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 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.
As Twitter Japan gets going upon its launch Tuesday night , one of the things that observers are going to be most closely watching is whether or not Japanese users accept the ads that are on the new site.
That's mainly because one of the biggest questions--or maybe concerns is the proper term--about the main, English-language version of Twitter is that, because it's ad-free and free to use, it has no obvious business model.
In an interview, venture capitalist and Creative Commons CEO Joi Ito--who helped create Digital Garage, which was largely responsible for localizing Twitter for its Japanese version--explained that it was thought that implementing ads from day one was the way to go there.
Digital Garage invested in Twitter as part of the localization arrangement.
"Ads are important," Ito told me. "It's always harder to add ads later. So we're launching with them in Japan."
Until I saw what the Twitter Japan site looked like, I wasn't at all sure how ads would work. But after seeing an image of the site, which Ito posted on his own blog , I think it's actually a pretty light implementation, and one which users of the English-language site would be hard-pressed to get up in arms over.
Now, I'm not a proponent of ads. I love free online services. But as an editor of mine said this evening, it is sometimes hard to fathom how angry users get when someone tries to put ads on free sites. "How dare they try to make money," seems to go the thinking.
Well, there's more to it, of course. Obviously, many implementations of ad-supported sites are horrible. But meanwhile, Twitter is rolling along, building a user base of people who are becoming more and more dependent on it, and there doesn't seem to be a dime coming in, at least not from the public site.
And certainly, there have been rumblings here or there about ads coming. But an Internet truism seems to be that you simply can't add ads to a site that hasn't had them. There is no better way to chase away your users than to do that.
But I think the Twitter Japan ad experience is going to be very closely examined, because if people in Japan aren't put off by the ads, it's going to be hard to make the argument that people here would be, even though we're used to the ad-free model.
The question may eventually come down to whether people would rather have Twitter with ads or no Twitter at all.
I don't mean to sound alarmist, or to be an apologist for the ad model. But again, after seeing the Japanese site, I just can't see how having ads on Twitter's pages here would be all that much of an imposition. Sure, it would ruin the simple, clean, innocent feel of the site, but that can't last forever, can it? Google's home page still doesn't have ads, but its search results pages sure do.
Another interesting thing, meanwhile, about the Twitter Japan ad model is that it launched with spots from Toyota, which link to an opt-in Toyota Twitter feed.
I'm not sure exactly what would come through that feed, but it's not clear to me how receptive the audience will be to corporate marketing coming through feeds. On the other hand, there are already some examples of that here, at least in the form of political marketing, like that of Barack Obama's Twitter account.
Whether that model would fly for corporate accounts is very uncertain to me. I know that I personally would have no interest in a Dell feed, or a Microsoft feed. I'm trying to think of a company whose feed I would willingly subscribe to--and read--and I'm coming up blank.
Ultimately, then, the lesson here may be: Get ready to deal with ads on Twitter, in one form or another. I could well have this totally backwards, but I'm guessing not. Where Twitter loses me, however, is if they push ads into associated services like Twhirl.
But if ads ever do come, and they're just on Twitter.com pages, well, I'm going to cut the company a little slack.
When I walked into midtown Manhattan's flashy Arena nightclub on Tuesday evening for an event celebrating the introduction of RealNetworks' Rhapsody music service on TiVo , a waiter approached me with a tray full of tumblers containing a clear liquid accompanied by slices of lime.
I was thirsty. "Is this water?" I asked him.
"No, it's an HD Crystal Clear Cosmo," he replied matter-of-factly, "so, no, it's not water."
A little bit of journalistic digging--i.e. finding a sign detailing the evening's signature drinks--yielded that that the HD Crystal Clear Cosmo consisted of vodka, triple sec, white cranberry juice, and lime juice. The Cosmos were accompanied by pale blue Rhaps-a-Tinis that consisted of Hypnotiq, vodka and white grape juice.
Personally, I never knew that vodka, white cranberry juice and triple sec were responsible for the crystal-clear picture on the awe-inducing Discovery Channel HD documentaries that I occasionally watch while eating take-out Chinese food in my apartment. Guess you learn something new every day.On the left, 'HD Crystal Clear Cosmos.' On the right, 'Rhaps-a-tinis' with Hypnotiq.
But I digress. The TiVo-Rhapsody event wasn't all that momentous, considering the news that Rhapsody would be fueling a TiVo-based music service had already hit the wires hours ago. This was, rather, a party, albeit one with an approximately 65-35 male-female ratio. TiVo president and CEO Tom Rogers and RealNetworks Chairman and CEO Rob Glaser made brief speeches--about which Rogers joked that "you can't fast-forward through" like you do with commercials on a TiVo.
The crowd was, overall, a suit-clad industry set. But I spotted a few fellow members of the online tech press: Gizmodo 's Richard Blakeley, the Silicon Alley Insider 's Peter Kafka, and camera-toting CrunchGear blogger Nicholas Deleon, who thought the Rhaps-a-tinis were gross.
Then there was entertainment. The event featured a live performance by alterna-pop band Fountains of Wayne, and emcee skills courtesy of The Bachelor host Chris Harrison, who spoke of TiVo and Rhapsody as a "perfect match" in the vein of the reality show that employs him.
The relationship analogies got a little bit uncomfortable when Harrison started talking about how TiVo kept forming alliances with other companies like Rhapsody and Amazon Unbox to boost its set-top service. "That TiVo's kind of a whore," Harrison joked. "TiVo gets around. It's my kind of guy."