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Representation Vs. Automation

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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 eBay.com 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.com (@adexchanger) on Twitter.

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