I was shocked when my colleague told me that Adsmart or Adrevenue – a UK based ad network that Games2win had signed up has gone bust…taking along with it about 500 UK Pounds owned to us.
Shucks…. and hell…. how do we get our money back?
I believe this is the beginningof the darker side of the slowdown and the economic holocaust – companies we believe are doing OK suddenly slamming the door on their clients, employees and partners.
In the case of Adnetworks, this is a bad business case. These guys have surely collected moneys from their clients that ran campaigns on their publisher sites and then have used up that money to run their day to day business. They are now under receivership and we are supposed to deal with the official liquidators to recover our money.
In the meanwhile, the entrepreneur (Paul Qaurterman) has had the gall to launch a new company, claiming that he has received VC funding of 0.5 mill (which moron VC is this?) and even tells my colleague that if we start working with his new company, he will compensate 50% of his last companies payables! So, was this the way to demand a 50% reduction on payables in the first place?
Publishers beware – lots of small ad networks and media agencies are going to go up in the clouds – dont count your revenue till its in the bank
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February 13, 2009 at 9:59 am
Anon.
How is the internet scene in India. Heard lot of companies are struggling to keep themselves afloat
February 13, 2009 at 10:04 am
rodinhood
Actually, the situation is equally bad. Lots of ad networks ‘negotiating’ payments’ with publishers – someone told me that they are asking for 50% reductions.
Internet companies suffering in the housing and travel segment really badly
February 13, 2009 at 12:03 pm
Anon.
Thanks for your input Alok, what is your thought on those in spaces like social networking, careers and matrimonial space.
I really think those who were just trying to acquire users bases with no effective monetization strategy in place , particularly in the social networking space might have tougher times ahead of them.
Also at the same time do you feel that what we have ahead of us is a holocaust of sorts. At least the govt and the media says the economy will continue to grow and not be in recession, technically.
February 13, 2009 at 12:45 pm
rodinhood
Social Networks in India are in for a rude shock.. Orkut and Facebook together has had everyone’s breakfast lunch and dinner (together as per comScore they will exceed 25 million of Indians), so the rest are just crumbs. Also, monetisation of social networks is a big challenge thanks to all the problems we know. Careers and Matrimonials I am not an expert on and dont follow them closely.
I believe we are in a 2 year downturn – dont believe the government in anything they say – when were the right ever?
February 13, 2009 at 12:48 pm
Rizwan
Hey, I like the point of view, but it also shows that there are some VC’s still out there willing to take chances…..I don’t know how the social media scene is like, in India, but there are signs of a slow down (not a recession). Companies have gone frugal and are sort of going into hibernation.
This also means that these guys are not experimenting and these times can prove to be breeding grounds for startups who can offer something different to people and hence setup base while the bigger players shy away…..
All in all – no one can predict what will come out of this – I am planning to save my money and buckle up for the ride ahead
February 13, 2009 at 3:19 pm
Anon.
@ Rizwan, I am not too sure about the VC’s thing. They all would be as clueless or informed ( as anyone of us ). And with obviously a risk appetite much lesser then others.
But on the startup front , we should see some more innovative models coming into play. Adversity gets the best out of us.
Btw, Alok hope to see more posts here. And also liked the name “Rodinhood”
February 14, 2009 at 7:46 am
Jassim
Adnetworks thrived at time when there wasnt too many options for the longtail publishers and startups, but as you could see larger platforms such as Google Adsense is forming partnerships with agencies directly, the big budgets would always move there. Most adnetworks fail to build relationships with agencies and still peddle their wares as a commodity.Check out a new opensource model from publicis called ViVaki, i guess this is a prototype of an integrated trading platform for buyers and sellers to converge and eliminate inherent inefficiencies….So do we still think the adnetwork model could survive in it current state ?
February 14, 2009 at 7:58 am
rodinhood
I think this is a great point. The ‘disintermediation’ of Ad Networks that come only from the ‘technology’ side and just tie up with the likes of WPP and Publicis will be obliterated. And its not easy to build relationships with brands. Trust me on that. It takes years and years… So, Jassim you are very correct on – I won’t be suprised if tomorrow Lintas, Madison and Mindshare in India quickly snap up failing ad networks for probably just their cost of servers etc
February 14, 2009 at 9:53 pm
anon2
Alok,
Couple of questions…
You speak of “Downturn”…is that in internet media or generally in entire enconomy? And when you say 2 years, did that period start last year or this year?
Pure Indian internet players are still limited to content-heavy sites like TOI etc. Otherwise indians are just going to global sites like google, yahoo, ebay etc. Is that true? Whats the long term play for desi sites…if ad monetization won’t work?
February 15, 2009 at 5:05 am
rodinhood
I meant the Economy per se. The Internet economy is actually much better protected given its unique strengths. In my mind, the 2 year period starts from January 09. I really like your question about the Indian sites and their purpose and viability. All the ‘me-too’s’ are redundant. I cant understand why a social networking site in India makes sense when 70% of India youth are already on Orkut! I guess the differentiators will be unique content, local offering etc etc. Take the case of games2win.com – we are aggressively chasing global eyeballs coz we are not unique enough for India and even if we were, the business is too small to bother about
To be honest, ad revenues is a much maligned word – its the business engine of Google! In India, the Star’s, Zee’s and Sony’s run on Ad Revenue given that subscription sucks. I think its just become a good bashing point conversation at the moment.
February 15, 2009 at 11:07 am
jassim
The medium in India is still driven by the digital ‘departments’ of mass media companies..while this is great in terms of finance and having a safety net, it is also prone to face ‘frog in a well’ issues which drives away talent and eventually brings mostly ’sons of dilbert’ who look at desi-fying or bootlegging succesful concepts probably inspired by bollywood.
I mean after the matrimony websites, the industry is yet to crack an original killer idea which works with the masses in India.
At the sametime adrevenue is still being driven by either direct sales to agencies or via networks/ad aggregators both of which are cyclical and dependent on multiple factors on which they don’t have much control…
I guess monetisation would move increasingly from a one time fulfilment of a view/click into a model based on lifetime value of a visitor and how a media company could enhance that relationship via content,credibility and commerce.
February 16, 2009 at 2:47 pm
UK AdSmart Ad Network Goes Bust
[...] several sites that will now be out of pocket from this closure, such as Games2win who has already published an article about their [...]
March 11, 2009 at 4:32 pm
Paul Quarterman
I was equally shocked when I learnt that significant advertisers in the UK had gone bust. These are mainstream highstreet brands that advertised through Adrevenue.
When a few large organisations leave you carrying the can for ad campaigns already delivered but not paid for it is a difficult situation.
In the UK you are not allowed to trade if you are insolvent. So whilst we had good forthcomming ad campaigns on our books we could not trade or take the campaigns.
It is a tough situation when you spend 10 years of your life building a company like Adrevenue only to find that in an economic down turn you loose the lot.
The good news is that most of the publishers have stuck with us, when you are doing £5mill a year and paying out 55-60% to your publisher base the appreciate what they have earnt over the years – I glad the loyal ones have a pragmatic longer term view and not worried about small change like £500 quid (not even a good meal in The Imperial Hotel in New Delhi ;o)
Yes, it ’shucks’
March 11, 2009 at 9:56 pm
rodinhood
So, what happens when a few more leading advertisers go bust in your new firm?
Is that another really expensive lunch that publishers have to pay up?
Or will there be a new incentive to earn back breakfast (half the lunch) for signing up yet for the 3rd attempt?
March 18, 2009 at 4:10 pm
Daniel Crespo
To suggest that the downfall of Adrevenue/Adsmart was due to non-payment by third parties is simply not true.
The majority of the business done in the UK is via Agencies – advertiser budget is signed off before it is allocated to the various networks and sites and therefore even if they were to go under the agreement is between the network and the agency.
This lack of understanding of what the core business was actually about is far more likely the cause for the companies demise than the actions of a third party – Adrevenue was a business which made money during the “boom”, caught some lucky waves and had some good if undervalued resources.
Other than that there was little of value – publisher loyalty was actually one of the main plus points – but with comments as above its unlikely to remain that way at any new company this man is involved with.
March 19, 2009 at 12:47 pm
rodinhood
Daniel, your insights are indeed enlightening. The big 10 advertising agencies are very much kicking and alive and hence I wonder who these mysterious blue chip clients of Adrevenue are that went under!