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Advertising - Thursday, November 29, 2007

Online Advertising's AdBrite Raises $23M

AdBrite has raised $23M in third-round funding from return backers that include Sequoia Capital and hedge fund Artis Management, says PEWire. It had raised $4M in Series A in July 2004 and $8M in series B in February 2006.

AdBrite's revenues are rumored to be around $40M this year. That's a good number and from our perspective, AdBrite is a solid system and company. However, it begs the question why isn't AdBrite bigger? There are a good number of online ad startups that have arrived on the scene more recently and are making more than that. AdBrite's burden is that it represents sites that get huge traffic but that are not valuable to advertisers as they are file sharing or not safe for work sites that most advertisers don't want to touch. Also, AdBrite's margins are much lower than competitors as it takes only a 25% rev share.

Why would Adbrite need a big round of funding? Given its revenues it should be able to command a good valuation. It could of course use the cash to do some acquisitions. There are a few AdBrite knock-offs in Europe and Asia that it could buy. Also there are a fair number of new competitors that AdBrite must fend off. Lesser known rival Etology claims that it is now larger than Adbrite and it recently launched a JV with Technorati in Japan called adbutterfly.

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