CBS Interactive steps out of the ad network buffet line

CBS Interactive will reportedly announce that it is dispensing with most ad networks today according to a report in Ad Age. Excellent. If they stick with it, it means another blow struck in favor of selling value online.

The formula used with such success by many ad networks over the last few years has been selling discounted space on the top 100 - 200 web sites, like those owned by CBS Interactive. The sales pretense has been rescuing excess inventory and leveraging data, which is balderdash. For buyers, it's been about price. The importance of where the advertising runs has existed alongside the importance of who the audience reaches, unabated, and networks have provided plentiful access to those preferred places. If it were otherwise, the tension between networks and large publishers would not exist as, indeed, it does not exist in the mid- and long-tail of the market where ad networks and representative firms succeed in creating value, not discounting it.

For help understanding the not-so-hidden forces at work it will be interesting to see what happens with CBS Interactive's replacement strategy, which is its internal ad platform, Madison (a very cool name). If the same discounted opportunities continue to exist through Madison then CBS Interactive will start fighting with itself instead of third-party networks. In the final analysis it doesn't matter who sells it; it matters only what it sells for. So they should proceed carefully, because internal fights are far more destructive to a host than fights with third-parties.

We should expect a surging fourth quarter to embolden others besides CBS Interactive to see the glass half full again. Then what? Whither all the business plans that have been counting on ad network models to pig out at the buffet?