NEW YORK While the economy might be teetering, ad networks continue to secure funding. Turn is the latest to do so, closing a $15 million round led by Focus Ventures. The ad network has now raised $37.5 million overall.
San Mateo, Calif.-based Turn has earmarked the money for boosting its sales presence in New York and providing a cushion should the Internet economy take a downturn.
The rise of online ad networks is undeniable. According to a recent Interactive Advertising Bureau study, ad networks handled up to 30 percent of Web ad sales in 2007 -- up from 5 percent a year earlier. Other recently funded networks include Lotame, Media6 Degrees and ContextWeb.
Jim Barnett, Turn's CEO and a former AltaVista executive, said the recent spate of funding is indicative of where the Web is heading: With user attention dispersed across thousands of sites and marketers clamoring for proven ad performance, networks have stepped into the breach.
"It's a very effective way for publishers to sell a lot of their inventory," he said. "They can get $1.50 from their network partners or they can get zero."
Turn specializes in what Barnett terms "branded response" campaigns for advertisers like T-Mobile that tie their programs back to sales. Turn has 500 clients using its marketplace, placing ads on more than 500 sites. It competes with the likes of AOL's Advertising.com, Microsoft's DrivePM and Specific Media. According to comScore, Turn is the 16th largest ad network, with a potential reach of 93 million users.
Not everyone welcomes the large role played by networks. Some publishers like Dow Jones and ESPN have sworn off networks. Martha Stewart Living Omnimedia president Wenda Harris Millard said networks and exchanges are commoditizing Web inventory. For Barnett, these complaints aren't tenable in a metrics-driven ad world.
"I think the days are changing," he said. "If Wenda thinks an advertiser is going to blindly spend $25 (CPM) on Martha Stewart because Martha has a nice brand, they're hiding under the covers. That's not the world anymore. Advertisers care about performance. Some publishers that have been historically overcharging for their inventory will not be able to justify their prices."
Turn differentiates itself by using various criteria to target ads, rather than relying on just behavior or context. When a user arrives on a page, it determines the most suitable ads to serve based on prior behavior, context and advertiser goals. While the company initially set prices on a cost-per-action basis, it has moved to more flexible pricing, with most ads sold through CPM.
"We found that's how most people prefer to conduct business," Barnett said. "It seems the preferred pricing approach for most people."
Barnett does not believe the current mania for networks will subside, particularly as advertisers increasingly scrutinize their placements based on metrics. For that, he thanks his old AltaVista nemesis: Google.
"You're seeing a trend, driven by search, to focus on performance," he said. "It's trained online advertisers that not only can you measure performance -- but you should."