Federated and Sphere - what ad networks and widgets are worth

Two pieces of investment related news surfacing early this week give entrepreneurs a realistic view of current valuations.

Quick conclusion: if you want the really big payoff, the money today is in ad networks.

Federated Media, which sells ads for blogs and other publishers, reportedly raised a $50 million round that valued the company at $200 million pre-money.

Battelle, a former co-founder and editor of Wired and Industry Standard, has been a big-time evangelist and visionary of the trend that sees sites wanting to have more control over their ad inventory.

Rather than just be satisfied with automated ads from Google or Yahoo, publishers are getting access to brand advertising dollars through syndication.

This is something we discussed a few weeks back with Russ Fraidin, CEO of Adify, who said at the time that he thinks his company is worth more than the several hundred million that acquirers had paid for Tacoda, Blue Lithium and other ad networks.

The comparison is not quite apples to apples, since Adify is more of a platform for online networks rather than a network like Federated Media, which Venture Beat reported was expected to more than double revenue in 2008 to $60 million. 

As with the Industry Standard, which collapsed along with the dotcom bubble before Battelle could convince his investors to sell, he is so far choosing to steer the ship rather than cash out.

The second piece of news concerned Sphere, Tony Conrad's startup that lets users share and find related articles across the blogosphere.

The company's widget, which by last summer had already been posted on more than 1 billion articles,  has become close to a standard for many blogs and media sites that want to help readers share stories that are interesting to them and find related ones.

TechCrunch is reporting that AOL bought Sphere for around $25 million. That's pretty impressive given that the company was founded less than three years ago.

To see how far Sphere came and how fast, I've posted their pitch from last August into this story. 

Conrad is a also a venture capitalist at True Ventures, which means he likely knows when is the right time to sell. So all you widget makers out there should note the valuation.  

As should online ad companies like ScanScout and Clickable.