Yahoo’s RightMedia closing Networks?!
It seems that RightMedia has decided to do what a lot of people have said they would do all along – slowly weed out some of the ad networks that connect through its system, and remove them completely from the AdExchange. A friend of mine, who will remain anonymous, talked with me about this a few months ago, and mentioned that it made no sense for them to build other ad networks when they had their own Yahoo network, composed of the former BlueLithium network, and the Yahoo properties. He went on to say that he can’t see that Yahoo could continue to promote the Yahoo network as premium properties, plus the less-than premium properties of the RightMedia network. He seems to think that long term, there is no plan for Yahoo to grow the RightMedia exchange.
This comes at the heels of their decision to close down one of the more innovative parts of RM, the DirectMedia Exchange, which allowed sites to directly connect to networks in the exchange, without having to join them individually. This was, in theory, a serious part the backbone of the exchange which allowed networks and advertisers to connect to sites directly. This leaves the DoubleClick exchange in a unique position to pick up high quality publishers.
The largest RightMedia network, CPXInteractive, a $50 million a year, entertainment and direct response network, seems to have already realized the possibility of being eventually shut off from the exchange and has been working on their own ad serving solution, announced this December. However, as a sales person over there recently told me, their use of “other inventory” on the exchange is extremely limited anyway. According to him, they also don’t allow that many other networks to buy from them, partially because of payment issues and ad quality issues. Thus, being cut off the exchange, wouldn’t affect their business in the least. This raises a significant question of how many ads are actually being “traded” on the exchange, when their biggest network basically promotes the idea that RightMedia is no more than a serving solution for them. It should be noted that CPXInteractive is also a member of the DoubleClick exchange, as are more than one former RightMedia client.
Publically, the reasoning behind this from RightMedia executives is that they have been pruning networks that were involved with advertising that was not up-to-par with some of their new guidelines. Privately however they have made it clear that they were getting rid of networks that might have been involved with the outbreak of malicious Trojans and pop-up ads last year on the exchange and avoiding a possible legal battle by just not renewing their contracts. Several owners of RightMedia networks pointed out to me that they are very much sure that this is just a way to slowly prune networks from the exchange in order to eventually shut the exchange down, or buy out the remaining networks in the future. They themselves said that there is a perception that much of the network is composed of offshore companies and networks that are just selling the same junk inventory on adware and drunk-girls-gone-wild type sites.
Honestly, I’m not sure which part is the plan. The exchange has not proven to be a huge part of Yahoo’s business and they have moved many of the previously senior employees to other parts of the company, mainly focused on new business development. Privately some of the executives have made it clear that the $500 million price tag paid for RightMedia was way overvalued – and that the exchange has not turned into this huge marketplace they had hoped. Similarly, the technology has not proven to be expandable and able to handle the high load of direct response based ads from some of the networks, causing frequent outages and late reporting. Removing those ads and then slowly focusing on higher CPM brand advertising might generate more income from their serving, since their contract with most networks is around .0175CPM or a percentage of the revenue, depending on which one is a higher CPM.
Doubleclick, owned by Google has proven to be a significantly more robust platform, and agencies and brands already trust the DoubleClick brand. Additionally there has been no reporting of the same malicious code issues that RightMedia encountered in 2009. This trust with the DoubleClick name, which has been a partner with the interactive advertising community since its inception, puts DoubleClick in a position to take over the higher end part of the exchange community. Obviously RightMedia is responding to this perception by immediately removing those networks that they see as not brand focused, but at the same time running the risk of losing a substantial part of their economic base. Perhaps it is just that Yahoo has realized that the exchange, as an asset, is no longer worth keeping and wants to eventually just merge it into Yahoo’s Transformative Digital Platform which is being targetted to the same exact people as RightMedia.
There is definitely something to say also about Yahoo’s relationship with RightMedia, when Yahoo, their parent company, isn’t connected through the exchange to most of the other RightMedia networks. As one CEO of a RightMedia network put it, “The only value of the exchange is the Yahoo property, and since it’s not connected to but a few networks, there is not much value for those who are on the network except as a serving platform.” In fact, despite publically acclaiming the “Media Guard” safe-creative system on RightMedia, Yahoo itself doesn’t use it, and requires all RightMedia networks to submit a list of creative for approval one by one, if they want to run it on the Yahoo network itself. They themselves say that they have over 450,000 individual creatives on the exchange, making it almost impossible to police every creative and it’s side effects.
That being said, I want to make clear that there are more than one network on the exchange that is providing unique, valuable inventory. Companies like Adtegrity, with a large newspaper base, and Netherlands based BannerConnect, KitaraMedia and several others have proven themselves to agencies and the marketplace. Yet there is something to be said about the offshore companies, the guys in their mom’s basement who have used RightMedia as a platform to scam advertisers and other members of the exchange. RightMedia efforts to clean up the exchange is to be commendable, but is it too late? You got to wonder how serious Yahoo is to keep RightMedia when biggest story of the year from them, besides shutting down a division, is an employee playing with Spiderman.
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6 Responses to “Yahoo’s RightMedia closing Networks?!”
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Superb! Best read yet.
Wow – what a good article!
Wonderful post… Very informational and educational as usual!
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I like cpxinteractive, is an awsome network
good article I have learn new stuff