October 22, 2007: Network Media: Intriguing But Controversial

What do you think of "network media," an intriguing strategy built around the recognition that online media works best when it can tap into the internet's contradictory potential for both scale and targeting? One network media business getting a lot attention now is Glam. In a relatively short time and with a relatively small kernel of proprietary content, Glam has become one of the most trafficked women's destinations on the web...if you count the traffic to the network of affiliated sites across which Glam serves ads. A few weeks ago, in a post called "Is Glam a Sham?", TechCrunch wrote about the pros and cons of Glam's business model.

The big picture opportunities for network media involve four issues: the difficulty navigating highly vertical content that resides in pockets all over the web; the difficulty monetizing this content; the scale benefits of selling online advertisers as large an audience as possible; and the fact that the more targeted the ad inventory, the higher the CPMs. It's very early in the life of network media, but so far I don't think anyone has cracked the entire nut.

Glam may be farthest along. One reason I'm familiar with them is that they've hired several of my former Yahoo! colleagues to build the proprietary ad platform that is envisioned as the core of Glam's business. Building your own ad platform from scratch is time-consuming and expensive. There's no doubt that when Glam completes this project it will leverage the ad platform into other verticals, probably far afield from its current women's niche.

Another company, Name Media, is tackling the network media challenge from the perspective of what they call "digital real estate." They buy thousands of domains--photography.com is a flagship--that people might enter into a browser, fill them with content of varying quality, and monetize with ads from the Name Media network. They'll also monetize unused, or "parked," domains owned by people who join the network as affiliates. An issue with the Name Media approach is that the acquisition of so-called digital real estate isn't very scalable.

Federated Media is another player in this space.

For me, a big piece that's missing from the network model is deep audience insight. If you attract an audience to an environment you host and control, you can observe their behavior in minute detail. If your audience is spread across a plethora of affiliates or network partners, you must resort to proxies for inferring behavior and demographics (for example, clickthrough rates). I believe advertisers of the future will want to know more about the audiences they're buying, so the network strategy may need to evolve further.

Time will tell, but the network media business model is definitely a hot topic these days. Network media is part rival, part complement to social media. It would be interesting to see a company emerge that can do both really well.