The Exchanges’ Redesign of the Web

“the executioner” opinion expressed below is written by Sam Temes, Associate, Platform Management, Ad Exchanges, at Razorfish.

In the last few months, those of us working in the world of ad exchanges have been bombarded by articles and discussions about issues that will directly affect our careers: privacy regulation, data sources, emerging business models and so on. In the same time period, I’ve seen virtually no discussion about how exchanges may positively affect Internet experiences for everyday users like most of my friends and family.

Several years ago, ad networks and content ads turned blogs into businesses and gave large-scale publishers an outlet for excess inventory. Designers were encouraged to create as many impressions as possible. As a result, we all became used to seeing hundreds, if not thousands, of online ads every day and learned to ignore or block 99% of them. Now that the network model is disappearing, the user experience to which we’re accustomed will disappear as well. As advertisers and their agencies become fluent in the value of publisher assets (see The Value of the Ad Cow), publishers will be driven to redesign for only the most valuable assets, potentially making the Internet a more quiet and peaceful place.

User behavior is already showing that some ads really do work, while others don’t (or at least not nearly as well). In looking at the cost of impressions by size, large skyscrapers are proving to be far more expensive than smaller logos simply because the average person (i.e. my 60 year-old mother or banking friend reading their favorite blog) is more likely to click and ultimately make a purchase from a large ad than a small one. The higher value in the exchange translates to more money for the publishers, raising the question of whether or not scale is still King. There is room for a new type of publisher who doesn’t split articles on to 4 pages with 8 different ads to generate 32 times the impressions, but instead, provides less cluttered content with one large, top dollar ad. Envision one ad per page (or even fewer) that delivers the right message, in the right place, at the right time. I’d click, and I’m pretty sure most of my friends would too.

Ads with data behind them are showing similar lifts in performance over basic anonymous impressions, and the data is necessary to truly achieve the above – it’s just trickier to explain to our friends. As publishers hone in on their most valuable data, they are being incentivized to maximize it and will likely change the model by which we pay for our free content. The New York Times provides their content without a registration because they could traditionally produce enough ad volume to stay in business. Soon, we (as exchange buyers) won’t pay for the ads that our friends and family ignore, forcing the Times to find a new way to charge visitors for content. They will likely generate revenue by requiring us (as visitors) to login and maybe even answer brief surveys that provide the data behind the most profitable ads. With open source tools, small blogs can afford to do the exact same, putting content behind a gate that anyone can open by answering a few questions.

As we build out more tools to measure the true value of display, we are likely to find there isn’t enough of the best stuff and far too much of the worst. Publishers will be pushed to create more of the good inventory and less of the bad, leading to a fundamental shift in how we experience the Internet. I’m looking forward to seeing fewer ads that are more relevant, even if it means answering a few questions and logging into a website to get my free content.

Follow Sam Temes (@SamTemes), Razorfish (@Razorfish) and AdExchanger.com (@adexchanger) on Twitter.