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What kills an ad network?

Many people commented last week on the AdWeek article about’s decline – an article that I foreshadowed with my magnum opus dissection of ad networks: Whither Ad Networks.

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.

  • sales organization basically disappeared for quite some length of time under Tim/Jeff
  • 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 when he took over Aol. Rather than treating 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 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 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 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 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. 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. 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 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 sales force and underinvest in the 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, DNA is imprinted on many of the most successful companies out there. Sadly, when you look at Aol, there is precious little DNA left and the DNA there is no longer given the tools to build that business.

2 Responses to “What kills an ad network?”

  1. S williams Says:

    Yes, but they still have adlearn and the results are significantly better than others. is not going anywhere.

  2. Former adcommer Says:

    Yes, but there are two reasons why he’s saying this doesnt matter now

    1. Everyone has adlearn in some way now. That’s what he’s referring to with DNA. DSPs and exchanges have an optimization tool that mimics the same method. Is it better than adlearn, probably not. But when everyone has the secret sauce, it’s tough to compete.

    2. Unless an optimization tool has lots of individual sites and placements, it can’t fully optimize. When a network taps into one huge chunk of inventory like an exchange and puts it into a tool like this, it sees it as one site and can’t optimize it. Unless of course was somehow able to tap into the exchanges at the URL level, which I doubt.

    I do side with Brent’s comment that maybe it was the right decision at this point, time will tell. However, the move to an exchange or bidded model was discussed LONG before Tim came on board. If they had made that move long ago maybe it would’ve prodded off competion, we don’t know this either. Maybe it was too technically involved, maybe it was internal decisions not to.

    In any case, every network that is using a DSP or exchange for significant amount of inventory has to look now to differentiate itself among the other 200 networks doing the same thing. Maybe actually getting access to direct inventory is the only way to do this.

    Maybe making and accessing content IS the right move