JellyCloud goes R.I.P, one ad network less (other 399 ad networks still standing)

Times are tough: the economic downturn shows its teeth. Lots of companies are feeling its bite, and some will go belly-up because of the wounds. Tech companies are not an exception. Maybe they won’t be hit as hard as the finance and banking sector, but, nevertheless, they will get bitten.

One of the companies that is playing with the fish now is JellyCloud (they are playing with the jellyfish, just to be in the family).

JellyCloud is (correction – was – may they R.I.P. now) the new reincarnation of the former ad network named Gator (renamed Claria after a while).

Gator was an 8-year old company which used to be an online vault for usernames and passwords for different sites. They also got us “accustomed to” their annoying pop-up ads (after they gathered personal details about our surfing habits without telling us). That caused them to be blacklisted as spyware and labeled a “black sheep” in online advertising (they weren’t alone, but they were among the well-known ones).

The team tried different business models: password keepers+ad network thru Gator, personalized home pages thru Claria, and now again an ad network thru JellyCloud.

It seems that they didn’t succeed in any of their attempts, so finally the company is giving up (according to Valleywag).

JellyCloud had taken several rounds of financing:
– as Claria: 40 million — from SOFTBANK America, Rogers Communications, Asia Pacific Ventures and Sand Hill Capital
– as JellyCloud: 11,5 million – U.S. Venture Partners, SoftBank, Sand Hill Capital and Cross Link Capital

Over 50 million dollars gone with the wind and about 36 employees fishing for another employer. It’s not a pleasant story, but the lesson is that there are lots of ad networks (over 400), so the market is saturated (partly because the online advertising spending was growing year by year and everyone tried to jump on the ship).

This year, it’s a different story. Financial and banking industries are among the top advertisers (especially using display ads), and their problems are reflected in the online advertising numbers.

According to CNET research firm eMarketer lowers the online ad spending forecast. It’s expected to be 23 percent this year…after it was nearly 35 percent in 2006, 25 percent last year, and dropped to around 16-17 percent for a few years. It’s expected to rise to 24 percent in 2012, when online video advertising is expected to boom amid a large economic recovery.

The Nielsen report shows that while, overall, online spending increased 11% in the first half of 2008 (compared to last year), display ad spending by financial services companies declined 6 percent. The financial services industry spent only $1.1 billion in online advertising in the first two quarters of the year, compared to $1.5 billion last year.

Apparently, JellyCloud is still hiring (according to their website).
But, I guess, they should hire a lawyer and a priest to finish up the burial.

Who’s next?