My Days of .Com
Future of Interactive Advertising

Ad Networks go broke

Written by Mihai Dragan on Tuesday, October 28th, 2008 ( Start discussion )
Tags: ad networks, adbrite, adzilla, behaviour marketing, Interactive Advertising, jellycloud, lousy companies, sequioa capital, toby gabriner

The Wall Street Journal reports that several US AdNetworks have closed their operations. JellyCloud has stopped after raising $11.5 million earlier this year. So did AdZilla.

AdBrite also cut it’s workforce by 40 percent this year, in a move that let off VP-Marketing Paul Levine and VP-Finance Bob Feller.

So - will the Ad Networks actually crash and burn?

Well, no. Like any other industry Interactive Advertising has its good, mediocre and lousy companies. JellyCloud was neither good or mediocre. It was not the financial crisis that killed them but their inability to actually make a living. They’ve burned through almost $50 million dollars in VC founding, with the last $11.5 million in less than 5 months. Crisis didn’t make this happen. Lousy management did.

What about AdZilla? There is word on the streets that the company closed after its top executive, Toby Gabriner, left the company. Apparently their behavior marketing technology was a little too intrusive on the users and the Congress did not approve. Also, have I mentioned that they too managed to burn through a lot of cash ?

But wait, AdBrite is in trouble too

No, they are not. Not yet, at least. The company fired some of the staff and two execs only after their venture backers, Sequoia Capital, “urged them to control costs and become cash flow positive”, in the holly words of Michael Arrington.

So you see - it is just a matter of companies failing to manage their operations and failing to offer a decent product (both Adzilla and JellyCloud were snooping a little too much on the users). The interactive advertising is still strong and companies will turn to it more and more looking for more efficient ways of spending their smaller and smaller marketing budget. It’s just that some companies will not be there to help them.