As I have predicted for years, the “flawed” business model of the Hybrid Ad Networks (the networks that own & operate their own sites in addition to representing partner sites) is showing through in a down economy. The conflict has been there all along, in that its most profitable for an owner/operator to put the best most high paying ads on its own properties first before relying on partners where they have to share the revenues. In a rising market, this conflict has been overlooked by publishers, but publishing partners of hybrid networks are feeling the pain of the economy now more than ever. This is illustrated in even the mother of all hybrids – Google. In a recent IBD article on AOL’s spin off (need a subscription), Peter Barlas writes the following:
“Google might be less concerned about AOL for another reason. These days, Google generates a greater percentage of its revenue from its own Web sites than from its partner Web properties.
In the first quarter, Google said its Web sites produced revenue of $3.70 billion, up 9% from the year-earlier quarter. But revenue from its partner sites fell 3% to $1.64 billion.”
The chickens have come home to roost. Publishers should seek representation from TRUE rep firms, who have THEIR best interest at heart and who don’t have the conflicts of both supporting their own owned/operated properties, and feeding the mothership with more profitable ad dollars.