@ EconAds: A Good Time To Start An Ad Network? Of Course It Is

Another day, another company starts an ad network. Peter Horan, CEO of Goodmail Systems (and former CEO, IAC ( NSDQ: IACI) Media & Advertising) asked a panel of online ad executives at paidContent parent ContentNext's EconAds Seminar whether there is a glut.-- A good time to start an ad net?: Now's as good a time as any to start an ad network business, several panelists said. It's like starting an Italian restaurant in New York. The good ones will thrive. Starting any business because of the exit is already flawed, said Adify's co-founder and president Russ Fradin, who admitted that it might sound disingenuous since selling his. Mike Walrath, SVP, Yahoo ( NSDQ: YHOO) Advertiser Marketplace Group and former CEO, Right Media: "We will see more ad nets, ad agencies and publishers start to morph their businesses according to that model.

-- Pork bellies vs. diamonds redux: The panel also dealt with the "pork bellies" complaint about commoditizing inventory. Michael Rubenstein, director, Ad Exchange, Google ( NSDQ: GOOG) (and former VP & GM, DoubleClick) reiterated his "diamonds" analogy as a response to the charge that ad networks devalue inventory by commoditizing it. Cyril Zimmermann, founder and CEO of Hi-Media. "If you have a big network, you have an alternative between the premium placement offered by verticals and the automated sales supplied by technology or remnant networks."

-- Anonymous: Fradin: If you look at the history of performance-based ad nets, companies came along and offered to handle the unsold ads anonymously?We won't tell anyone it's for your site?so it wouldn't commoditize their inventory and lower its value. There are some unscrupulous ad nets out there. The ones who don't do it anonymously?they're the ones causing this "pork bellies" fear.

-- Social nets and ad nets: Pali Research's Rich Greenfield asked if there's a winner between vertical and horizontal. Fradin: A $1 CPM used to be bottom of the barrel. Now it's 3 cents. Performance networks have driven that down. He's skeptical of the data being used by social networks; there will be a consumer backlash and regulatory clampdown.

Register for our EconAds seminar, June 3rd, at the New World Stages in New York City. Covering the economics of online advertising.