The ad network purge begins
Online ad networks are set to consolidate, reports the Wall Street Journal. There are 400-some networks, which act as middlemen between advertisers and publishers to broker space on websites, modeled after Google's successful AdSense business. But the big deals in this space have already taken place — aQuantive to Microsoft, Right Media to Yahoo, DoubleClick to Google. The remainders are starting to realize that, like bad leftovers, they're about to be thrown out. So the bigger players are starting to snap up the smaller ones, at bargain prices.Or what seems like a bargain. But even the bigger online ad networks are troubled. Take Glam Media, for example, the splashy ad network founded by Samir Arora, which he has pitched as "the future of all media." A dismal future indeed, if so. Glam grew quickly by promising publishers rich ad-rate guarantees, and then ran into trouble selling the inventory it had acquired at those rates. In the third quarter, according to two sources familiar with Glam's finances, Glam took in $14 million — $11 million short of the $25 million forecast Arora gave investors when he was peddling a stake in the company. Layoffs ensued. It's not clear how much of the $85 million Glam raised in February is left to buy up competitors. And if the advertising market is due for a deep downturn, as many in the industry fear, then the more successful ad networks would be wise to husband their cash, rather than spend it on weaker rivals. Darwinian market forces will do away with the lesser ad networks soon enough. Roll up, or roll over? The latter seems wiser.