company that we sold to AOL in 2004 for $495 million. And the fact that Advertising.com continued to be succesful long after the acquisition and was considered one of the best acquisitions of that period helps validate my belief that we really had created something with important, lasting value.
After leaving Advertising.com in 2004, I was introduced to Murthy Nukala, who had a vision for creating a company we later decided to name Adchemy. His vision was not all that dis-similar to the Ferber's in that we would be using math and technology to create economic value for advertisers, and lower the risk they needed to bear. With Adchemy however, we built a platform that featured a much greater level of integration and optimization, for a smaller number of clients. The strength and breadth of their set tools today is extremely impressive and is the reason they are one of the larger players in the education, mortgage, and insurance markets -- in addition to their bringing on 3rd party "tech licensing" type clients at an extremely impressive rate. The recent downturn in the economy has further validated the value they create as they undergo a period of rapid growth while so many other companies in the space are contracting.
I also had the opportunity to help Jim Barnett and the folks at Turn with their business model and set of targeting features a few years back. While they had a strong lead on most companies in the space in reading the text of a web page and matching a relevant ad to the content of that page (their backgrounds were heavily rooted in search), we realized that the majority of the impressions earned more money being matched with an ad that was targeted via a different method. By building a robust set of targeting options into the Turn platform and making the decision as to what type of targeting to use as a core part of their impression decisioning algorythm, they made some huge strides in increasing their eCPMs, and my guess continued execution on this initiative has played a large role in their rapid growth of late (per a recent press release, they are cited as the fastest growing ad network).
I've also had the pleasure of helping a company focus on a very specific and narrow targeting feature (much the opposite of the Turn strategy) at Media 6 Degrees. Here an extremely tight focus on a somewhat niche targeting technique (mapping individuals relatedness to one another) has enabled them to drive absolutely massive increases in the value or performance of certain impressions. And with many ad networks and sites enabling them to only purchase the impressions that fit their requirements, the results have been tremendous. How many other companies do you know that have case studies where they outperform all other vendors by 20x, or drive 30% of a clients conversions with only 6% of their budget?
As I review my past experiences with companies in the internet ad space per the above, my decisions as to which companies I will prioritize in the future become easier to make and understand. I hope to continue to help create and build companies that provide lasting value by making some type of marketplace or process more efficient -- that seems to be the common theme with the successful ventures of my past.
Wow, that is a lot of experience. I'll have to come back often to learn from your insight.
Posted by: Jeff Wendland | August 11, 2009 at 08:35 AM