AdForce Founders Jilt Firm’s Ad Serving Technology

The brothers who founded Internet ad serving company AdForce Inc. appear to have spurned the company’s technology for a new advertising-supported service they launched this month.

Ryan and Chad Steelberg oversaw AdForce’s development into one of the biggest firms serving banner advertisements on the Web before leaving the company to try their hand at several other successful Web ventures. AdForce was bought by CMGI Inc. for more than $500 million last year.

More recently, the brothers gained attention with plans to give away broadband service through their new company, Broadband Digital Group, Newport Beach, CA. The company’s FreeDSL service, which went live this month, provides high-speed Net access to consumers who agree to hand over demographic information and look at ads served to a browser bar that rests on their desktop.

BDG president Ryan Steelberg confirmed this week that FreeDSL will operate in conjunction with a third-party ad server. He also indicated that an agreement has been reached with an ad serving partner but declined to identify the company.

“We’ve signed a contract. I can tell you that,” Steelberg said.

And it’s not with AdForce, according to sources at that company.

“We’re not serving ads for them,” said AdForce spokeswoman Sheryl Draizen. AdForce's vice president and general counsel, Rex Jackson, who oversees ad serving contracts for the company, echoed the statement.

At press time, BDG had not responded to follow-up questions about why they opted against AdForce, whose technology the Steelbergs themselves helped to develop. AdForce also did not respond to an inquiry about why BDG might have chosen another firm.

AdForce arch rival DoubleClick Inc., whose DART product is the world’s leading ad serving technology, serves Web banners on a “points prize page” run by Winfire, another Steelberg-founded company that was merged with BDG. Winfire provides the technological platform for the FreeDSL service.

DoubleClick has been in discussions with BDG, but the New York company is not prepared to reveal any details of their relationship, said DoubleClick spokeswoman Jennifer Blum. “We’re not ready to talk about any sort of partnership with them,” she said.

Ad serving is a technologically staggering task, requiring the targeted placement of billions of advertisements in real time across ad networks and individual sites all over the world. The industry is dominated by only a handful of players, all of which suffer technical glitches from time to time, said Dana Serman, vice president of equity research at investment banking firm Lazard Freres & Co., New York.

It’s not clear which company performs best. AdForce says it has the best “up time” in the industry, claiming to prove reliable 99.992 percent of the time. However, Serman said DoubleClick’s DART has “certainly been better performing than AdForce.”

Steelberg expects FreeDSL to be primarily ad-supported next year after the service has more fully ramped up. In the meantime, it will depend mostly on other revenue sources such as charging users for speed upgrades. BDG has several hundred advertising clients and FreeDSL has signed on 900,000 users, Steelberg said.

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