I’ve been beating the drum for a long time that technology is the key to success for any ad network, performance, display, CPC or whatever. The problems that arise when there isn’t enough focus on tech-dev are handily illustrated by what’s now happening at Right Media, the division of Yahoo that runs their premium display ad exchange. Right Media has been a critical part of the display ad ecosystem for a long time but Yahoo has neglected it and there are rumors it will soon be sold.

Mike Walrath founded Right Media and has written a thoughtful analysis of the problems facing potential buyers:

In order to build a truly disruptive and highly valuable company delivering enterprise software for digital advertising, the new solution has to be an order of magnitude better than the existing systems. It is not enough to deliver an incrementally better version of the existing systems (primarily doubleclick and homegrown technologies). If there is to be a resurgent disruptor in the advertising technology space it has to change the game.

The problem is that the technology stack is outdated and so any buyer needs to not just maintain the existing system in order to keep Yahoo’s custom, but must also build a new, hit-it-out-of-the-park system from scratch at the same time:

The buyer of these assets will have to migrate, maintain and ultimately decommission the existing tech stack, at the same time they are building the new platform. We tried to do this at Yahoo, and we failed. We failed for a lot of reasons, but the primary is that some teams are good at cobbling together existing stuff, and some are good at building brand new stuff, but rarely can a team do both. Never was that more apparent to me than when trying to integrate Right Media and Yahoo product and engineering teams. Whoever buys this asset will have to do both, or at least recognize you need 2 distinct teams to do each.

And if that isn’t challenge enough, then you have to take on the competitors in the market:

Once you’ve accomplished that, all you have to do is defeat Google/DCLK in a sales war where they hold the high ground, and can pretty much price you out of the market. Not that you can’t win a fight like that, but without the order of magnitude better system I describe in my core premise…good luck.

This is a great example of how lack of investment eventually catches up with technology companies, and make no mistake, ad networks are technology companies.