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Companies I have an interest in:

  • (as a past or present employee / consultant / investor / advisor or related)
  • Advertising.com
  • Vandelay Industries
  • MyMojo
  • USO Networks
  • Media6Degrees
  • Adchemy
  • Consorte Media
  • doublePositive Marketing
  • Turn, Inc.

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November 17, 2009

Comments

Tim Ogilvie

@Tom K- A big part of the equation is that there are lots of people who are willing to spend $100 million to generate a $435 million outcome.

Others believe it will be much less expensive the 2nd time around because others have taken similar approaches and the market has gotten dramatically larger since ad.com did it.

That said, I agree with your overarching point: when faced with the reality of how expensive learning is in the exchange ecosystem, many marketers will happily pay networks their extra margin because it is very well deserved. De-averaging is harder than it sounds!

The revolution that the exchanges have delivered is that every marketer is going to have to make this decision. De-average or perish!

Tom K

Good points John - this is one of the reasons why I view exchanges as a step backwards in evolution. Why would you want to worry about all this when networks handle all this for you and are so confident in that ability that they bear some or all of the risk? How many mathematicians on your team will you need to hire to beat our AdLearn (which costs about $100 MM to build)?

People knock some networks for just taking a cut – if middle men don’t provide value, they tend to fail. What many people never had the chance to know is “what that value is”. Maybe it will take trying to do all the things a good network does on one’s own to realize that a GOOD network actually provides a hell of a lot of value. Happy bidding!

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