Yahoo’s Right Media Investment and the Coming War of the Ad Networks

Yahoo! has made a strategic investment into RightMedia. You can read the release here, and Mike’s (RightMedia’s CEO) comments here.

We use RightMedia as an advertiser here at VendareNetblue to serve ads for some of our web sites and I couldn’t be happier for Mike, Brian and the rest of the team.

I think the investment is significant validation that the display advertising is just too damn hard right now and that major players are seeing a lot of value in platforms that can help the scale the market. The problem is that display advertising is hard to buy and make effective as an advertiser and it is hard to price and fulfill as a publisher. Throw in some third party ad serving and/or rich media and the implementation complexity skyrockets.

RightMedia should help that some for advertisers and publishers in their network, but I’d argue that all the major ad networks need to take a step back and re-evaluate how they make it a lot easier for an advertiser or publisher to make this stuff work.

I know here at VendareNetblue we are doing that with our ad network Traffic Marketplace. The network models of three years ago no longer cleanly apply to the market today and advertiser needs continue to change. Ad networks that do not provide real value to publishers and advertisers are going to have a hard time competing or growing.

Rightmedia’s value centers around transparency and control which is a response to advertiser and publisher backlash towards the blind ad network models that have been popularized by Fastclick, Tribal Fusion, and Advertising.com after the bubble burst in march of 2000. The idea is that transparency and ease of use should bring more advertisers and publishers into the market – which I think is true.

However, that’s not the only issue facing the market anymore. Now that on-line ad spend and media costs are back higher than ever, the value equation has quickly moved to monitization effectiveness for publishers and conversion effectiveness for advertisers. When it come to monitization and conversion effectiveness, I think that all the ad networks (Rightmedia and Traffic Marketplace included) are about the same at this point.

So while I think we will continue to see a convergence across all the ad networks towards transparency over the next year I also think we will witness a dramatic divergence in how the networks approach monitization and conversion effectiveness. Get ready….