Centro Acquires RealCities, Kills Network

Centro has acquired McClatchy’s RealCities, which now redirects to Centro.net. Kate Kaye at ClickZ has a nice overview of the background. Here is the key paragraph:

According to Centro Chairman and CEO Shawn Riegsecker, however, Centro isn’t buying the media properties available through the RealCities network. Instead, the firm is buying business relationships with agencies and advertisers currently working with RealCities. “We are not picking up the publisher contracts,” said Riegsecker. “We firmly believe that the network model is not the right model agencies are looking for.”

What this suggests is a big discount.

RealCities was conceptually on target but had ongoing execution challenges. As an ad network it has largely now been superseded by the Yahoo! newspaper consortium and the newspaper-owned quadrantOne. However there are a host of other local ad networks. Yet RealCities was one of the few local networks with reasonable scale, having swallowed the inventory of DotConnect Media, Lee Enterprises’ newspaper network in late 2007.

Terms of the deal weren’t disclosed. Here’s an email interview with Centro CEO Shawn Riegsecker I conducted after being alerted to the deal earlier this week:

Why did Centro buy Real Cities?

A: Real Cities has been a respected player for many years in the space. To be able to acquire this respected company and its existing base of more than 250 clients, while consolidating the industry on our one platform, and gaining McClatchy’s involvement and support for our media planning and buying platform – it all just made a lot of sense.

Did you come to believe you needed your own “inventory”?

A: Although we will be servicing Real Cities’ clients, we did not pick up their contracts with publishers. Centro will not own or be taking a stake in any inventory, we will remain an independent and objective resource for our agency partners. We have no intention of operating a network.

Does the acquisition affect Centro’s ability to work with other ad networks in any way?

A: No, we will continue to buy inventory through other ad networks when it makes sense for our clients.

Does this signal a change in the nature of the business or the model?

A: By canceling the publisher contracts and only picking up the clients, it supports our current business model and belief that the best solution for advertising agencies is an independent one-stop, software-backed solution that enables them to put together the most successful campaigns across all local publishers.

Real Cities has had mixed success in the past; how will you improve performance, participation?

A: Although more quiet in recent years than previously, Real Cities still serviced more than 250 clients in the past twelve months.

Will Centro now be competing with Yahoo’s consortium and quadrantOne for advertiser dollars and advertiser inventory?

A: Centro’s media software helps agencies quickly, easily and successfully place a media campaign across 100% of all local online websites across 100% of all their inventory including high impact placements, sponsorships and email based on advertisers’ needs. It’s a very different model than the remnant network model employed by Yahoo and quadrantOne that services only a portion of what we reach, both in terms of quantity and quality.

What’s RC’s current reach? Will Centro attempt to expand it further? How?

A: Centro will be integrating the Real Cities brand and client relationships into its organization. Centro has no intention of maintaining Real Cities’ network. We feel, and our publisher clients tell us emphatically, that a network model does not serve the industry as well as our model does. It is what has enabled us to grow as we have, and what has put us in the position we’re in today.

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In terms of reach, comScore treats Centro like an ad network and places it 23rd out of 50 in its “ad focus” ranking. RealCities was 41 by comparison. To further compare, MySpace is 27 on that list and YouTube is 30.

NBCU Buys No.1 Local Site

Some people could make a strong case that Craigslist is the number one local site online. However the top local site is probably Weather.com.

NBC Universal (and private equity) just bought that property and its cable channel parent from Landmark Communications for $3.5 billion. Landmark, which owns IP intelligence firm Digital Envoy, newspapers and classifieds properties, local TV affiliates and Q Interactive (formerly CoolSavings), had the makings of a great local ad network anchored by Weather.com. Alas . . . they’d probably rather have the cash. The Weather Channel had been for sale since January.

Weather.com has tons of geotargeted and contextual-local ad placements. It’s also got a mobile offering. All this is great news for NBC. Now what will the company do with it?

Local and the Future of Ad Serving

Last week I had two separate conversations that were very interesting thematically; both involved Yahoo! The first was with ShopLocal and the second was with Yahoo! itself regarding its deal with Publicis (specifically about mobile). The ShopLocal meeting was in part a discussion of the company’s recent Yahoo! deal and the mechanics of the dynamic ad serving and distribution of retailer content.

Similarly, in the Publicis mobile case, Yahoo!’s platform is now going to determine the right ad to serve to the mobile end user. Ad creative, provided to Yahoo by Publicis, will be sliced and diced. Display ad copy and creative elements are being turned into “modules” (my word) and then recombined dynamically. At a conceptual level this is also what is happening in the ShopLocal deal; targeting data from Yahoo! determine whether to show, for example, the HP ad with the printer or the laptop image, what local store information to show and so on.

The hypothetical layers of targeting here are many: demographic, local, contextual and/or behavioral. The practical reality today, however, is somewhat less “one to one” than these capabilities suggest. One or two ad elements change rather than four or five. However the targeting is rapidly getting more sophisticated and layered. Indeed, the promised “holy grail” of mobile advertising is true “one to one marketing.” (This has historically been said about email and is now being said about social networking.) But for these recent platform advancements such precise targeting would never be possible.

Let’s step back.

There’s absolutely no chance that agencies and advertisers could do this “one to one” targeting on their own right now. They’re still figuring out basic stuff about online and how to combine traditional media with online campaigns effectively. There’s almost no way they could create a range of hypothetical campaigns that would address the various audiences and behaviors they want to target, let alone “manually” determine when to show those ads online and where (to some degree however you can do this with search campaigns and specialized landing pages).

The light bulb that went off for me is this: “the platform” is stepping in to take all the available data and then create and an ad accordingly. The “ad” is evolving from a fixed combination of creative elements into a data feed that can be parsed and recombined. As one example, United Airlines might have different fare offers for different cities. There might also be different messaging for loyal customers vs. those who aren’t enrolled in the frequent flier program. Accordingly, different messages, data and ad text can be delivered to the publisher/platform and the system figures how to put those different creative elements together and when based on the user and her behavior or profile. The ultimate “creative” is determined by the machine.

Now back to local specifically — and all this goes double for mobile/LBS.

Most major advertisers don’t know how to think about local online today and most aren’t taking advantage of current capabilities, let alone all the emerging layers of targeting. But what these increasingly sophisticated ad platforms (i.e., Yahoo!’s) will do is compensate for that lack of human sophistication. It’s a bit of a “Zen” thing: first there was simplicity, followed by complexity and then there will be simplicity on the other side of complexity.

In other words, all that the agency and marketer will eventually have to know about digital marketing (including mobile) is that they want to target women, 18-34 who live in New York, San Francisco or Chicago and are interested in certain product categories. They’ll create their ads accordingly. Then they’ll deliver electronic data feeds of their creative and the platform will determine what to show when. They won’t have to figure out much tactically or mechanically. The complexity of the entire system will be in the “black box” of the platform and buried for both the marketer and the end user, who will just see an ad and respond or not respond.

Better and more precise location targeting, for example, will be provided by “the system,” which will ferret out user location via a range of strategies (ISP, browser, user registration data, triangulation, GPS, keywords, zip identification, etc.). The advertiser or its surrogate will just need to know the conceptual capabilities of the system: the “idea” that a 40-something year old technophile on a smartphone in midtown Manhattan can be targeted.

The “how” will be taken care of.

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Addendum: This isn’t a move toward the “commoditization” of advertising. It’s about taking the complexity out of online advertising, which agencies want. There will still be plenty of “art” in figuring out the messaging and thinking about advertising across platforms and how to integrate those campaigns.

Cox Diversifies with $300M Adify Buy

Cox, which owns cable, newspaper, online and broadcast properties, has purchased ad network platform Adify for a reported $300 million. This is a really interesting buy for Cox.

Adify allows entrepreneurs, publishers and others to create “white label” ad networks using its platform. Adify refers to itself as a “vertical ad network.” Through its customers and their niche/vertical networks, Adify was itself building an interesting ad network. And Adify at one time was angling to become the backbone behind quadrantOne.

It’s certainly one of the most interesting ad platforms/networks out there. CEO Russ Fradin (formerly of comScore and Wine.com) will continue to run the company.

PaidContent reports (from sources) that 2007 revenues for Adify were roughy $7 million, so it’s a big multiple.