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Silicon Valley ad veterans launch start-up, Adify; raise $8million

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Once an entrepreneur, always an entrepreneur. So it is with Larry Braitman and Richard Thompson, the guys who formed Flycast Communications a decade ago, to create an online advertising network that served smaller Web sites. It enjoyed a $500 million IPO and then, in the frothy year of 1999, was acquired by CMGI for $2.3 billion.

They are trying it again with a new start-up, Adify, and are looking to aggressively undercut rivals.

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Braitman
Flycast had created the first "blind" advertising network, where a network of advertisers served ads to participating Web sites, and there was little negotiation. Times have changed, and now the pair are starting Adify with almost the opposite approach.

They've just raised $8 million, in a first round led by Venrock, and including individuals. This time, Adify's network allows transparency -- and thus may be more enticing for site owners and advertisers. The Belmont company allows advertisers to contact bloggers or other Web publishers directly. It gives advertisers a form -- run on the back-end by Adify -- where they can request a particular ad space on the site. It allows a publisher to negotiate ad rates, and to reject an advertiser if wanted. Adify is only taking 20 percent of what the advertiser pays to the publisher. That's considerably less than what many other ad companies charge, for example Adbrite, which takes 50 30 percent.

For that 20 percent, the publisher gets a lot. It includes Adify's support for serving both graphic and text ads, all billing and collections (including eating any credit card fees), ad management, tracking and reporting.

The site launched in June. We asked Larry yesterday whether he is purposefully undercutting competition. He said "that's where the market is headed, and potentially lower."

Adify allows bloggers or like-minded sites to create their own network -- as FM Publishing has done with tech bloggers -- in order to make things simpler for advertisers who are looking for a one-stop shop. For example, Adify has formed a network for publishing sites covering the cycling industry. It is called Clip-Ins. This also creates a referral network: If one blog or Web site snags an advertiser on behalf of the network, that Web site gets a 10 percent commission for generating the deal.

We asked Larry how he intends to develop the expertise to go after these particular niche networks, since ideally this demands a lot of pavement pounding to schmooze advertisers to advertise in those niches. He said he was not prepared to answer that question; it is still early. He has no intent to manage campaigns on behalf of advertisers, he said.


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Comments

Where does it say anywhere that AdBrite takes 50% of the revshare? Also, most folks don't use the term "50 percent of the advertiser's spend" -- unless you're talking about something different than publisher revshare.

-david

David Ulevitch on August 4, 2006 9:50 PM
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I'll double check this, now that you ask. I remember, somewhat vividly, that Adbrite was taking a 50 percent cut, but just went to their site to check, and it's not plainly disclosed anywhere. I see a reference on Google to a page from last year, saying Adbrite was taking 25 percent, which is still higher than Adify, but lower than 50 percent...but the page is old. Stay tuned. Anyone else know? I'll check with the company, and presumably will have an answer on Monday.

Matt Marshall on August 4, 2006 11:46 PM
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I tried sending an email to adbrite's pr folks (pr@adbrite.com), from two different email accounts, and both bounced back. Don't know what is up over there, but now looks like answer won't come until Monday.

Matt Marshall on August 5, 2006 7:54 AM
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We used them in 2005, and their commission rate was 25%. We since went to Tribal Fusion, Casale and others that take a 55% comp because they get higher quality and more volume...that is, even if Tribal pays a lower eCPM, you get more money because you have far fewer defaults and much more fullfilment.... AdBrite eCPM just wasn't as high as a Yahoo Publisher or Google AdWords campaign.

Now I will say that as a Publisher I *LOVED* working with AdBrite, they have a fantastic idea, they just lack a strong enough portfolio of advertisers. Now that we're serving millions of page views a day though, we've moved to our own ad servers and sales force and are working our way off the Ad Networks. (when you do our Volume, AdNetwork commission rates quickly cover the cost of a whole department of headcount)....

Adam on August 5, 2006 2:58 PM
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Oh, forgot to Ad, Adfly sounds like a god idea, but here is what *I* need, and if someone builds it I'll pay for it.

I need an inexpensive ad server (like < $0.02CPM) (like AdSpeed.com) where I can manage geotargeting, frequency capping, etc etc,...AND...be able to pul from an intergrated Ad network.

That is I want to be abel tuse a system three ways.

1.) Ad Server (I get my own ads, and billing)
2.) Ad server + Billing (Reasonable money handling fee)
3.) Ad Server + Ad Network (like Google Ad words only I can balance it out with other campaigns from other ad servers).

So the ability to mix and match 1, 2 and 3 is key for us.

We would probably only ever use 1 & 2, but for those people just starting out I can see them start with 3, then work up to 2, then finally get to 1.

Adam on August 5, 2006 3:04 PM
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Just heard back from the Adbrite folks. The current revenue split is 30 percent. Apologies. I've corrected.

Matt Marshall on August 6, 2006 11:02 PM
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Adam,

We've just released into private beta what you're looking for. It's called RMX Direct and it allows you directly work with and apply with eight ad networks on the Right Media Exchange, as well as add in your own deals like Adsense, etc.

http://direct.rightmedia.com/

Pat McCarthy on August 8, 2006 12:52 PM
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