While I agree with the gist of the article (obviously, based on my previous writings) – Ad Networks are screwed by the advent of exchanges – I think there is a bit more to the story.
- Advertising.com sales organization basically disappeared for quite some length of time under Tim/Jeff
- Advertising.com technology execution was not great/distracted during this key period
One of the things that shocked me – absolutely shocked me – was Tim’s approach to Ad.com when he took over Aol. Rather than treating Ad.com as the jewel in Aol’s crown, he focused on the content side of the business.
Maybe, coming from Google, he was spoiled by the best ad inventory in the world (pages with search results) and wants to recreate that awesome inventory, knowing that advertisers will follow. But what he had at Advertising.com was probably the third biggest aggregation of advertisers buying inventory in a marketplace after Google and Yahoo!. One would have thought that he would value that highly and focus on how to get more advertisers participating in that marketplace. His approach to achieving this was to minimize the sales force’s role in bringing advertisers into the marketplace and bet heavily on self-service. Unfortunately, self-service grew, but not in a Googly way. Google’s self-service was the way that people could access the most valuable inventory on the Internet (search results). The result was an incredibly strong gravitational pull. Further, the self-service platform was not production ready when he started to downsize the Ad.com sales focus.
I suspect (and I have no knowledge of this from an insider perspective) that some of the consultants and advisers he brought in from Google and/or internal Aol people counseled him that Google + DoubleClick would run Ad.com over and crush that entire business. The result is he became less invested in the business, took the sales force and diverted them to selling premium content.
Did Ad.com execute poorly? Did the market change? Sure. But if you take 75% of the sales people and tell them to go sell Aol, that is bad, too.
Ad.com technology didn’t execute crisply either. They are in the midst of an ad server consolidation project now that will hopefully leave them with a more nimble, flexible architecture, but as a result of this and previous, similar projects, following the market with mediation technology, APIs for programmatic buyings, DMPs, and other technologies didn’t really happen. Ad.com ended up bidding into exchanges to expand their reach (just do simply low frequency bids on run of network-ish inventory, low-tech), but not becoming an exchange because that required more technology execution.
So while it is easy to say that a new technology era happened, Aol failed to respond to that change and that is why they are no longer successful, that overstates the effect outside factors had on the state of Ad.com today. I agree with the insider comments in the AdWeek article that internal miasma played a role as well. The decision to aggressively shrink the Ad.com sales force and underinvest in the Ad.com technology stack no doubt had huge impacts on the business.
Now, maybe Tim made the right decision – maybe executing on the tech would have not been successful regardless, so Google would have won, so this was the right thing to do. There is no way to know. My point is divorcing the external pressures from the internal changes is impossible, so no single factor pointed the way to the decline of the organization.
When you look around online advertising, Ad.com DNA is imprinted on many of the most successful companies out there. Sadly, when you look at Aol, there is precious little Ad.com DNA left and the DNA there is no longer given the tools to build that business.