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SES: Ad Exchanges Are Changing The Game

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There’s a new frontier in online advertising: ad exchanges. Operating more like a stock exchange than a traditional auction, ad exchange networks seek to make better use of the long-tail of search destinations by matching up unused inventory with appropriate advertisers.

(Our on-scene WebProNews staff have passed along this latest news from SES San Jose 2007. If you can’t be there, you need to be here with WebProNews this week, for videos and reports.)

The Search Engine Strategies panel in San Jose addressed how "ad exchanges are changing everything," and speakers from industry heavy hitters like DoubleClick and Right Media explained what this means to a still burgeoning market.

Microsoft’s regulatory objection to Google’s buyout of DoubleClick may have been more strategy than concern, especially as the Beast and fellow-rival Yahoo made similar purchases a short time later.

These companies represent an ad sales market that deals in impressions on the destination side rather than the entry side, and, according to DoubleClick, as much as 80 percent of publisher inventory goes unused.

At the same time, advertisers are stumbling over each other as the short tail gets fatter (cluttered and well-trod), leaving less inventory available for potentially converting contexts and destinations that are less traveled, but collectively are powerful.

So diffusion must take place, and ad exchange companies are betting on the overflow into the long tail, even if panelist Jay Sears, of ContextWeb, admits the "long tail is perceived as a scary place" where there is little control of where ads appear and where impressions are wasted when paired with irrelevant content.

But that also means there exist necessity and invention, and out of that new models and networks are born to address these issues.

While much of publisher-advertiser matching is automated, ad exchanges allow for a certain level of advertiser and publisher control. The publisher sets an asking price for ad space, and the advertiser sets a bid price for specific inventory. (And one would imagine advertisers can block or reject as well.)

A system like this allows for tighter targeting, more control, and an escort for treacherous wanderings into the long tail. Sears and ContextWeb boast about their aptly named ADSDAQ product, which has four key offerings: premium inventory; pricing control; contextual technology; and an open platform.

"ADSDAQ is turning the long tail into a clean, well-lit place for advertisers," said Sears, always ready with the pitch.  

SES: Ad Exchanges Are Changing The Game
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  • http://clickshunt.com Tim Sanders

    I agree that this is a growing niche that is not fully tapped. I have just finished beta testing a new ads exchange script that will go live next week at http;//Ads-Share.com that offers both free and paid advertising. free is credit based similar to banner exchange, offers both vertical and horizontal bars to include onsite, offers featured ads and ads search and affiliate program.
    Your article hits the nail on the head as to why these types of scripts/sites will soon start popping up all over.

    Thanks
    Tim

  • http://www.jlcgroup.net jay berkman

    having spent 20 years on wall street, including developing and/or interrogating more than two dozen electronic exchange platforms–and since migrating to fringes of the media industry for the past 6 years—i’d like to think that my exposure to both industries puts me in the unique position of opining about the topic of ad exchanges.

    the most striking observation i can make is that the advertising industry is experiencing much of the same evolution “build it and they will come” mindset insofar as electronic ‘trading’ as the financial markets encountered during the last 15 years. The blending of tech-based solutions with traditional practices is a non-trivial undertaking; what the ad industry is clearly missing is expertise in designing platforms that actually meet the needs of its constituents, and more importantly, designing business models that inspire targeted users to actually contribute liquidity and benefit from an equity stake that would compel the ‘players’ to participate.

    Succinctly, developing exchange platform(s) is an art and a science that the ad industry currently lacks. There is an un-addressed need to recruit objective experts that bring to the table both technology and business model expertise–individuals that are sensitive to the needs of a user friendly platform that can address all of the needs of respective constituents.

  • Ol

    Ad Exhcnages? Unused Inventory? Long Tail? Short Tail? Say What? I thought it was your job to take these concepts and dumb them down in to something that we could all understand.

    Hmmm….

  • http://www.traffiq.com Billy

    It is certainly going to take some time to perfect the electronic system of an ad exchange that performs in the same likeness of what’s available for the financial industry. We believe TRAFFIQ is moving in the right direction of addressing unsold ad inventory by bringing publishers and advertisers into the open market.