TechCrunch reported that ad network Adbrite laid off 40% of its workforce.
After layoff, Adbrite will have about 60 employees. Assuming $175K annual expense per employee, their run rate will be around $10,500,000 per year. Based on their $32million gross revenue, assuming their margin is about 30%, their net revenue (i.e. the revenue after paying publishers, which is usually 60 to 80% in the industry) will be around $9.6 million.
So, give and take, they probably would be barely profitable or break-even after tightening their belt. There are a number of ad networks with revenue in the $30 million neighborhood. It’d be interesting to see if these companies can continue to grow, or they’ll hit the plateau. I think that it’s relatively easy to grow to $30 million in revenue. But, going from 30 million to 100 million is going to be very tough for a lot of those players.
Prediction: more layoffs are coming to ad network who are doing 20-40 million revenues with 100+ employees. The economic of their business models is simply not sustainable.
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