This is simply my perspective as I know that others at Right Media and Yahoo! had completely different opinions and feelings about everything that occurred from 2004-2010. That being said, let’s take a walk down memory lane.

Joining Right Media

In late 2004 when my longtime friend Brian O’Kelley (currently CEO of AppNexus) reached out to me to see if I wanted to join a startup called Right Media. Brian was the CTO of Right Media and had built some interesting auction technology for their ad server. They wanted to start going more aggressively after publishers and he thought I’d be able to help with that effort.

I had a good job I enjoyed at Palo Alto Software, a Eugene-based business that is the leader in the business planning software space. I had worked there for four years and was managing a small team running their ecommerce site PaloAlto.com, as well as their main content properties Bplans.com and Mplans.com. In my spare time at night, I also was operating a site I started in 1997 called Wakeboarder.com that I later sold in 2006.

Despite the good job, I wanted the opportunity to join a younger startup and online advertising was a field that I had good experience in and was passionate about. My role was to do business development, product, and support work for medium to small publishers for Right Media’s ad network. Additionally, I looked forward to working with Brian again as we had started our first web business together in 1995 and worked together numerous times since (including a fun dot-com bomb in 1999).

Right Media was a New York company, but when I joined I made it clear I had no plans to move from Eugene. Fortunately, Brian and the rest of the executive team (Michael Walrath, CEO and Christine Hunsicker, COO) allowed me to start building a publisher-focused team in Eugene. When I joined my wife was excited for me to be able to work from home since we had recently had our 2nd child. However, after a month I had already hired three great people and found office space. It was off to the races.

Right Media Growth

When I joined, Right Media was an ad network with some interesting and differentiated auction technology that helped power the network. It had not yet become an ad exchange, but the ad network itself was growing well. I helped build Right Media’s self-service publisher signup, and we began bringing in publishers at a steady clip. it’s funny now to think back to 2005 and how we were talking to publishers like “TheFacebook.com” which was at the time a few young college kids who didn’t know much about advertising for their college social network.

Not too long after getting the office space setup in Eugene the company started making the move to the crazy concept of an ad exchange. We had to go sell other ad networks who were our competitors to use the Right Media Exchange as their ad server or as an additional place to access supply and demand. It was a strange notion to many people externally, but it made a lot of sense to everyone within the company. Even then we didn’t know what would happen when we connected our ad network to another ad network to see how the buying and selling would perform on one platform. Fortunately, it worked quite well.

The Eugene Office Entrance

The time during 2005-2007 was amazing as every month saw growth and progress in the business. The Exchange continued to grow, improve in quality, and it started making real waves within the online advertising industry. We felt like underdogs taking on the establishment to change the industry, which is one of those things that makes startups so much fun and addicting to many people.

There were problems with quality, hiccups with the exchange scaling, and problems with spyware and other issues that the company took very seriously and worked through diligently. I think those things really kept us on our toes and kept us so busy that you really couldn’t stop and marvel at the fact that we were doing billions of impressions per day by the time 2007 hit.

During 2006 though our team in Eugene had noticed that small to medium publishers were having a tough time working with the complexity of the Right Media Exchange. We used the APIs to build RMX Direct which was later renamed to Direct Media Exchange.

This product was the first self-service publisher yield optimizer that was a simple ad server that allowed publishers to get demand from the Exchange while also managing and auctioning their inventory to 3rd party ad networks like Google Adsense, Valueclick, and others. This was a forefather to the products later built by companies like Pubmatic, the Rubicon Project, and AdMeld.

Direct Media Exchange also was experiencing the same kind of rapid growth and success of the Right Media Exchange, but at a smaller scale that was a bit more under the radar. The team in Eugene was pretty proud of what we’d built together.

Pre-Acquisition

My first personal experience with Yahoo! directly came in 2006 during Ad Tech San Francisco. At about 10 am on the first day, Brian told me that he had a meeting scheduled with Yahoo! down in Sunnyvale that afternoon that he could no longer make due to an important meeting at Ad Tech. He suggested I go along with Ant Taylor and Kees Schouten who were both at Ad Tech as well. What was interesting about this was that Ant and Kees were actually in their first week on the job at Right Media and didn’t even really know what their roles were yet. Additionally, I had no context for the meeting besides that “we are talking to Yahoo! about becoming a client.”

We headed down to Sunnyvale and met with Ryan Christensen, who was doing Pricing and Yield Management for Yahoo!’s display business. We managed to get through the meeting even though we lacked context and really spent most of the time learning about how Yahoo! was currently running their non-guaranteed business and talking about how Right Media’s Exchange could help with some of those problems.

Later that summer I was in New York when a group from Yahoo! came to meet with the Right Media executive team. The morning of the meeting, Ant and I were tasked with building a presentation for one portion of the meeting. As a great example of the hectic pace of the startup world, we again lacked context and tried to scrap our way through it anyway. As you’d expect, we created a terrible presentation that wasn’t usable for the meeting. The meeting apparently went well, but the panic I felt that morning was something I’ll never forget.

In October of of 2006 things really started to get more real as Yahoo! invested $40 million into Right Media for 20% of the company and to become a major client of the Exchange. This was a huge win both from a company stability perspective financially, but it also provided a marquee quality client who validated the Exchange in the eyes of the industry.

Of course, there were feelings internally and rumors abound through the rest of 2006 and early 2007 that Yahoo! might want the whole company. As visitors from Yahoo! became more frequent to the offices in 2007, it was a not so subtle secret they were doing due diligence and diving deeper on our technology.

After spending Monday through Thursday at a conference my flighted landed in Eugene and I received a call from Christine Hunsicker our COO. She said I needed to be in New York by 9:00 am the following morning to demo Direct Media Exchange to people from Yahoo! and to bring along our lead product manager and lead engineer for the product. I told her this would be tough as I hadn’t been home all week and it was already Thursday afternoon. She said she wasn’t asking if I could do it or not, so we drove the two hours to Portland to take a red eye to New York.

We flew all night, changed in the bathroom at JFK, and then made it to the Right Media offices a bit late. The three of us walked into the main Right Media conference room where there was a few Right Media executives and then a number of executives from Yahoo!. At the time I wasn’t familiar with any of the Yahoo! executives as it was my first time meeting them, but it was a pretty high-powered tech crowd in the room consisting of SVP of Product Mark Morrissey, SVP of Engineering David Ku, Chief Scientist Qi Lu (now the President of Online Services at Microsoft), VP of Product John Slade, and halfway through the meeting Jerry Yang also made an appearance.

We were asked to demo Direct Media Exchange so we connected our product manager’s laptop to the projector. Remember, this was after a night of travel and no sleep. As the demo begins, the first thing everyone notices is his Firefox toolbar is set to Google as the default search engine. Oops, strike one!

After some half-joking and half-serious comments about the toolbar, I gave an introduction to the product and ask our product manager to login to the application. He then clicked on the username form field and hesitated. I wasn’t sure why he was doing so, but he gave me a look that let me know something was wrong. I urged him to proceed, and he typed in a Gmail address to login to the application. Apparently it was the only address he had with administrative priviledges. Oops, strike two!

We endured some more jokes that were increasingly serious, but then continued to give a quality demo of the application with plenty of good dialog. I thought we’d moved past the early mistakes when we were asked whether we were building a specific future enhancement. Our product manager responded “Absolutely, I’ve already created some mockups I can show you.” I wanted to bang my head on the desk at that point, as I knew what was coming and he opened up mockups that he’d recently created in MS Paint. That’s right, they were screenshots of our app with hand-drawn new features scribbled on it. A true professional mockup! Strike three?

Fortunately, the strength of what we’d built and the traction we’d achieved with Direct Media Exchange in the demo was what ended up hopefully being memorable. The company overall ended up being a compelling option for Yahoo! after Google had just ponied up $3.1 billion for DoubleClick just a few weeks earlier. Yahoo! purchased the remaining 80% of Right Media it didn’t already own for $680M making it one of the largest ad technology acquisitions of all time.

The Acquisition

Getting acquired is an extremely interesting experience. Of course the team celebrated, as it was a large acquisition and it really validates what you’ve been working so hard on. This was the goal right? Or at least one of the big goals?

On one hand you are happy knowing that your company’s stock is now liquid, and you have the hope of the business becoming even bigger and achieving more success with the “endless” resources of the acquiring company. It was also exciting to go work for one of the pioneers of the web who had big businesses in so many areas online.

However, even having never been through an acquisition, I knew many things were going to change. Immediately the people in our Eugene office began to wonder what would happen to them and if our Eugene office would be closed. At this point we had over 30 employees in our Eugene office but people wondered if they’d have new managers, if they’d be laid off, and what would happen to the products they were working on.

The acquisition process and integration itself for me personally was good. It could have been improved probably with more structured education on Yahoo!’s businesses and such, but I felt very welcomed by employees at Yahoo!, and got to immediately start spending time in various Yahoo! offices teaching people about Right Media and what we did.

On my first trip to the Burbank office a group of employees I had just met invited me with them to an Anaheim Might Ducks playoff hockey game. It was a good experience to get to know them personally and see my first live hockey game at the same time.

Moving to their IT systems and and way of working was also pretty easy, but there were still challenging questions the companies had to work through. What would happen to the Right Media brand? Do we integrate websites? What do we switch to Yahoo! technology and what don’t we? Can we still use Google Analytics to track our sites? Most of these things got resolved over time without too much trouble.

Post-Acquisition

After the honeymoon period was over more challenges began to pop up. Specifically, there were strategic questions that showed everyone was not perfectly aligned on where everything was headed and how it should be built. Should we build on top of the existing Right Media technology? Should we start and build a new ad platform from scratch that has the functionality of Right Media combined with the guaranteed ad serving system Yahoo! had built in house?

After the decision was made to build a new platform from scratch (APT) there were then issues trying to keep building Right Media Exchange functionality as many engineers had been moved to work on the new project. Additionally, many engineers had to work on scaling Right Media itself with all of Yahoo!’s added volume and integrating with Yahoo!’s finance systems. This left little room in the road map to keep pushing Right Media as hard as many of us had hoped.

Despite this, there was a lot of excitement over the new system being built and the strategies to do some amazing thing in the display advertising space.

Personally, I had been promoted and was excited about taking on responsibilities at Yahoo! that also went outside of Right Media. It was interesting to learn about new areas of Yahoo!’s business and work with so many new people within the company. I’ve heard other acquisition stories where people from acquired companies were buried in the bigger organization and not given prominent roles. Yahoo! definitely gave various people at Right Media strong roles within the company, although there are definitely people who did get stuck in unfortunate situations.

Microsoft Acquisition Attempt

Not too long after getting settled in at Yahoo!, Terry Semel was replaced with Jerry Yang as the CEO and Microsoft went public with their acquisition offer. This was a very interesting time to say the least. It was a rapid ascent to being a startup striving for attention every day to having Yahoo! on every news site all day long with rumors and speculation about the Microsoft acquisition. People tried to not make it a distraction, but I think everyone would be lying if they said there wasn’t a lot of time spent reading that speculation online every day and talking casually around the offices about the situation. For the most part it seemed like most projects kept their momentum as everyone knew that it was a long way from happening for sure.

Everyone I talked to internally loved the idea of locking in a stock price in the $30s, but no one was very excited about having to integrate two companies of that size with different cultures and missions. I felt the same way, and was wondering what would happen to Right Media in the situation of an acquisition.

Of course, it all fell apart. It was followed by the attempted search deal with Google and it ended Jerry’s time at CEO. In retrospect based on the stock price alone you’d have to classify that it was a mistake for Yahoo! to not take one of the Microsoft offers. However, Yahoo! is still a profitable independent company today which I’d say is better for the overall health of the web than if the acquisition had been successful.

Besides the Microsoft acquisition, Yahoo!’s display strategy was also affected by the economy going into the recession. A lot of the ideas around building guaranteed cross-selling relationships for display didn’t make a ton of sense when every publisher was struggling to sell their own inventory alone. This turned a lot of the development of the APT platform to be on building it internally for Yahoo! while continuing to support the Newspaper Consortium who was using the product to run their display ad businesses and sell Yahoo!’s inventory to local advertisers.

The soured economy led to two rounds of layoffs as well. Laying off members of my team and seeing former Right Media employees in Eugene was definitely the lowest point at Yahoo!. Some of the decisions on who to layoff just didn’t seem to make any sense, although struggling to figure it out has never gotten me anywhere. That being said, the company definitely felt overstaffed to me at the time, so it seemed like layoffs did make sense for Yahoo! overall.

The New Yahoo!

After all that drama, Carol Bartz was brought in as CEO and began to make changes throughout the company. Carol did a nice job shutting down certain products and businesses, selling some pieces of Yahoo!, and the change brought some executive turnover and org structure changes.

Unfortunately, one of those products that got shuttered was Direct Media Exchange. While it was sad for our team in Eugene who built it, the reality was that the code hadn’t been touched since the Right Media acquisition. The product had continued to grow and was doing over 20 billion impressions a month and was easily profitable since there was only a small team doing customer support for it. I was a believer though in the company’s mission to focus, and smaller publishers were not a priority of the company as also demonstrated by the shutting down of the Yahoo! Publisher Network product for small publishers.

The major area though that Carol “outsourced” was the search technology business to Microsoft. This became a huge strategic focus for the company and I took the opportunity to move completely out of the Exchange area into B2B Marketing to run the marketing for the Search Alliance with Microsoft. It was a nice change of pace to work on search, work with Microsoft directly, and to work with a new group within Yahoo!.

During this period our office in Eugene was closed as our lease ran out and we were down from 30+ employees to 7 after the two rounds of layoffs, people moving to other Yahoo! offices, or leaving for other job opportunities altogether.

It became clear to me over this time though that I was getting the entrepreneurial itch again and I wanted to get back to building products. One of nice things about a big company is there are specialists to perform almost every task, but I felt more and more like I spent my whole day just talking to people internally while doing status reports and internal presentations. While there is some value in that, it feels like I was disconnected from products and customers. I could have explored moving into other parts of Yahoo!, but I really wanted to start a company and get back to being an entrepreneur.

Overall

The bottom line was the whole thing was a positive experience for me. I’m glad Brian initially recruited me into it and that the Right Media executive team was supportive of building a presence in Eugene.

It’s interesting though is how perspectives can differ, because I know some people at Right Media felt the acquisition was a very negative experience for them. For me though it was positive to have Right Media stock become liquid, I was exposed to many things I never would have learned in a startup or small company, and I got to have front row seats to some very interesting things happening in technology. The best part really may have been many of the friends I made along the way, many of whom I’m sure I’ll work with again. Not a bad way at all to spend the early part of my 30s.

I wish the ending would have turned out different for Direct Media Exchange, and I wish the momentum of the Right Media Exchange wouldn’t have slowed down. As I was leaving Yahoo! though, it appeared that more emphasis was being put back on that business so hopefully that continues that way.

The Right Media Open event we held last October in Half Moon Bay was a big success for both Right Media as a company but also for all our clients who benefited from the networking that took place at the event. Just recently some videos of some of the panels and discussions at the event were added to our Right Media Open site. The videos include:

• Jerry Yang Fireside Chat (with the head of the IAB Randall Rothenberg)
• Exchange Perspectives
• Direct Marketers Speak Out
• Taking Advantage of the Tail (moderated by yours truly so don’t laugh too hard)
• New Horizons: High Yield Business Opportunities in a Global Exchange
• What Do You Want to be in the New Ad Market? (with Right Media CEO Mike Walrath)

But until they prove they can monetize their audience in a very powerful manner, how is a $10-$15 billion valuation justified even in these bubbly times?

While it wouldn’t surprise me, it’d really shock me if Facebook doesn’t take $500 million for 5% of their company. That is a sizable war chest that will give them a long time and a lot of money to play with to really see if someone can really figure out how to monetize a social network, or for Facebook to grow beyond what it is until really being the next Yahoo! or Google which people seem to think it can become. I’m still not sure we know yet whether Facebook can become a real internet superpower or not.

At a previous job I was in charge of the ecommerce and content properties and web analytics was one of my big areas of focus. Our primary analytics provider was WebsideStory (now called Visual Sciences), and each year they held a user conference where customers of their product got together with the staff at WebsideStory to learn, share, network, and have fun. It was an event I enjoyed a great deal as a customer and someone interested in the analytics space.

Along those lines, I’m very excited to not only be attending but taking part in Right Media’s first event called the Right Media Open taking place October 22-24 in Half Moon Bay. It’ll be a great chance for everyone involved to learn more about each other and the online advertising industry, make connections and relationships, and of course have some fun. There’s an impressive list of industry executives attending, and some surprises coming.

The agenda, partial speaker list, and activities (Segway tours!) are now up on the event website. It is an invite-only event due to space limitations, but if you haven’t received an invite and think you’re interested in going, you can state your case with me.

I’m amazed, but it had never really occurred to me that most people think an ad exchange is more like a link exchange. Meaning that an ad exchange is a system where websites swap ads with each other. That really isn’t the case at all, but based on the words themselves and the concept of link exchanges I can see how people come up with that conclusion.

The good news is that ad exchanges are growing in number, size, and prominence. iMedia recently did a round up of ad exchanges that’s worth taking a look at. They start out by summarizing the concept, then giving the same interview questions to all the major ad exchanges that exist.

It starts out with Adbrite. First, I would probably classify Adbrite as a marketplace instead of an actual exchange, but that’s kind of semantics. Either way, it should be understood that Adbrite is a much different system then something like the Right Media Exchange. Adbrite is setup so individual advertisers choose to advertise on individual publishers on a couple of set pricing types. An actual exchange can contain many different types of companies and pricing and is a more dynamic (and some might say confusing) environment. I also must applaud Adbrite for providing actual client examples and numbers in this article. Part of the definition of “exchange” to me conveys an open environment, and as we’ll soon see some other exchanges are intending to keep things secret.

Next in the iMedia article is AdECN. AdECN is very heavy with the exchange terminology and likes to compare themselves to financial exchanges. This is great, but they didn’t disclose any customers or numbers for this article citing confidentiality. Most financial exchanges are pretty open with these things, it’s part of what makes them work by nature. It’s also interesting that AdECN used to make their transactions per second number public, but won’t disclose anymore. I also have a problem with this quote:

AdECN is the only real-time, auction-based, neutral exchange for online display advertising.

Really? I would argue that a few other exchanges all meet that criteria.

Next on the list is Contextweb’s ADSDAQ. Another one that likes the financial exchange comparisons, and that’s cool with me. Right away I have a problem with the opening line though:

Since its inception in early 2005, we have built the ADSDAQ exchange by offering a CPM AskPrice to publishers.

While Contextweb may have been operating in 2005, they didn’t launch their exchange, or at least talk about it as an exchange until quite recently. As you can see from Archive.org, the ADSDAQ website didn’t go live until May of 2007. As far as I know, this solution was still in beta in June (as seen in the signature of this forum post). So I think it’s odd to be billing your exchange as operating since early 2005, maybe I’m just being picky though.

I do like that they are releasing names of clients and data though, and it seems like an interesting system.

Next on the Exchange hit list is Datran Media’s Exchange Online. Datran’s big difference is that they focus on email advertising, which definitely puts them in a unique position today. I’m admittedly not an expert in the email advertising area, so I’m not sure I can really evaluate it well. Again though, a quote I have a problem with:

EO.com is the first exchange to support cost-per-acquisition pricing.

Maybe in email advertising this is the case, but numerous exchanges have already been offering CPA pricing. Right Media’s Exchange launched in early 2005 with CPA as one of the main pricing types.

DoubleClick’s beta exchange is the next to be looked at, but like AdECN DoubleClick doesn’t release any clients or numbers. Being that it’s still in beta and not publicly launched, I’ll cut them some slack on not feeling comfortable releasing that information yet.

Lastly is my biased favorite, the Right Media Exchange. Undoubtedly the largest and oldest of the exchanges, I feel the profile is pretty good with releasing the names of real clients, and giving out data. The big question now is how our integration with Yahoo! goes, and what the future holds for the exchange with Yahoo’s resources, talent, and relationships involved.

The exchange area is posed for more growth over the next few years, and we’ll continue to see more companies enter the space. It should be a fun ride.

Additionally, there are still some other large players who are also in the game such as News Corp./Myspace/Strategic Data Corp, and IAC/Ask.com.

Obviously this is a big land grab for these large companies, combined with trying to get innovative companies who are pushing things forward in online advertising. The Wall St. Journal talks about the ad exchange concept and how it relates to these acquisitions.

The media and blogs have been covering these stories quite a bit, but I’ve seen a lot of writers and commenters really not having a great gasp on what pieces of the advertising business each company has now, how they all stack up, and what it all means going forward. So, I’ll try and help out.

Who’s Got What?
After the acquisitions are all complete, we need to stack up all the areas that matter in the online advertising battle that’s taking shape. (A checkmark means they have an asset, the 1/2 means they do to some extent but not to the same level as the other companies).

Asset	Google	Yahoo!	MSFT	WPP	AOL	NewsCorp	IAC/Ask
Search Inventory
Search Ad Platform
Contextual Network
Display Ad Network
Ad Serving
Ad Exchange
Ad Agencies
Owns Own Content

Now that we have our handy chart, let’s break it down by asset.

Search Inventory
This refers to the company actually owning search engine ad inventory, which basically means do they have significant search results in which they can show ads against. Search inventory is generally very valuable to advertisers and generates good revenues for the company because users often have an intent to buy or act and the technology can match ads to their intent.

Google is the king here with over 60% of the market with Yahoo also having a nice chunk, then it tapers off with Microsoft and and IAC/Ask.com. We’ll give News Corp. a 1/2 because Myspace does have a search feature that creates a chunk of inventory that Google currently monetizes for them.

Search Ad Platform
Just having search inventory doesn’t mean you have a good advertiser platform to monetize that inventory. Google has Adwords, Yahoo has Yahoo Search Marketing (Panama), Microsoft has AdCenter, and Ask.com has their Sponsored Listings. We’ll give AOL a 1/2 because they have a white-labeled version of Adwords to buy their search inventory separately.

Contextual Ad Network
Now that we know who has strong search ad platforms, do they have a publisher network in which they can give their advertisers additional reach through placing contextual ads on publisher sites? Google leads the way here with Adsense being the strongest ad network. Yahoo! has the Yahoo Publisher Network which has played second fiddle to Adsense but has a strong publisher base. Microsoft has announced a beta of their publisher network, but as far as I know isn’t accepting invitations from it anywhere so it gets a half point. Ask.com rounds out the group with the announcement of their contextual program as well, although I haven’t seen this in action anywhere either so we’ll give them a half instead of a full check mark.

Display Ad Network
While contextual networks are great, they aren’t the only ad game in town as the display ad has continued to be the leader in high-dollar brand advertising, and has also made a strong run over the past few years in direct response. Ad exchanges, optimization, and increased use of data and technology has allowed the display ad to make a comeback. Although some would argue that it never left.

I was tempted to give Google a half mark on this one, as their display advertising efforts through Adsense haven’t set the world on fire, but their acquisition of Doubleclick makes it fairly obvious that this asset will exist fully in the arsenal. While Doubleclick isn’t an ad network today, it’s likely Google is going to integrate/leverage display capabilities to have a serious display network.

Yahoo! has such a vast amount of content and so many properties that they essentially are an ad network just on their own site. To add on though, in the agreed acquisition of Right Media they also add on a good sized network in Right Media’s Remix Network. Additionally, the Right Media Exchange has over 60 ad network clients, so the display ad network business is definitely a strong point for Yahoo! moving forward.

Microsoft is now a stronger player in the display ad network business by buying aQuantive which has a high-quality network in DrivePM. They also have started to act a bit like a network with representing Facebook’s inventory. WPP is a player with the acquisition of 24/7 Real Media which has a strong display ad network. AOL definitely gets a strong checkmark as the owners of one of the largest display ad networks in Advertising.com.

One could argue that News Corp has a display ad network of it’s own properties such as Myspace, FoxSports, Scout.com, AmericanIdol.com, etc. However, they’ll get credit for that in the “Owns own content” category. IAC/Ask is in a similar situation with the content properties they own, but neither are quite display ad networks (yet).

Ad Serving
Having networks is a primary driver of revenue due to the nice margins, but there is an extreme amount of power when you control the ad serving infrastructure of the web. It’s another example of how the online advertising wars are playing out on many fronts. It’s usually quite easy for publishers and advertisers to switch ad networks they work with, but there is usually a much deeper integration with your ad serving partner.

Google has long been rumored to be building their own ad server, but the Doubleclick acquisition gives them both advertiser and publisher ad serving. Yahoo! has had a strong internal ad server for a long time, and the acquisition of Right Media gives them an immediate ad server to offer to clients as well. Microsoft is now fully capable with the Atlas and Accipter ad serving platforms being part of their acquisition. Atlas is one of the leading advertiser and agency ad serving platforms, while Accipter is stronger in the publisher realm. WPP brought 24/7 Real Media’s Open Ad Stream ad serving platform into their war chest, which has a strong publisher base as well. AOL also purchased Ad Tech:AG, a German ad serving firm that will be part of their Advertising.com unit. One would have to think they have plans to roll this out and start pushing their own ad serving technology.

News Corp comes in with a half-check due to their acquisition of Strategic Data Corp. It’s not clear yet whether they wanted to just own that technology internally, or actually ever roll it out to any clients.

Ad Exchange
Perhaps my favorite piece of the puzzle! Right Media’s success combined with Doubleclick announcing their own soon-to-be exchange, and general buzz about exchanges everywhere leads me to believe it’s a key piece of the advertising wars. Why? Well, exchanges remove friction, connect partners, and provide a common trading platform in which all the players can benefit. Whoever can build the largest and most successful exchange will continue to attract buyers, sellers, and brokers of all shapes and sizes which will grow their advertising ecosystem. An exchange also can tie in to the other categories in this post such as ad networks, ad serving, and other technology.

Google gets a half-check because they have an exchange in the works with their acquisition of Doubleclick. It’s not a full check because it isn’t launched yet, and I’ve heard rumors from some that it could just be more like a big ad network. Without knowing all the details, it didn’t make sense to give them a full check yet. Yahoo! gets the only full checkmark in this category by acquiring Right Media. Right Media is a full-blown exchange, has been for over two years, and has over 20,000 companies buying and selling via the technology to the tune of over 120 billion ad impressions per month.

Ad Agencies
Ad agencies are important because they are essentially the controllers of the majority of brand advertising dollars spent on the web today. They choose the tools and platforms they want to work with, and those companies benefit and will continue to benefit in the future by getting more access to the ad spend from the agencies. While I don’t think it’s totally necessary in the advertising wars to actually own agencies as a couple of companies now do, but it is important to have your ad tools and platforms in heavy use by the agencies in order to get more access to the dollars.

Beyond having agencies buying from Adwords, Google now has their hooks more in the agency market from the DART For Advertisers product they control from the Doubleclick acquisition. DART for Advertisers is one of the most commonly used ad servers in the agency world. Yahoo! does have agencies buying through Panama, but currently has no tools being used by agencies beyond that.

Microsoft is now an agency powerhouse. Not only is the Atlas ad server an agency favorite, they also now own a significant share of the agency market from the aQuantive acquisition. It’ll be interesting to see how the agencies owned by Microsoft choose to work with the other major players in the space. WPP is a conglomerate of agencies, so it’s safe to say they’ve got this business covered. Will their agencies adopt Open Ad Stream as their ad server of choice?

Owns Own Content
One thing that I think is sometimes lost in all this is the power of the companies that own and control their own content. It puts you less in the position of relying in outside companies to actually have a place to serve your ads and provide advertisers value. It also allows you to test and develop using your own properties instead of having to put clients through it, and it can be leveraged in many other ways such as behavioral targeting.

I didn’t clearly define whether search results count or not as owning your own content. However, Google obviously leveraged this a great deal by getting advertisers to advertise on their search results that they then can also push out through their content network. Either way, Google qualifies for a full check since they’ve also continued to grow their services like Gmail and Google Calendar where they can show ads, but also in acquiring YouTube.

Yahoo! is the big daddy of owning your own content. The Yahoo! properties are vast and large and in almost every key vertical. As strong as Google is in search, Yahoo! holds a similar edge in content ownership. An example of the properties they own which usually fall right around the top of all web properties in each vertical: Yahoo! Mail, Yahoo! Finance, Yahoo! News, Yahoo! Sports, Yahoo! Search, Yahoo! Calendar, My Yahoo!, del.icio.us, Flickr, Yahoo! Answers, Yahoo! Video, etc.

Microsoft is also strong in the content game with MSN, Hotmail, MSN Search, etc. They aren’t quite up to Yahoo’s level but are a serious player. AOL is similar as well with all the AOL verticals and properties and definitely deserves a full check. News Corp is good as well with the behemoth known as MySpace, Fox News, Fox Sports, Scout.com, AmericanIdol.com, etc. Not to be left out, IAC is yet another strong content player with Ask.com, Ticketmaster.com, Match.com, CitySearch, CollegeHumor, and more.

Summary
Where does all this leave things in the battle for online advertising supremacy? Assuming all the acquisitions go through, there is the integration challenge for each company to go through, as well as prioritizing what they’re going to execute and how. Then they actually have to go execute on it. It’s impossible to call a winner at this point, but looking at the chart it’s clear to see that Google and Yahoo! are the best positioned to fight out the battle, with Microsoft also close enough to keep their name in the mix.

Looking at Google and Yahoo! specifically, they each have some strengths and weaknesses that will make it very interesting. Google has the advantage in search monetization, the Adsense network, and in ad serving. Yahoo! has strengths in their owned content, ad exchange, and display ad business. Which company can close the gaps on the other, and who will move forward with the right strategy over the next few years? Only time will tell, but you can bet it’s going to be fun to watch and participate in. I also wouldn’t count out the other players such as News Corp, AOL, etc. as they are all capable of making moves, and are each very successful in their current strong areas at this point. We also may see many deep partnerships come into play instead of having each company trying to own their own asset. Let the fun continue.

The New York Times, jumped the gun by a few hours but the story is out that Yahoo has acquired my employer Right Media.

There’s really a lot that could be said about it, but I think generally the most important thing is that I’m extremely excited to work with Yahoo to accelerate the exchange model that we’ve been developing at Right Media for the last few years. And more specifically to work with the Yahoo Publisher Network team to expand upon everything they’ve built and what my team has built in our Direct Media Exchange product.

Here are some questions you may be having:

Why did Yahoo acquire Right Media?
Well, we should probably ask Yahoo! specifically, I won’t speak for them. I’ll link to their comments as they come available. But so far Terry Semel said this:

“The acquisition of Right Media will further Yahoo!’s goal to create the industry’s most open, accessible and vibrant advertising marketplace, which will help democratize the buying and selling of digitally enabled advertising,” said Terry Semel, chairman and CEO of Yahoo!. “This acquisition is an important step in our long-term vision to build the industry’s leading advertising and publisher ecosystem. We believe that Yahoo!’s open approach is a clear differentiator from others in the industry and provides significant benefits to advertisers, publishers and Yahoo! itself.”

What does $680 million for 80% value Right Media at?
$680 million for the remaining 80% that Yahoo! didn’t yet own is equal to an $850 million in total valuation.

What does this mean for the Direct Media Exchange product?
We can’t start working with the team at Yahoo until the SEC approves everything, but we’ll be working on making Direct Media Exchange better in the near term as well as working with Yahoo to build new and improved publisher solutions.

What does this mean for you personally?
Hopefully all good things, I’m excited to work with Yahoo to build better solutions for publishers and learn from all the incredible people there. Yahoo will now have an office where we are in beautiful Eugene, Oregon.

Obviously I’ll keep everyone up to date as I can.

More coverage:

• Yahoo! Announces Agreement to Acquire Right Media, Largest Emerging Online Advertising Exchange – Official Press Release
• Yahoo to Buy Ad Company in Bid to Compete With Google – New York Times
• One Giant Leap for the Exchange, and for Interactive Advertising – Right Media Blog
• Breaking: Yahoo Acquires RightMedia for $680 Million – Mashable
• Democracy and the Online Ad – Yodel Anecdotel
• Yahoo! Serioius! – OffTheIsland
• Yahoo! Buys Right Media (Big Surprise) – Tech Beat
• Yahoo to Acquire Right Media Ad Company – Search Engine Journal
• Yahoo to Acquire Right Media – Search Engine Watch
• Yahoo Acquires Right Media – Bill Wise
• Yahoo’s newest acquisition – DogBallsBlog
• Yahoo answers GoogleClick, buys Right Media for $680M – Venturebeat
• Right Idea – A VC
• Yahoo’s $680m Reasons for Goto.com 2.0 – Ben Barren
• Online Advertising in an IP-Enabled World – Flashpoint
• Yahoo buying Right Media for $680 Million – WebMetricsGuru
• Yahoo Fully Acquires Right Media – Marketing Pilgrim
• Yahoo Buys Ad Company to Compete with Google’s Acquisition of DoubleClick – Search Engine Roundtable
• Yahoo To Acquire Right Media; Joins Google In Buying, Rather Than Building, Display Ad Network – SearchEngineLand
• Yahoo will buy the rest of Right Media – Moneyweb
• Yahoo Acquires Right Media – Cost Per News
• Yahoo makes its move, snags Right Media, an ad-exchange – GigaOm
• Yahoo! buys Right Media, a smart move to defend its online ad leadership – Charlene Li (Forrester)
• Yahoo Buys Right Media – Threadwatch
• Yahoo Buying Right Media – Screenwerk
• Web advertising gone wild – Don Dodge
• Yahoo buys rest of Right Media for $680 million – ZDNet
• Yahoo! Acquires Ad Firm Right Media For $680 Million – Wired Epicenter
• Panama Not Enough To Battle Google: Yahoo Acquires RightMedia – TechCrunch
• Yahoo Exchanges $680 Million For Right Media – WebProNews
• Yahoo Fully Acquires Right Media – DigitalGrit
• Yahoo Goes Yard. Pays $680M For Rest of Right Media – alarm:clock
• Congratulations to Right Media! – Cody Simms (Kid’s Allright)
• Yahoo Is The New Owner of Right Media – BigGreenBlog
• Yahoo to Buy Online Ad Company Right Media – NYT Dealbook
• Yahoo: No impact from Right Media buy until 2008 – Google Watch
• Is Yahoo’s price wrong for Right Media? – CNNMoney.com
• I Got Me An Ad Exchange Too: Yahoo Buys RightMedia – John Battelle’s Searchblog
• Right Media and Yahoo’s New Star System – Business 2.0 Beta
• What? You Thought Yahoo Was Going to Use a Google-Owned Ad-Serving System? – All Things Digital
• Yahoo Purchase of Right Media Gives It Added Liquidity, Exit From DoubleClick – Seeking Alpha
• Yahoo – EightFiveThree
• Yahoo Acquires my Rockin’ Employer: Right Media – The Green V