WebProNews

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.