Ad Exchanges are Changing Everything

Aug 20, 2007 • 6:00 pm | comments (1) by twitter | Filed Under Search Engine Strategies 2007 San Jose

Ad Exchanges are Changing Everything

Moderated by Kevin Ryan, the new Vice President and Global Content Director of Search Engine Strategies and Search Engine Watch. He welcomes everyone to the cannabis legalization forum session (laughs).

First up is Anthony Taylor from Right Media. They are an ad exchange network that has served over 1 trillion impressions since launch. 5 billion impressions daily. Roughly 70 million ad auctions hosted on the exchange. This evolved from a closed marketplace, due to friction between platforms and between businesses. In countering the closed marketplace, they wanted to bring down the barriers to the network. The supply is no longer just belonging to one advertiser, but instead to the community. The principle feature to the open exchange model is that everyone has open and equal access to all inventory. Goes over some more features of their system…and how they evolved into an exchange (first in 2005).

Anthony explains a stability (x) and openness (y) curve which he displays on a scale titled “Right Media Exchange Advantage.” Things to consider: Scale is a key advantage; the pricing (ad serving is a commodity); transparency (what is your exchange costing you?); security (they have solved this issue). “the deal” (they have closed it). They have one global platform, auto-optimization, breadth and depth of audience, and more. He shows a couple quick examples of the reach extension that this kind of exchange provides. As a publisher, you can say there is a broader marketplace beyond the usual inventory.

The second idea revolves around segment sharing, which delivers a huge value to multiple advertisers and publishers which provide the extended reach. He goes into some complicated slides about the value driver maps they use, which facilitate the discussion and analysis of a publisher’s business model.

Jay Sears from ContextWeb is up next. He will also talk about the ad exchange marketplace and evolution. He wants to sum it up by saying that there is a lot of money flowing into this business currently, including the DoubleClick deal and Right Media, which are the other two panelists. He wants to know “why is the short tail getting fatter?” Who can bring advertisers into the long tail where there customers are and give them more control?

In today’s “Yet another ad network” model, there are few good choices for advertisers and publishers. For advertisers - the long tail is perceived as a scary space, yielding wasted impressions against content that is not relevant or performing. For publishers, graphical ad networks typically have appealed to large publishers and operated on a revenue sharing basis. The revenue share is undisclosed, and the risk is yours.

Over the past few years, the market has evolved. Control of pricing has been driven by the advertisers, not the publishers. So the ad exchanges have all been about solving the solution of unused inventory. Price and control has still remained with the advertisers. This makes their online ad exchange a little different, as they call it a “true exchange.”

They allow for a bid price, and give true control for publishers and advertisers through the new exchange model. This allows advertisers to bid, and publishers to set CPM asking price. Then an arrangement is achieved. 4 biggest takeaways from ADSDAQ product are: premium inventory; pricing control; contextual technology; and that it is now open to everyone.

ADSDAQ has an ability to “turn the long tail into a clean and well-lit place for advertisers.” ContextAd (trademarked) provides real-time, page level categorization. Advertisers get to control bid price using BidPrice (trademarked). How it works? The advertiser comes in, sets up contextual and other basic types of targeting like geo or demographic. Then they make a bid, which goes on to exchange. Unlike other exchanges that are trying to match a $ bid with a $ ask, this exchange is more of a “market maker.” They will take both positive and negative positions on publisher inventory. In the market maker model, the ADSDAQ system will actually pay the difference between the advertiser bid and the publisher ask, in order to satisfy both sides of the equation. In the long run, they make the money back since they are providing both clients the number they want.

They call ADSDAQ “inside Sales for the long tail.” It allows for real time decision to be made by the network whenever the ad is triggered, either sending them to the desired premium location or to a backup. Again this stuff is a little confusing because of its newness to me, so I apologize in advance if I have incorrectly stated anything in this coverage. What is different, or “ADSDAQ’S new, new thing” is that they have really opened this up to a lot more advertisers with an open Beta. Learn more at

Michael Rubenstein from DoubleClick. He will not have a PPT but will just share some ideas. He explains how many people in search are starting to hear stuff about the world of display, and that it reminds them a lot of search. The newer model for display is an automated way to connect buyers and sellers, which is a big step forward. Forrester has said that about half of display media place is either unsold or liquidated. The economics behind hiring people to do the last minute placements of ads etc doesn’t make sense, and automation is the solution. The keys are that ad exchanges are about transparency, openness, and connecting buyers and sellers.

(This is live coverage of SES San Jose 2007, and some typos or grammatical errors may exist. If you were a panelist and you would like something clarified, please post in the comments or contact me through the system)

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