Traffick - The Business of Search Engines & Web Portals
Blog Categories (aka Tags) Archive of Traffick Articles Our Internet Marketing Consulting Services Contact the Traffickers Traffick RSS Feed

Monday, March 17, 2008

Ad Exchanges - What You Need to Know

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




View Posts by Category

 

Speaking Engagement

I am speaking at SMX East

Need Solid Advice?        

Google AdWords book


Andrew's book, Winning Results With Google AdWords, (McGraw-Hill, 2nd ed.), is still helping tens of thousands of advertisers cut through the noise and set a solid course for campaign ROI.

And for a glowing review of the pioneering 1st ed. of the book, check out this review, by none other than Google's Matt Cutts.


Posts from 2002 to 2010


07/2002
08/2002
09/2002
10/2002
11/2002
12/2002
01/2003
02/2003
03/2003
04/2003
05/2003
06/2003
07/2003
08/2003
09/2003
10/2003
11/2003
12/2003
01/2004
02/2004
03/2004
04/2004
05/2004
06/2004
07/2004
08/2004
09/2004
10/2004
11/2004
12/2004
01/2005
02/2005
03/2005
04/2005
05/2005
06/2005
07/2005
08/2005
09/2005
10/2005
11/2005
12/2005
01/2006
02/2006
03/2006
04/2006
05/2006
06/2006
07/2006
08/2006
09/2006
10/2006
11/2006
12/2006
01/2007
02/2007
03/2007
04/2007
05/2007
06/2007
07/2007
08/2007
09/2007
10/2007
11/2007
12/2007
01/2008
02/2008
03/2008
04/2008
05/2008
06/2008
07/2008
08/2008
09/2008
10/2008
11/2008
12/2008
01/2009
02/2009
03/2009
04/2009
05/2009
06/2009
07/2009
08/2009
09/2009
10/2009
11/2009
12/2009
01/2010
02/2010
03/2010
04/2010

Recent Posts


Relative Complexities of Paid and Organic Search, ...

Well That'll Make the AOL-Yahoo Merger Messier, Wo...

SES Toronto - Call for Speakers

Do You Lie Wildly About Your Traffic?

Meanest Post of the Year: We Already Have a Winner...

Site Performance Increasingly Important to SEM Per...

Holly Asks Ask to Get a Hobby? [At Least They Didn...

Tearful Ask Fans Lament Decline

Facebook Lands Monetizer Extraordinaire

Wall Street Doesn't Get It (Part I)

 


Traffick - The Business of Search Engines & Web Portals

 


Home | Categories | Archive | About Us | Internet Marketing Consulting | Contact Us
© 1999 - 2013 Traffick.com. All Rights Reserved