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Old 06-24-2004   #1
Joseph Morin
 
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AOL Purchases Advertising.com for $435 MM

http://www.itworld.com/Tech/2428/040623aoladvertising/
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Old 06-24-2004   #2
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Is this AOL's first move into an independent product? Will replacing Google results be next?
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Old 06-25-2004   #3
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As far as I can recall, yes, but their deal with Google is highly lucrative (AdWords distribution) so I don't see them displacing Google search anytime soon.
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Old 06-25-2004   #4
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.. sooner or later....

AOL can't continue to sit back and let Google increase market share without fighting back.

What I see is AOL trying to gain market share among the thousands of smaller advertisers. They can't stop deailng with Google now, of course. They didn't spend $450M on a business that they are going to trash. But over time, you have to expect them to come up with ways for those clients to not use Google (and Yahoo, etc etc.)
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Old 06-25-2004   #5
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in the press call to discuss the purchase, they talked alot about how this purchase gets AOL into the "pay-for-performance" advertising game, and they also at one point compared it to Yahoo's purchase of Overture.

they insist that Advertising.com will remain a stand-alone like Overture, and that it will retain its independent distribution network.

it presents an interesting conflict of interest though. i know that many agencies are unsure whether to view Advertising.com as an ad network to be utilized, or a competitor -- its the same problem that 24/7 Real Media and ValueClick have... and incidentally, those are the companies Advertising.com identifies as their most direct competitors...

if Advertising.com becomes the defacto go-between for AOL ads (esp. important ads like search) will they be forced to drop (or downplay) their service business and concentrate on self-service distribution to put agencies at ease?

Overture and Google offer services, but those focus on their own networks. advertisers need broader reach, so these services generally dont compete with agencies who offer broad-reaching services. Advertising.com, meanwhile, services across multiple networks -- they'll even build and manage Overture and Google campaigns for you... so to that extent, they cross over into SEM waters too...

so the question is, did AOL buy an advertising service or an ad network? and will advertisers want their cross-network campaigns managed by one ad network? how will the other networks feel about that?
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Old 06-25-2004   #6
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hmmm

Quote:
Originally Posted by gvenditto
.. sooner or later....

AOL can't continue to sit back and let Google increase market share without fighting back.

What I see is AOL trying to gain market share among the thousands of smaller advertisers. They can't stop deailng with Google now, of course. They didn't spend $450M on a business that they are going to trash. But over time, you have to expect them to come up with ways for those clients to not use Google (and Yahoo, etc etc.)
The funny part of it is they are receiving at least 35% maybe more of the proceeds and do not have to collect and do no support and deal with all the rest of it. It is a very sweet deal for AOL who can concentrate on other parts of their world.. like provide connections etc.
I think Advertising.com just adds a whole branch to their banners/various marketing efforts etc. and also maybe gets them more products to add to their world.. the search engine side at advertising.com is more tracking and bid management tools etc.
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