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Dogster's Risky Bet Against Ad Networks

Posted Nov 28, 2008 01:00pm EST by Sarah Lacy in Internet, Media, Venture Capital, M and A, IPOs
Related: goog, yhoo, ^ixic

Back in 2003, when many Web 2.0 companies were getting their start, they had a big leg up that didn't exist in the late 1990s: Ad networks. Things as simple as Google AdSense or John Battelle's Federated Media gave bloggers and even larger sites like YouTube and Digg a way to get instant revenues, without having to hire and commit to costly sales forces and infrastructure.

Tiny Dogster went another route. It tried all the ad networks and realized that CPMs in the 20-cent range weren't going to sustain a business -- especially with ad networks taking as much as 50% of the profits. Dogster founder and CEO Ted Rheingold didn't suddenly saw ad networks as the expensive proposition -- not the cost saver. It's an insight a lot of the mainstream media is only now discovering the hard way.

Now, in 2008, Dogster is heading into a downturn with strong relationships with advertising agencies and a bigger pipeline of business than it had a year ago. "This is still a relationship business," he says. "And once we have those relationships, we get more calls." Watch the video to hear more of Rheingold's take on where niche online advertising is going.

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