Ad network Adify gets $19M to build out vertical ad network model

Adify, the Belmont, Calif. company offering an online advertising network product that charges a lower fee to publishers, said it has raised $19 million in a second round of financing today.

That’s a lot of cash, but is probably necessary to keep Adify in the running, now that the industry is filled with all sorts of competitors.

The round was led by US Venture Partners, and includes previous investor Venrock Associates, and a strategic financing from GE Media, Communications and Entertainment (a unit of GE Commercial Finance), NBC Universal, Inc. and Time Warner Investments. Adify raised an $8.25 million Series A round last year.

See our coverage at that time.

There are two products. The first lets a publisher use Adify to attract advertisers directly. In this version, advertisers can also contact Web publishers directly. A publisher using Adify presents advertisers an online form, which lets them request a particular ad space on a Web site. It allows a publisher to negotiate ad rates, and to reject an advertiser if wanted. Adify is only taking 20 percent of what the advertiser pays to the publisher, somewhat less than the 30 percent or higher that others take.

The second product is where a larger publisher, such as the Washington Post has enough clout to attract other publishing partners to form its own network, using the Adify platform. Adify may decide to charge the Post less than 20 percent of the ad revenue, because of the bulk it promises. The Washington Post, meanwhile, gets to charge other publishers what it chooses.

It is the second model that Adify is pursuing most aggressively. It seeks to build networks around sites with similar themes, so that advertisers can select a group of the sites to advertise on at the same time. If larger publishers like the Post pool their Web pages with ad inventory with the pages of smaller sites, the overall inventory is made larger for advertisers — and thus more efficient.

Adify says it now has 30 vertical ad networks. Customers include the Washington Post, Newsweek Interactive’s Sponsored Blogroll, Time Warner and Reed Business.

Also worth noting is that the GE group providing the funding is part of a new $250 million fund designed to invest in media and technology companies. Adify is its first investment. GE’s portion was $3 million. The fund is jointly managed by two GE units: GE Media, Communications and Entertainment and NBC Universal.