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The Business Upside of RTB: "Trust Us, There Is One..."

The Global Address"The Global Address" is a column written by members of the digital media community with an international perspective on the digital space.

John Childs-Eddy is VP of Business Development at Australian direct response ad network, Funbox.

As I sat at my desk the other day, I remarked to our lead analyst that after reading what feels like hundreds of articles on RTB, I still didn't know from a business point of view what it really did, or how it would help us make more money.

Chew (our lead analyst) whose opinion I greatly respect, and who was recently invited to (and gave) a talk to TED on chaos theory, went on to give me a long and detailed explanation of how RTB causes a market to function more efficiently.

"Yes, I can see how that is true", I answered.

"But, ultimately what I see is a technology being pushed at us, which does not bring either more supply, or more demand. In fact, all it does is cause prices to become more efficient, which creates a more effectively priced market place… but unless the benefits of that outweigh the costs of applying the new technology, then from a P&L viewpoint of our business and our clients, I do not see why we would be interested in it. After all, it's not increasing the amount of money in exchanges, or our ability to get more of the existing money."

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How to Buy Australian Audience When It Isn't For Sale

The Global Address"The Global Address" is a column written by members of the digital media community with an international perspective on the digital space.

John Childs-Eddy is VP of Business Development at Australian direct response ad network, Funbox.

When AdExchanger.com first asked me to discuss the Australian market, my verbatim response was:

"The thing about this market is that it’s consolidated, and dominated by traditional media – it’s the only English speaking market in which the five biggest digital media companies are owned by the biggest traditional media companies – which is an interesting anomaly on the face of things... however it seriously slows the adoption of ad exchanges in Australia... and reduces the discussion about these kinds of things. It’s not exactly an innovative marketplace like the States is in this area."

To reflect just how deeply the Australian Media market is regarded as an oligopoly, you can check out this Wikipedia article on the definition of oligopolies.

And to paraphrase what is possibly the most important note in the Wikipedia article: "... competitors will generally ignore price increases, with the hope of gaining a larger market share as a result of now having comparatively lower prices. However, even a large price decrease will gain only a few customers because such an action will begin a price war with other firms. The curve is therefore more price-elastic for price increases and less so for price decreases."

In other words, there is very little incentive to suddenly allow the majority of the media company's remnant inventory to become liquid in an exchange market place. Indeed the companies have far more to lose than to gain by allowing the devaluation of their inventory through an ad exchange. The companies will correctly point out that they are better off *not* selling their remnant inventory at all, and keeping their eCPM average more than 1000% higher than the avg. in an exchange environment.

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Looking At Europe: Technology Obsession Arrives

The Global Address"The Global Address" is a column written by members of the digital media community with an international perspective on the digital space.

Paul Turner is Director of International Business Development at Invite Media, a demand-side platform.

They say a week is a long time in politics – well it appears that the same could also be said of the DSP space! It's been fascinating to see the volume of articles on DSPs these last few weeks and the number of people commenting on them. One thing is for sure – this is definitely a dynamic, exciting and passionate space to operate in.

Looking at the various articles and comments, and spending time in both the US and Europe recently, what's been of particular interest to me is how quickly the European display space appears to be catching-up to the US. As with the US, there's now a vibrant community of 'next-generation' buyers and sellers with their own take on how the market will evolve. Rewind nearly three years ago to when I joined Right Media and it felt like we were selling something completely alien to most in the European market – at times it felt as though we were talking a different language. Save for a small number of very sophisticated Networks, Europe on the whole was very slow to adopt Exchanges. That's definitely changed over the last year and a half – there are now a large number of quality Publishers, Agencies and Networks operating on Advertising Exchanges.

I think the reasons for the slight lag in European adoption of Exchange technology can be broken down into a number of areas:

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