Silicon Valley Watcher - reporting on the business of technology and media

I've been a fan of the astonishingly young and talented Jared Kopf for a while, ever since I met him several years ago when he was working with the astonishingly young and talented Max Levchin at Slide.com, (and part of the Odessa mafia :-).

Jared is smart much smarter than his years (and many peers) and he has already paid a lot of dues. For the past two years Jared has been working on a new project the launching of AdRoll, an advertising network that seeks to link up advertisers with community-specific networks of small online publishers.

Normally I'm not a big fan of advertising networks. They charge too much and they are not a defensible business because online publishers can potentially handle their own advertising once they reach a certain size.

But AdRoll could turn out differently. We'll see how its blend of social marketing tools and ad serving technologies disrupt some of the larger networks such as FM Publishing, Adbrite, and BlogAds. AdRoll can certainly give them a run for their money and more. [BTW FM Publishing just raised as much as $50m.]

AdRoll today emerged from private beta and is now in public beta. Anyone can sign up on their web site and recruit other web sites, set advertising prices, etc. Advertisers can buy space on an AdRoll network in one lump without having to verify out each individual site and make individual deals.

Media buyers like to buy large numbers of the same type of audience. AdRoll rolls up many smaller audiences into a larger single entity and takes a cut of between 20 to 30 per cent of revenues in return for serving the ads and providing a collection of management tools.

"Smaller brands can use AdRoll to connect with communities that they wouldn't be able to reach through larger online publishers," says Jared.

Challenges...

Earlier this year I spoke with Adify, which has a great console and can place ads at different times, sites, etc and also allows people to create their own networks, and it takes about a 20 per cent share of revenues. Adify might be a bigger challenge for AdRoll. FM Publishing takes a larger cut but it goes out and sells ads which AdRoll does not.

A young man's game...

Still, pricing is a flexible thing, and servers are cheap--it'll be the design of AdRolls' technology and its relationships that will determine success. Jared and his colleagues are young, with a low cost of operations (and no family support payments yet), which means AdRoll can dig in for the long term while other ad networks that have taken on large investors don't have that luxury.

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Join a Silicon Valley Network...

I'm going to try out AdRoll and I've created a Silicon Valley Network of like-minded web sites that includes Silicon Valley Watcher. So if you have an online site, a blog, or even a company product or service, sign up with my Silicon Valley Network. We'll share in the ad revenues and see if there is money to be made in these types of advertising networks. I've set quite a high CPM of about 1 cent per impression, after all there is no sense (as in Google AdSense) in devaluing your brand.

Send me an email tom(at)siliconvalleywatcher.com if you are interested in exploring this further.

Here is how AdRoll works in 45 seconds:

I've never liked banner ads much, or any of the conventional type of online ads you see most places. They are a relic from the days of print and don't make use of the many media technologies we have at our disposal. I've begun using a form of hand-coded widget for my sponsor Intel (see right).

I recently met with Peter Kim, the CEO of Interpolls, once based in San Francisco, now in Pasadena, California. Interpolls has developed a new type of online advertising it calls a rich media widget (there is an example at the end of this article.)

"We started the company in San Francisco in 1999 but then ran straight into the downturn so we had to regroup, move back into working from our apartments," said Peter Kim. "We had to change our mindset and we moved down to southern California. We've grown since then from 4 to 40 staff."

Mr Kim says that Interpolls' philosophy about online advertising has been to make it integrated into a company's marketing strategy and make it accountable. With its recently introduced rich media widgets strategy, it can integrate a media player, user polls, RSS, Javascript, and anything else. It is based on technology developed by Interpolls and the rich media widget can integrate anything that a regular web page can hold.

Mr Kim says that an important aspect of the widget approach to online advertising is that the widget can be shared, and that the sharing can be tracked.

Interpolls also hosts the widget content and pricing is fixed, that way if you do have a viral hit on your hands, you don't get billed for the millions of extra impressions etc.

The content of the widget is usually developed by an outside agency but Interpolls has an in-house creative team and offers advice on best practices.

"The proliferation of social networks is perfect for rich media widgets," says Mr Kim. "We see people embedding widgets related to movies in their MySpace pages. And we've even found that if the widget includes an intstant message or email function, people will use that to contact their friends, something which we did not expect."

There are a lot of widget creation companies around but Interpolls says its widgets are certified by the large social networks. For example, MySpace is very concerned with privacy and other issues. Widgets that don't conform to its specs risk being banned.

Marrying rich media widgets to TV broadcasts is the next frontier, says Mr Kim. "We have to continually innovate to stay ahead."

Here is an example of a rich media widget advertisement: