Alley Insider is reporting that News Corp. is toying with the idea of launching an ad network. This isn’t news, this is formalization of something that has been in the works for some time.
After all, by virtue of owning MySpace, News Corp.’s Fox Interactive Media owns the largest site by pageviews, and by virtue of that, largest site by impressions.
MySpace’s inventory is certainly long tail and difficult to monetize, that is why the acquisition of Strategic Data Solutions fit within the FIM empire.
If you consider that IGN - my former employer briefly after it bought my old company - generates a lot, and I mean a lot of impressions on its message boards, then you start to realize that in addition to some of the best marquee, prime real estate in online media, FIM also has a lot of not so valuable real estate. That’s not a knock, because all large properties have vast inventories of low yield inventory… this is in fact why online ad networks such as Blue Lithiu, Right Media, Valueclick et al. have seen valuations skyrocket.
I recall reading some time ago that Rupert Murdoch was never the first to get into a market, but once he did, he really accelerated his push. This “news” regarding ad networks is a perfect manifestation of that: Murdoch spent $2B to become one of the most powerful online media companies, secured a $900M ad deal with Google. He inherited a lot of inventory and instead of farming this inventory out to ad networks such as Right Media, Blue Lithium and company, he can get 100% of those rates by keeping it inhouse.
Moreover, Murdoch totally understands that data = money. Facebook might be a phone book, but phone books are valuable. So Murdoch is planning ahead by not sharing too much data on sites like MySpace with third parties.
Lastly, there’s one more reason why Murdoch and FOX should totally go for this, the traditional challenges facing ad networks are two-fold:
- getting publishers to accept their business
- getting advertisers to run ads.
FOX won’t have any problems because it already works with marquee advertisers AND it can woo publishers sitting on the fence and not being sold on the virtues of ad networks.
Oh, one last thing, expect a couple of small to mid-sized deals here, maybe even Valueclick, or perhaps Tribal Fusion. That’s for display/banners, for videos, we surely expect some activity too, not for his properties, but to extend his reach on the web away from his sites. One potential player?
News Corp. owns 5% of Roo, with the option to buy 5% more. I think they just might make a run at Roo (disclaimer: Roo is one of the many distribution partners in WatchMojo.com original video syndication network).
Of course, this is not without risk. Advertisers call ad networks when they want reach on obscure sites etc., when they call News Corp., they want premium inventory, so if the ad salespeople start to pimp low quality sites away from News Corp. into the annals of the Web, then they might be turned off and be less prone to pick up the phone and call. But, that is a risk worth taking when you consider than increasingly, online, the action tends to be away from your site.
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