Leverage: Who has it?

Here's an interesting question: Who has the real leverage in online media?

Hypothetical situation. A large direct-response advertiser decides to implement an optimization solution - let's say Poindexter. It calls up FastClick and says "Here's my new Poindexter tag". FastClick, worried about the new behavior network that Poindexter is launching, says "We don't support Poindexter. We'll only accept raw creative." What happens?

Another hypothetical situation. A major publisher, one with a lot of remnant inventory, purchases Atlas to optimize and manage this inventory pool. Casale Media, threatened by the competition with Drive PM, tells the publisher that they won't serve ads that come from Atlas. What happens?

Both of these situations occurred recently - with major players - and here's what actually happened: The advertiser laughed at the network and said "I spend $500k a month. You'll take whatever tags I give you." The publisher laughed at the network and said "Fine. If you don't want the traffic, I'll send it to somebody else."

I think it's pretty clear what's happening. Not only are networks undifferentiated, they overlap heavily with each other. Smart publishers are implementing their own monetization programs to work directly with direct-response advertisers. Networks have no leverage. What's worse for them, they're under direct attack by Google.

Here's a pretty no-lose prediction for 2006: Networks are going to pay much more for inventory than they ever have before.

Here's another: If networks don't find a better way to cooperate than daisy-chaining, they're toast. Google is big enough and good enough to beat a bickering set of networks - and advertisers will start working directly with publishers' monetization programs.

Leverage is a bitch... if you don't have it.