Brian Ascher, venture capitalist at Venrock was on the board of ad network Adify, which was acquired by Cox Enterprises for $300 million last year. In this interview with Bambi Francisco he talks about what made Adify so unique, and what is needed today to become a successful ad network.
BF: What are you looking for from an ad network?
BA: So ad networks have a really important place in the Internet ecosystem because you have millions and millions of sites and more of the traffic is outside of the top 10. Yet, the revenue is concentrated in the top 10 because it’s inefficient for advertisers and their agencies to buy along that long tail of sites. Ad networks come in and make it efficient to place one buy and get access to hundreds, thousands, or more websites. Obviously, there have been a ton of ad networks, a ton of good outcomes, but there’s hundreds of ad networks out there. In fact, Adify is a white label platform to help you create a new white vertical ad network and there is over 150 of them on Adify alone. So you really need to be a differentiated ad network today. I think one area that’s underserved today is there is a tremendous glut of social media content, whether is social networks or just UGC type sites and it has been difficult to get the real value out of that inventory for advertisers for a host of reasons. An ad network that can figure out how to tap into this new marketer driven wave of conversational marketing, recognizing that what the marketers dream is to tap into consumer endorsements- your brand advocates, your customers selling on your behalf because they are excited about your brand and making recommendations to your friends. And a network that can harness all that endorsement and brand love that exists in a distributed fashion on blogs and all sorts of niche sites, on behalf of the advertisers enable them to participate in the conversation- I think that’s a unique area and would solve some big problems on the web today.
BF: Have you spotted or identified a short list of companies that do that?
BA: Yes, there are several out there that are tapping into that consumer buzz and figuring it out.
BF: Can you talk a little about it so some people can kind of get a sense of the companies we’re talking about here?
BA: Sure, I’ll give a plug for a company we’ve not invested in but we’re big fans of called Open Mind. What they do is use natural language processing to be able to read comments on websites, social network sites that pick up signals of purchase intent. So you might say that you really hate your car and you have to get a new set of wheels. And then it would be able to identify that person as an auto intender, and then serve up relevant ads.
BF: Would you invest in an ad network that’s built on top of Adify?
BA: We’ve looked at a number. Yes, we would. In fact, Martini Media is just that. And it really saves a lot of costs. You don’t have to muck with the billing and the ad serving, and the optimization, and the on boarding. They do a lot of the low value stuff and do it well and cost effectively so you can focus on recruiting publishers and selling to advertisers. And that’s the core of what an ad network does. The rest is just background that’s necessary.
BF: It sounds like you would be looking more at vertical ad networks versus general broad, Federated Media, Technorati media type of ad networks which to my sense are broader.
BA: Yes, I think that although even there they’ve chosen some vertical slices such as technology, women, blogs. The more specific your value proposition, the more of an opportunity you have. The big horizontal networks have already happened.
BF: And just backing up a bit with Cox’s acquisition of Adify, what was the rational behind that acquisition in terms of the integration right now, how’s it been working for them?
BA: The thesis was that more and more of their business is going to shift from traditional media to electronic. They’ve had great success in the past starting new electronic initiatives. Auto Trader was very successful for them and they have some B to B brands in that space as well. And they really fell in love with the concept of the vertical ad network platform, and also the management team who just did a terrific job and would help them chart new territory in the online world.
BF: Did Venrock help Adify find that acquirer or did Cox approach the network?
BA: Well, actually it was one of these portfolio days that an investment bank that knew us put on. JP Morgan invited us, I nominated a handful of companies, Adify was one of them, they met that way and the team really took it form there establishing a very tight relationship with Cox centered on a partnership, and then it progressed passed that into actual acquisition. So I played a very small part at the beginning and the team deserves all the credit.
BF: Yes, Russ deserves a lot of credit. I’d bet you’d bet on him again if he were to come up with another vertical ad network.
BA: Yes, absolutely.
BF: I’ve been speaking with Brian Ascher of Venrock and I’m Bambi Francisco.