The Catalyst Code

Media companies are engaging in a bit of co-opetition as they form ad networks for selling advertising across member properties. (See the recent AP article Media Groups Share Content in Ad Deals.)

Sometimes competitors are getting in bed together because they figure, I guess, that they don’t want to lose the money for selling ad space to Google. I have trouble understanding this strategy and why they think they can make money at it for very long.

Google, Yahoo, MSN, Valueclick and others are getting incredibly good at using web technologies, auction methods, techniques borrowed from financial exchanges, and fancy new behavioral targeting techniques to buy, sell, and place advertising inventory. It is futile for companies to do for themselves what others can do much better. It is far more sensible to stick to one’s knitting and focus on one’s comparative advantages.

Media companies seem pretty good at creating, aggregating, and distributing content to attract the eyeballs that advertisers want. Nothing is impossible but these guys seem as likely to create a killer advertising network, that operates efficiently, as a middle aged accountant seems to create the next killer social networking app.

In the new world, firms are going to have to specialize in what they excel at. Some firms are going to be really good at creating efficient global advertising platforms. I don’t know whether Google, Microsoft, or some unknown twenty-something is going to be left standing in a decade. I sure doubt I’m going to see Comcast running a successful advertising network five or ten years from now. Geez, they have yet to get the business model right for the simple stuff like on demand content.

Am I being too hard of the media companies or do you think they need to focus on what they know how to do best?