To learn more about the changes in ad exchanges, I interviewed both Ramsey McGrory, VP of Exchange Development, Right Media and Jay Sears, SVP of Strategic products and business development, ContextWeb. If your interested in more information on ad exchanges, both will be speaking in the Ad Exchanges are Everything session at SES New York 2008 on March 19 2008 (Day 3).
1) What are the benefits of using ad exchanges (for publishers and advertisers)?
Answer from Ramsey McGrory:
At its most fundamental level, an exchange addresses underlying needs of buyers and sellers by providing the ad serving platform, community, controls and services.
For a publisher, this means monetizing their inventory as effectively as possible, minimizing the operational workload through automation and a better understanding of the process, maximizing the controls to protect its brand, direct sales and users and providing new products to their clients so a publisher can secure greater share of brand, performance, behavioral and search budgets where possible.
For an advertiser, this means greater access to inventory, greater visibility into and control of pricing, performance, global frequency, messaging while minimizing the ad ops workload to manage it. Exchanges ideally provide protection mechanisms for advertisers as well, preventing ads from ending up on sites with objectionable content and preserving brand integrity. For those who are driving their businesses in Search, an exchange represents an opportunity to create coordinated cross channel marketing campaigns, and create incremental revenue streams as a service provider leveraging the expertise of search into the online display space.
2) How has the emerging ad exchange market been unfolding? Can you detail some significant technological (or otherwise) developments?
Answer from Jay Sears:
The ad exchange space has been emerging at light speed. Much of this is driven by the media and audience fragmentation occurring in the marketplace.
While portals were once the dominant source of news and information, page views on the top 3 portals declined 18% from August 2004 to August 2007 vs. an overall 21% total internet growth in page views. As David Sifry’s Technorati web logs growth chart has shown every year for the past few years, users are moving to the Long Tail – over 120,000 new content blogs are created every day.
Exchanges can present a huge opportunity for advertisers to reach the increasingly fragmented web audience in a single efficient buy. They allow advertisers to trade directly on the exchange. Advertisers can use any pricing model (CPM, CPC, CPA), a variety of ad formats (graphical, rich media, text) across numerous publishers on exchanges.
3) As we all know, the search engines have been investing more in ad exchanges (i.e. Yahoo & Right Media, Google & Double Click). Where do you see the search engines taking this business? What are the implications of this in terms of online advertising in general?
Answer from Jay Sears:
2008 is the year of the “P Word”—Platform. Yahoo! has APEX, the advertiser and publisher exchange; Microsoft has AdECN, a “network of networks” exchange; AOL has Platform A, its collection of ad networks with various specialties and Google has the DoubleClick advertising exchange.
Display advertising is the next battleground after search. The display market is highly fragmented and Google will have its hands full working to create a dominant position from its current 3% market share (Yahoo! holds a 30% market share). The big media companies must go after the display market to continue to scale their businesses. Search is “supply-gated”—there is only so much of it. In contrast 95% of user time online is spent looking at content. Once an advertiser finds success for a particular offer running on a specific type of content, the advertiser should be able to replicate, or scale, this type of success on an exchange.
4) Where do you see the ad exchange market in the next 5 years? 10 years?
Answer from Ramsey McGrory:
Exchanges will provide a mechanism for buying and selling when each segment of the market is mature enough. For example, because of short supply and because of no accepted industry standards, video ads are generally not sold through an exchange. As video advertising grows and as standards are created, an exchange will become more important to that format. In the online display space, there are many flavors of exchanges currently. I think the market will solidify around a few that can provide and support the tools, services and ecosystem required for buyers and sellers. The rest of the companies will change their business models or integrate with the larger exchanges.
5) When it comes to using ad exchanges, can you suggest a few best practices?
Answer from Ramsey McGrory:
Thought it’s not a best practice, I think a critical first step is to understand the differences between an exchange and a network marketing themselves as an exchange. An exchange is a platform that enables buyers and sellers to work together. It is effectively a technology solution with a set of tools and practices. A network is a company that is buying or selling inventory.
If an ‘exchange’ company comes to you and tries to buy or sell media with you, they are a network. Why does it matter? It matters because each is motivated differently. A network buys and sells media with the goal of maximizing yield for itself. An exchange provides the technology, tools, practices and services to enable buyers or sellers to operate efficiently and their interest is completely aligned with their clients.
I believe there is significant confusion around what an exchange provides and how buyers and sellers leverage it. Many technology providers are building ‘an exchange’ as a point solution, which assumes current ad serving technology, practices and products don’t change and that the exchange is bolted on. What we found is that adopting an exchange methodology is less about buying inventory from or selling inventory to the exchange. It’s about questioning vision of how technology and services must change in world that’s different than when ad servers such as DoubleClick were first created (mid/late 90s).
After the differences are understood, I recommend making sure you use an exchange that provides a lot of buyers and sellers to work with, the tools to manage campaign for performance and delivery, and the controls for advertisers, publishers, networks and agencies to protect themselves and their clients.
Answer from Jay Sears:
Jay believes you need to ask yourself the following five questions to determine which exchanges best suit your needs:
#1. Inventory. What kind of inventory will you find on the exchange? Remnant or premium inventory? Spot market (bided – similar to how SEMs buy) vs. futures market (reserved/ guaranteed inventory – similar to how agencies buy)? Safe for brands or direct response only? Designed for agency and/or SEM workflow?
#2. Pricing models. What types of price are available? CPM, CPC and/or CPA?
#3. Targeting – what types of targeting are available? Contextual – category or keyword? Behavioral – what types of behavioral targeting? Geo-targeting? Other targeting types?
#4. Formats – what ad formats are available? Graphical ads? Rich media ads? In banner video ads? Pre-roll video ads? Text ad formats?
#5. Publisher types – what types of publishers are in the exchange? Portals and large sites only? Long Tail sites including blogs and specialized niche content sites? Ad networks? Social media sites?
Posted by Mona Elesseily
| | Permalink
 |
 |
 |
The Traffick Search Engine Directory :: |
| » Internet Marketing » Internet Tools » Search Engines |
» Web Browsers » Web Portals » Webmaster Tools |
» About the Directory » Add URL » Traffick Report: Flock |
