Vertical Ad Networks: Evolution

Another big funding round in the vertical ad network world: FM raises between $40 and $50M from Oak Investment Partners. Valuation: $200 Million; 2007 Revenue: $25 Million; 2008 Revenue Forecast: $60 Million. Not bad!

My previous coverage of Federated Media is here, where I said that they need to focus and also roll-up some publishers to get to a better business model.

Interesting set of sub-categories emerging in the segment:

1. Ad Networks that power the Vertical Ad Networks (e.g. Adify)
2. Media Brands’ Ad Networks (e.g. Forbes powered by Adify)
3. Vertical Ad Rep Firms (e.g. Federated Media, Travel Ad Network)
4. Vertical Media – Vertical Portal + Ad Network + Ad Sales Force (e.g. Glam Media)

Of these, the maximum valuation has been awarded to Glam because of its comprehensive set of services, and vertically integrated business model. I pretty much agree with that being the best business model, which tells me, very clearly, that Federated Media, armed with the new cash, should go get itself morphed into a vertically integrated business, finance, technology media company along the lines of what Glam has done in Fashion.

Similarly, Travel Ad Network should also roll up a bunch of travel properties to get a better footprint, and a vertical integration. The Travel space is slightly more complicated, because of the considerable clout of the vertical search engines, of which, Kayak also intends to pull together a vertical ad network.

What, then is Adify’s destiny? I had suggested a merger with Kosmix to get its own Google-esque (Vertical) Search + Ad Network portfolio.

Right now, sub-category (2), i.e. Large Media Brands’ Ad Networks is the farthest behind. However, in a year from now, that situation is expected to change, as they learn to play their cards better.

This segment is a part in the series : Vertical Ad Networks