Representation Vs. Automation

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

Today’s column is written by Eric Franchi, Co-Founder and SVP, Business Development, Undertone.

Two interesting and significant pieces of news in the display advertising space came out on Monday morning, January 31st.  Ecommerce giant eBay announced a change in strategy from its current monetization model, announcing that  boutique rep firm Triad will now help the internet giant manage display ad sales for and eBay Motors.  On the same day, Microsoft announced that it would be moving all its non-premium inventory to the Appnexus platform.

If you follow the display space, then you know that this is a big deal.  Microsoft and EBay were the 3rd and 11th largest display advertising providers in October 2010, according to comScore. And display is certainly a strategic focus for both.  Seeing them make their bet on completely opposite approaches, at the exact same time, makes this all the more interesting.

eBay, in particular, is intriguing since it runs counter to the current conversation of automation-as-the-future.  If you read the WSJ piece, it noted that EBay already removed 90% of display advertising on the site over the past year in an effort to improve buying experience and ad effectiveness.  And it may not be done yet: focusing on custom placements and brand advertising may force even more changes to the site and yield fewer display ads.  This means more of a custom approach to display ad sales, making exchanges potentially irrelevant and unnecessary.

The eBay announcement is in stark contrast to Microsoft’s, which signals a move towards automation and RTB.  According to the ATD article, Microsoft will start with Mail, and then eventually shift the sale of all inventory into the exchange (including representation partnerships) for buyers to transact with automatically.

Presumably, both parties have access to reams of data and did a variety of tests, but took the exact opposite strategy: customized, outsourced sales vs. exchange/RTB.  So what gives?  Is this a case of radically divergent business needs, or there something larger here at play?  Further, as one of my colleagues pointed out, eBay has an extensive relationship media buying relationship with Appnexus.  Is eBay signaling that the available exchange-based options are great for buyers, but not as compelling for sellers?  Does RTB, in its current form, favor the buy side, as many have opined?  Does representation have a bigger role in the future of non-premium display as a result?

These are all interesting questions that will no doubt take time to answer, but the moves being made right now are fascinating to observe.

Follow Eric Franchi (@ericfranchi), Undertone Networks (@UndertoneNet) and (@adexchanger) on Twitter.

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  1. actually advertising is not strategic at all to ebay and they have a long standing history of opposing it on the site. the underutilized use of their data is an interesting opportunity however.

  2. Joe Lyons

    Both moves are indeed interesting and the timing makes for a good comparison. Seems like an apples to oranges though as both have been slowly moving in those directions for some time. I wonder how much lift Microsoft is seeing from Appnexus as they establish their floor prices and leverage more demand from RTB? And for eBay I wonder how much they’ve benefited from the ‘less is more’ in page advertising model? My opinion on the overall comparison is that a rep firm model should yield more revenue and profit for the publishers if executed properly. While RTB has helped some publishers significantly move the needle on ecpm’s for remnant it still makes for a buyers market.

  3. Anonymous

    eBay hired a sales team to sell their premium auto inventory. Yahoo used to sell eBay’s inventory. Yahoo apparently didn’t prioritize the inventory or package it in a particularly appealing way.

    MSN continues to use an internal sales team to sell their premium auto inventory.

    Both companies have a vested interest in maintaining a close relationship with OEM’s. eBay has historically struggled to figure out what their relationships to advertisers and automotive OEM’s has and should be, but they keep making money. MSN’s might know what they want (a close advertiser relationship and high cpm’s), they just don’t know how to make a profit out of it.

    So in the end, of course they took different approaches when comparing premium to non-premium inventory, but they are taking similar approaches when you look at how each company approaches premium inventory (direct sales teams) and non premium inventory (little help from AppNexus).

    While one can argue that eBay Motors isn’t viewed as premium inventory Triad’s role might be to make it viewed as such. I’ve recently seen the new eBay Motors opportunities…and they are appealing from an advertiser standpoint.

    If Microsoft put their premium Autos inventory to AppNexus, we’d have something to talk about. You are not going to see that happen in the near future though, if ever. They would never get the rates they currently get, except in a few cases which would most likely be confined to the tactic known as conquesting.