The Online Ad Start-Up Beauty Pageant

Now in its second year, OnMedia NYC is a beauty pageant of sorts for interactive advertising and marketing start-ups. Over the course of the two-day event, dozens of new companies (as well as a few older ones touting new services or a yen for funding) make 6-minute elevator pitches to an audience comprising mostly venture capitalists and some potential media partners and agency denizens.

It’s a good opportunity to take the pulse of where online advertising may be headed. Or at least where the people with the money are betting it’s headed (which may or may not be the same thing). Last year, there was a heavy focus on social applications, organizing content, and not a few mobile plays.

So which directions are start-ups taking now?

Ad Networks and More Ad Networks

Overwhelmingly, the trend is ad networks (and ad exchanges). Lots of ad networks. Ad networks in all shapes and sizes. Contextual networks, vertical networks, behavioral networks, international networks, remnant inventory networks, geotargeted networks, performance-based CPA (define) networks. It seems any way you can slice and dice online advertising, there’s a network or three specializing in your favorite inventory flavor.

Some of the networks that presented have been around a while, such as Exponential (formerly Tribal Fusion), Adify and Seevast (vertical networks), (performance), and Lat49 (geotargeting). Newer ones you may not yet know include up-and-coming Hydra Network, a performance-based CPA ad network claiming to have affected 25 million transactions last year for an impressive and diverse roster of clients, including Xerox, Comcast, Kraft and TiVo.

Etology‘s automated process serves 2 billions ads daily on 3,230 sites. The network has its eye on international growth, says marketing VP Kent Laux. In additional to targeting ads by category and keyword, advertisers can target by country. Laux says the company is in the process of partnering with Japanese blogs and other CGM (define) sites and seeking similar deals elsewhere on the planet.

NebuAd, another newcomer, offers a behavioral targeting network with a twist by partnering with ISPs as well as advertisers and publishers. Large ISPs that agree to hook up the company’s appliance share nonpersonally identifiable user data — and revenue — with the company.

Ad it Last made a trip from Down Under to show off its solution for selling deeply discounted distressed inventory to smaller advertisers, who are usually out of the running for last-minute media unless they can afford to work with an agency. The company, which just opened a San Francisco outpost, also sells print and broadcast in addition to online inventory via a Web interface.

David Moore, chairman and CEO of 24/7 Real Media, said on a panel that the current trend toward ad networks is a threat to portal audiences. “Networks enable that kind of reach,” he affirmed.

They also afford radically simplified buys, which portals and major publishers alike fully recognize. “We spend a lot of time trying to make buying from us easier,” said Gordon McLeod, who heads The Wall Street Journal Digital Network.

The Discovery Channel

“Discovery” is bubbling up as a buzzword, even in the ad network model — where it could arguably also mean “contextual.” Aggregate Knowledge walked through its Pique PPC (define) product for retailers and media sites. It delivers relevant product suggestions in real time on Web sites, as well as via affiliate and e-mail distribution.

t5m, a new video play, features hi-res interviews with prominent (but not necessarily celebrity) figures. Watch an interview or click on a channel (one of the branded channels bears the Disney logo), and a wealth of related material awaits discovery by the user, potentially leading into immersive brand and product experiences.

Even relative newcomer SpiralFrog, which serves ads alongside its DRMed-to-the-hilt music, uses the “d” word now.

The Web 2.0 Stuff

Social and consumer-generated media, along with virtual worlds, are still very much around, just less lumped together with the Web 2.0 label than they were as recently as a year ago. Virtual world Stardoll is an extremely pink retooling of Habbo aimed at tween girls. The site features avatars of real celebrities and opportunities to use virtual money to buy such items as virtual DKNY collectables at a virtual version of the company’s flagship store.

Aimed at a slightly older audience, Real Girls Media’s first launch, Divine Caroline, is a woman’s magazine with 100 percent user-generated content (UGC), prettily packaged.

Of the UGC trend, Athan Stephanopoulos claimed (alas, without attribution) that over 60 percent of the online content viewed by the average 21 year old was created by someone she knows. His company, Gorilla Spot, encourages users to edit video online and send it on to people they know. An early client was Paramount Pictures, which supplied users with material from “Sweeny Todd” to mash up into their own trailers for the film.

Some of these companies you’ll never hear of again. Others may be game-changers. The hard part? Guessing which is which.

Meet Rebecca at SES London February 19-21.

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