Wed, Mar 26, 2008 page10

• FEATURE: Traditional media companies challenge large portals by building ad networks

  • AP
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  Traditional media companies trying to stem the flow of advertising dollars to Google and other large Internet companies are increasingly building ad networks of their own, anchored by their brands.

  The latest, Forbes Inc, announced on Monday that it will start selling ads this spring for about 400 financial blogs. In recent months, Conde Nast, Viacom Inc, CBS Corp and other major media companies have also unveiled topic-specific ad networks to lure advertisers that want to buy more ads than any single site can sell.

  If newspapers, magazines and broadcasters cannot expand online ad inventory, they are "under threat of becoming less and less relevant to the advertiser," said Russ Fradin, chief executive of Adify Corp, whose technology runs ad networks for Forbes and others.

  But these media networks -- some linking fewer than a dozen hand-picked Web sites -- may have a tough time competing with the larger networks of thousands assembled by Google Inc, Yahoo Inc, Microsoft Corp and Time Warner Inc's AOL.

  Those companies have been expanding, too, spending at least US$11 billion collectively to buy smaller ad networks and technologies -- and in Microsoft's case, also bidding more than US$40 billion for Yahoo.

  "As our technology has continued to advance, we've gotten better and better," said Lynda Clarizio, president of AOL's emerging Platform A advertising unit.

  "We can handle a lot of demand from advertisers," she said.

  The expansion drive by both sides comes as Internet users increasingly divide their time across scores of sites large and small. Advertisers would rather not deal with thousands of individual Web sites. Media companies and Internet portals alike are promoting networks as a way to reach larger audiences with "one-stop" ad buys.

  So far, the portal ad networks have largely succeeded in selling their affiliates' leftover ad inventory at discounted rates and sharing revenue.

  Now, by employing targeting techniques such as matching ads to visitors' surfing habits, those large networks are also stepping up their bid for higher-value ads -- the ones that have traditionally gone to sites run by the media companies.

  Accustomed to selling ads on their own in offline channels, many traditional media companies have been resisting overtures to join the larger networks.

  "One of the big ones said to us, `You guys are really good at creating content and we're really good at selling advertising. It would be perfect,'" said Sarah Chubb, president of Conde Nast's online division, CondeNet, which has signed up a handful of blogs on fashion and technology.

  "We're pretty good at selling advertising, too," she said.

  Smaller networks can offer advertisers a consistent audience on pre-approved sites, while giving those sites individualized attention.

  "The folks at Forbes really understood our business," said Steve Woit, publisher of Xconomy, a blog joining the Forbes network. "A larger network, whether it's Google or others, has to deal with every industry and large consumer sites."

  Rather than join the large networks, Martha Stewart Living Omnimedia Inc figures it is better off recruiting one or two dozen leading lifestyles sites that meet its editorial standards and selling higher-priced ads to Macy's, Ace Hardware and other brands. Martha's Circle launched in November.

  "Publishers are brand stewards," said Wenda Harris Millard, the company's president for media. "The folks ... who are assembling these massive networks, most come out of the technology sector. Some of them are good business models, but they are not about protecting brands."
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