Adbot

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Adbot, Inc. was a private online advertising company based in Chicago, founded in 1997 by James R. Frith Jr. It helped start a new way to buy display ads on the Internet using an auction market.

The company announced its auction market on January 23, 1997, and on April 10, 1997, it held its first live outcry auction to pair small publishers with advertisers. By mid-1997, Adbot had sold a huge number of ad placements and had created a closed system for delivering ads and paying publishers. The company operated this way until December 5, 1997, when a FBI raid led to the suspension of normal operations as part of a securities fraud investigation related to Frith’s CPB operation. Adbot ultimately liquidated its assets and shut down in December 1997.

Frith was later found not guilty of securities fraud, but he was convicted of two securities law violations tied to the CPB, based on a shortfall in reserve funds on a single day in 1997. The case became a reference for auditing requirements for securities firms.

Adbot grouped publisher sites by topic into networks and sold them in lots through the auction. Each lot was priced by bidders, which guaranteed that unsold inventory would be used and that advertisers would receive a minimum number of ad impressions. This supply-and-demand pricing model was different from larger rivals like DoubleClick, where pricing was typically negotiated.

Clients and publishers included names like Hotmail, Answers.com, Expedia, Experts Exchange, Dine.com, Weather Underground, and MapBlast (which became part of MSN’s mapping service).