Free ad serving might be bad business for all but the biggest players in ad tech.
AdZerk, an ad-selling platform for publishers, sent a notice to its free and self-service customers that it’s shutting down that part of the business to focus on its enterprise clients. The company will complete its exit Aug. 31.
The announcement comes just over a year after OpenX beat a hasty retreat from the self-service ad-serving space, with the abrupt shutdown of its OnRamp offering in February 2013. AdZerk swooped in and said at the time it was seeing self-service customers sign up at three times the normal rate in the immediate aftermath.
AdZerk’s free offering relied on small publishers to tack on premium products and convert into enterprise clients over time. CEO James Avery said the conversion from free to paying customer was disappointing – fewer than 1% of free users were going on to sign enterprise contracts. Avery said he’d hoped to see at least 3% of users convert.
“What we found was that the majority of small publishers were largely looking to sell one or two direct campaigns, and just fill the rest with AdSense or an ad network,” Avery said. “They didn’t have the resources or time to dive in and do direct sales or take advantage of the tools in the marketplace.”
For Avery, the move away from self service is geared toward shifting focus towards where it feels it can be most competitive, and that isn’t with small publishers. “Google has cornered the (self-service market) with AdSense,” Avery said. “The efficacy of AdSense for small publishers really can’t be matched by anyone right now. Which is why you don’t see PubMatic, or Rubicon or (anyone similar) going downmarket. They can’t do what Google has managed to do with AdSense.”
AdZerk also recently abandoned Network Tools, which had been geared towards ad networks. Both moves were billed by the company as allowing it to focus on “ad serving as an API” for publishers.
The move away from self-service and network customers has been a year in the making, Avery said, citing shifting revenue shares. In May 2013, self-serve (10%) and network (50%) customers contributed a higher share to AdZerk’s bottom line than in May 2014, when self-serve (5%) and network (7%) revenues accounted for much less, according to Avery. This while the company claimed 60% overall revenue growth year over year, driven by growth of its revenue from publisher and API customers.
AdZerk has 10 employees at its Durham, N.C., headquarters and Avery said he plans to hire three more in the coming months.
In a related development earlier this year, Google told some DoubleClick for Publishers (DFP) customers that they will no longer have access to phone support or dedicated account reps, effectively making them "self-serve."