Chicago Independent Ad Network Is Closing

April 11, 2012

I am disappointed to announce that the Chicago Independent Ad Network will cease operation on April 30. This unfortunate outcome is the result of two basic facts: there were not enough sales to pay for continuing operations and not enough outside funding to keep the network in operation.

Launched with a $50,000 of funding from of the Chicago Community Trust last October, ChiAd was a limited experiment and did not receive a second round of funding. During this six-month period, the ad network made sales calls to close to 1,000 local advertisers and agencies. ChiAd made some placements in its first six months, but the network’s sales were not significant enough to pay for the continuing sales and marketing efforts necessary to keep growing ChiAd’s presence in the marketplace.

The Trust’s generosity and the time and patience of our publishers did provide us with some valuable feedback. Among the lessons learned about the current state of digital ad sales by our six-month mark:

  • Because we were a completely new entity with no track record, most advertisers would need to run a small test campaign before making a significant investment. But before they could run a test campaign, most advertisers needed months to divert ad spending from other campaigns.
  • Larger advertisers, such as those with a regional or national focus, felt ChiAd’s one million monthly impressions did not make a big enough impact in a market with over 500 million monthly impressions.
  • Despite the high net-worth audience our network attracted, our $12 CPM price point was considered too high for many local advertisers.
  • At least in Chicago, digital ad space is usually sold in one of two ways: As an add-on to another legacy media product or through another reseller like national ad networks and exchanges. From our experience, only the largest media outlets in Chicago have digital ad sales operations that do the same kind of work as legacy media sales forces, such as making regular sales calls and building a pipeline of leads.
  • From our limited experience, there is a wide gap between the investment larger, national brands are making with digital advertising and smaller and medium-sized businesses are making in digital. Since regional businesses were our target, the fact that many sales calls needed to begin with customer education slowed us down considerably.
  • Many advertisers have already begun to move away from purchasing straight display and are looking to link their ad buys to data provided through retargeting and other cookie-based systems. Available to only the largest advertisers a year ago, these tools are being pushed down to regional and local advertisers quickly.
  • Many advertisers and agencies are not interested in seeking out publications for each targeted demographic or psychographic, but would like to have a single point of purchase for all digital ad spending. This may seem elemental, but it suggests that the day of ad networks are passing and that the future is with ad exchanges.

My personal opinion is that there is still potential for local advertising collaboration, but it would have to be conducted as part of a larger operation. In a market the size of Chicago, mass and momentum is critical. Many of the lessons learned above could have been surmounted if we were backed by more resources and existing sales relationships.

Finally, I am grateful for the time and participation of all of our publishers and the advertisers who chose to invest in ChiAd. Thank you.