AFI BLOG: Media and Technology

The Wall Street Journal

For the past five years, SOAPnet.com has been the Disney-ABC Television Group’s hub for all-things soap opera. It has hosted clips of shows like “All My Children,” featured behind-the-scenes news, and even sold souvenirs.

But starting Wednesday, it is an “ad network” as well. The Walt Disney Co. unit plans to announce that it has struck agreements with 45 smaller, separate Web sites that allow it to distribute content on them and, more importantly, sell advertising on their behalf. By doing so, it joins roughly 300 other companies that also call themselves ad networks.

The business of brokering ads across clusters of Web sites has become one of the most popular — and overcrowded — niches on the Web. The result is a glut of networks competing with each other, confusing media buyers and guaranteeing that some sort of shakeout is inevitable.

For some, starting an ad network is about survival: SOAPnet.com’s traffic was light and diminishing, so in order to sell ads it needed to be able to offer access to other sites as well. Others are hoping to capitalize on the rise in online ad spending, either to capture an expected explosion in display advertising, or follow the lucky footsteps of previous ad networks that have been snapped up at high prices by large companies.

The ad-network business relies on two factors for growth: Web publishers ceding more of their ad inventories to the networks to sell, and the networks being able to actually sell that ad space to marketers. For the most part, publishers have little to lose by letting an ad network try to sell some space for them.

The bigger problem is that because so many ad networks are now competing — in some cases, multiple networks are trying to sell the same slice of ad space — it’s harder than ever to rack up sales. Already, a number of networks are ailing.

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