What's so interesting about AOL's bid for TradeDoubler?

This past Tuesday, AOL put in a 6.3 billion kronor (about $900 million) bid for Swedish ad network TradeDoubler.  Although TradeDoubler's board voted to accept the bid, one of its largest share holders rejected the bid as undervalued.  The take among the investment community is that this is AOL's attempt to expand advertising revenues now that it has moved away from its subscription-based business model.  While I think this is certainly true, I find a few other angles of the potential acquisition more interesting:

1) Ad networks are back in a big way.  In 2001, I wrote a piece predicting the demise of ad networks.  And for the most part, I was dead on: Engage went belly up; DoubleClick ditched its media business.  But now, 6 years later, new ad networks are springing up all over the place and veteran networks are offering expanded services.  I think improvements in technology have made it possible for ad networks and media sites to help advertisers target ads based on more than demographics -- always the Achilles heel of the impression-based, online network buy.  AOL's willingness to shell out some big bucks for TradeDoubler (it paid $435 million in 2004 for advertising.com, one of the largest ad networks in the US) indicates that it thinks ad networks will play a crucial role in the future of online advertising.

2.  More and more, media properties are providing marketing services to help differentiate their overall offering from competitors.  Yahoo!'s Panama ad management platform and MSN's AdCenter are tools that provide marketers an easy way to buy and manage ads on their sites (and eventually even on other online properties).  They, like Google also provide a host of free marketer services (e.g. Keyword selection tools, Web analytics).  This interest in TradeDoubler indicates AOL is also quite interested in growing its marketing services capabilities.

3.  Why isn't AOL investing in social media?  AOL has always served the mainstream consumer over the early adopter.  But as a media company competing with other online portals for advertising dollars, I'm surprised that it is so willing to spend so much on more of what it already has.  Granted this acquisition would provide a European presence.  But I think at the end of the year, the most successful media companies will be the ones that provide advertisers diverse media options.  We see MSN preparing for this through its acquisitions of additional marketing channels (Massive Inc),  Google by developing advertising in other media (print, radio), and Yahoo! wishing they had done more with del.icio.us.  AOL's interest in TradeDoubler seems very focused on staid online formats like display ads and affiliate marketing.  A mistake I think, when the rest of the world is looking to alternative ways to create conversations with their customers online.


re: What's so interesting about AOL's bid for TradeDoubler?

The AOL buy is very much in the mainstream of what most folks come to think of as traditional ad networks (unrelated websites collected together to sell audiences based on user interests deduced by which sites in the network they visit.) I thought you might be interested in three trends I see in ad networks:1) Vertical networks - ad networks that focus on single industries (auto - www.jumpstartautomotivemedia.com: travel www.travelad.net; and technology-www.netshelter.net). They are doing exceedingly well and I think we will see more category-specific networks sprout up. Since these networks generally control ALL of the inventory they rep, they can put together multi-unit programs that are very effect, such as roadblocks, video, etc.- not just serve banners.2) Behavioral networks - TACODA (www.tacoda.com) is the world’s largest and most advanced behavioral targeting advertising network. Its Audience Networks™ enables brand advertisers to target relevant messages to specific audience segments of up to 130 million monthly unique visitors across 4,500 websites. TACODA's ability to find audiences marketers might not realize are buyers of their products was just enhanced when TACODA announced that it entered into a multi-year licensing agreement with comScore Networks, to integrate comScore data with its existing massive Audience Networks™ database of behavioral insights. The result will be actionable data that will reveal unique insights about online audiences that will allow advertisers to design stronger media plans and produce and place more relevant online marketing messages. TACODA also just signed the Dow Jones Online network of business and financial site and USA TODAY.com3) Performance Based ad networks - By linking together the 500 or so sites that use its private label AdSonar offering, which enables content-targeted, pay-for-performance ads to appear on their sites, such as ESPN.com, CareerBuilder.com, the nation’s largest online job site, Fodors.com, and Cox Newspapers, Inc. Quigo emerges as the Among Top 10 Independent Ad Networks (measured by MediaPost). In January, Quigo was selected by AlwaysOn Media as the number one Internet New Media company for 2006 among the nation’s Top 100 Private Companies.