Counterpoint: In Review, The Business Models And Objectives Are Quite Different

Networking“Networking” is written by members of the online advertising network community.

Today’s counterpoint column is written by Jacob Ross is Senior Director, Advertising Platforms, Demand Media

Big news on both eBay and Microsoft today, and Eric Franchi did a great job of surfacing the importance of the news. However, it’s misleading to compare these two announcements side-by-side as the business models and objectives of each company are quite different.

Microsoft is using Appnexus in a much similar way to how Yahoo uses Right Media – to monetize all their display ad space in the most effective possible way. You’ll note that they’re starting with the longest of tails, Hotmail. In terms of monetization opportunities, there are no other real opportunities on the Hotmail pages – most of Microsoft’s pages are monetized purely through advertising. In this case, an Exchange relationship with a player like Appnexus makes sense, and allows Microsoft to start building some powerful relationships with the DSPs and agency trading well as leverage data-progressive agreements which will result in outsized CPM and spend levels.

eBay, on the other hand, is primarily focused (rightly) on their core auction business for revenue. Having a display business driven by 3rd party monetization (ad networks) was never a great idea, as every time a user clicked on an ad, eBay generally lost the opportunity to make a sale for 1000 times the value of that ad view. The partnership with Triad will likely usher in a new kind of advertising for them where you’ll start to see advertising experiences that drive traffic to eBay carts more often than 3rd party sites.

The direct, in-house strategy in this case is appropriate for eBay given their business, just as the AppNexus remnant partnership is a good move for Microsoft. Display advertising represents a huge opportunity for each company, but each one absolutely must approach it in a different way.

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