Ex-Yahoo execs take on brand ad network, raise funds

For the last six years, the multi-billion-dollar breadwinner of the online advertising business have been those well-placed text links that appear on Google and other search engines.

Now, executives and investors want the money to starting pouring in from sales of graphical or video ads on the page.

Two former executives from Yahoo, one of the Web's prime-time locations for display ads, are banking on new demand from advertisers for online brand ads, promotions akin to the outdoor billboard or TV commercial. Last year, Elizabeth Blair and Andy Atherton--two former longtime executives in Yahoo's ad operations--started Brand.net to be an advertising network that would cater solely to wishes of brand advertisers, as opposed to direct marketers that buy text links, email lists, and other action-oriented media.

On Tuesday, their company Brand.net will announce that it has raised $10 million from Norwest Venture Partners and its previous investor InterWest Partners so that it can build up operations. The company brought in $3 million last November, too.

Brand.net is one of in a long lineup of new advertising plays that are attracting investors' attention. Turn, for example, raised $15 million from Norwest Venture Partners and others last week to further develop its display advertising marketplace.

The idea behind these companies is that online brand advertising has much further to grow. Off of the Internet, brand advertising is worth an estimated $130 billion annually. Online, it's still worth about $4 billion annually, compared to the $16 billion for direct marketing ads online.

For its part, Brand.net has not announced any of its publishing or advertising partners, and a company representative said it has no affiliation with Yahoo. But Blair said that Brand.net works with the top advertising agencies to buy and place brand ads across a host of top publishing sites.

The San Mateo, Calif.-based company uses its own ad server and analytics technology to help advertisers run a targeted, well-timed campaign on the Web, such as the launch of a new car or movie promotion, according to Blair. The company's pitch to advertisers and agencies is that it can help them save time by doing the legwork for them across many sites.

It's hard to say whether it will work, given that there are so many advertising networks that have already aggregated much of the prime real estate on the Web. But the company's founders believe that their track record of working with advertisers and agencies will be key to their success.

"A lot of the investment in (online advertising) has been from technology-focused folks trying to solve problems and impose solutions on a market," said Atherton, a former vice president in Yahoo's advertising group.

"There has been a little Silicon Valley-Madison Avenue dialog in which Silicon Valley has said, 'you should do more direct response advertising because that's the tool we've built,' rather than listening to advertisers and agencies requirements and building around those," he said.

[djc8080]

Global advertising is $1.5 trillion. Google has $20+ billion - just over 1% of total. Brand advertising is huge.

tEarn AdNet

[joemarchese]

It has always been the promise of advertising dollars shifting in proportion to attention that has fueled investment/speculation in the online space. It hasn't been until today (8 years after the bubble) that core technology companies have started to focus on what will deliver true value to the brands online, not simply managing to the metrics they have historically been judged on. They can do this because they are becoming partners with the agency, not just service providers.

Now take a step into social media and the whole thing gets muddied again. Who are the publishers really? What determines relevancy? How do I measure it?

Great piece Stefanie.