Adify Builds Ad Networks with the Future in Mind

Back in 1996, when the Web was still a novel advertising medium, Larry Braitman, Rick Thompson and Russ Fradin came together to found ad network Flycast Communications, one of the first networks to aggregate low-cost ad inventory across thousands of different Web sites. Within three years, they sold that network to CMGI for almost $700 million.

Now online advertising is firmly in the main stream, and the Flycast trio is back in business with another online network, unveiled this past summer. This one is called Adify, and it’s tailored to ease some of the pain points in text, display and rich-media advertising that have cropped up on the Web for both marketers and publishers.

Braitman, who serves as CEO of the new company, says that one motive for developing Adify was the perception that the online ad network model hadn’t really kept up with the changes that had taken place in ad buyers and sellers. In particular, online advertising was no longer an arcane black art that required immense technical expertise to deliver ads and tremendous data sophistication to optimize them for performance.

“We found from talking to the e-commerce guys, the direct marketers and the ROI buyers that in the last 18 to 24 months, they’ve invested heavily in search engine marketing tools and services to manage portfolios of keywords in real time, on three or five search engines, and automatically adjust bid pricing based on back-end conversions,” Braitman says. “They told us they wanted to apply those tools to display advertising as well. But most ad networks have been doing that work for them, not particularly well, and charging a very high commission to do it.”

Adify also relies on marketers’ need, in a crowded ad marketplace, to reach down into the long tail and come up with niche Web properties that may convert well. Finding these properties is time- and labor-intensive and most small advertisers can’t spend time doing it and still make their costs work.

So Adify is proposing to build that long-tail network for them, along with solving some of these other issues. Publishers can use Adify’s system to set up storefronts to sell ads on their site under their own brand, setting their own prices for whatever advertising they want (text, display, or rich media), choosing the terms on which it will sell (per click, per thousand views, sponsorship) and using Adify’s back-end systems to bill advertisers, collect payments, track performance and generate reporting.

The company is also building vertical niche networks that let marketers reach highly targeted Web audiences. The first two of these networks bowed this past summer: Clip-Ins, a network serving the needs of marketers and publishers in the cycling community, and the Top Dog Network to deliver canine fans to advertisers in that segment. Adify also has another called Ready to Rare, which targets enthusiasts of comic books and collectibles. All the networks contain a mix of well-subscribed Web sites, online newsletters and blogs.

They also offer advertisers something Braitman says is hard to find in most other online ad networks: visibility. “We’re entirely transparent,” he says. “Advertisers can see exactly where they’re getting their clicks and exactly what they’re paying per ad placement. They can effectively plug their existing optimization tools directly into the network buy.”

That visibility can be an important safeguard for marketers concerned about click fraud, he adds.

In fact, Adify is now beta testing an application programming interface (API) that will let advertisers integrate their bid management and tracking tools to adjust their display purchases exactly as they now do their keyword buys.

Building these niche networks is time-consuming for Adify too, of course, so the company is in various stages of partnership with other aggregators who can help put together verticals that can achieve a critical audience mass. “If we can get to 7% to 10% of the total monthly reach on the Internet against a category, we feel that we can have a viable vertical network for that category,” Braitman says. “That can be either a handful of large sites or 20 smaller ones, depending on the configuration in the category. But our advertisers have confirmed that that kind of reach constitutes a viable ‘list’ for that industry.”

While there will continue to be a need for a handful of large, broad-based online ad networks—particularly for the very smallest advertisers, who don’t have the tools and services that will let them micro-manage their own campaigns– Braitman believes the future of Web marketing will belong to the niches and the verticals.

“One-size-fits-all is on its way out,” he says. “It will be replaced by very targeted, very focused networks. And including all kinds of fancy black-box technology that marketers don’t understand is really just a substitute for the kind of visibility you have in the list industry, where you can buy different lists, compare performance on your own and then optimize.

“Marketers want to control their data. So we’ve designed a network that will offer a little less in terms of black-box technology. We put the data out to them and let them use their own intelligence, doing it in a way that makes it easy and practical for them to buy.”