Wall Street Journal Predicts Ad-Network Shakeout
By Anna Johnson on November 6th, 2008According to The Wall Street Journal we can expect a shakeout in the online ad-network market. While over 300 online-ad networks have emerged in the past couple of years, there are indications that many won’t see out the next few years, as online advertising slows and venture capital (VC) funding dries up.
Two ad-networks to close recently are JellyCloud, which closed this month after raising $11.5 million in venture-capital funding earlier in the year, and Adzilla, a similar operation. Meanwhile, AdBrite, which was founded in 2002 by Internet entrepreneurs Philip Kaplan and Gidon Wise and has raised $35 million in funding, recently cut 40 percent of its work force in an effort to become profitable.
Not only are ad-networks likely to suffer as advertising revenues continue to contract, but they can no longer rely on venture capital to keep them going. The Wall Street Journal quotes Dennis Miller, general partner at Spark Capital, a Boston-based venture fund, as saying that VCs are increasingly looking to invest in companies that are cash-flow positive.
