Online advertising is continuing to take off with over $25B in global revenue this year and no signs of slowing down. This has been dominated by performance based ads but brand advertisers have taken notice and are migrating to the web - especially given the increasing shift of audiences from traditional media to the net.
The challenge for brand advertisers is to find audiences they want to reach (at scale) done in the most effective and emotional way (e.g. rich media) and in the right context (e.g. not next to content they would find offensive or unknown - like most user-generated content or certain news stories). Until now, they've flocked to premium inventory at the major networks (Yahoo, MSN, AOL) and vertical sites with scale (e.g. ESPN, iVillage) but these networks and sites are selling out the quality rich media inventory in the right context (they have plenty of tonnage in areas that brand advertisers don't care about). There's a supply-demand mismatch and I think there's an opportunity for the long tail to take advantage of it.
The issue for the long tail is that each site alone is too small and is not "validated" by the advertiser or someone they trust. The solution actually lies in the "head"... These sites or media publishers (large branded anchor sites or traditional publishers) can create a large branded network by affiliating with many sites in the long tail. The anchor typically has a strong brand (e.g. Washington Post or an upstart like Glam) and handpicks long tail sites that meet their quality standard to include in the network. They then use their trust and relationships with brand advertisers to sell ads across the network - perhaps at a discount to their anchor site. This is a perfect setup for publishers who have deep brand advertiser relationships but not enough quality inventory (such as traditional magazines who don't have a ton of users on the web). The long tail may have great content (e.g. high quality blogs or hobby sites) but doesn't have the scale or expertise or relationships to get the ad dollars and can get more revenue per pixel vs performance ad networks. It's a win win all around.
i'm interested in investment opportunities in this new ecosystem - whether its a new upstart network by a publisher/entrepreneur or a platform to make all this happen (like Adify). It's inevitable that more dollars will move online (6% of ad spend is online but time spent online by consumers ranges from 15%-35% depending on the demographic) and this seems like the right way for brand dollars to find their audiences.
