Air and Liquid: Social Media and Ad Exchanges

Considering the glacial migration towards premium AND remnant inventory exchanges by the online ad industry, the attributes of social media and ad exchanges have a lot in common these days aside from the fact that social media display ad inventory is unloaded through exchanges. Whether we want to admit it or not, both mediums prominent roles in the digital economy lie ahead.

Below is the final slide of Charlene Li of Altimeter Group’s recent presentation, “The Future Of Social Networks,” at SXSW 2009 (covered here by Louis Gray), as she prognosticates about the social future.


And now, the same slide edited with AdExchanger’s golden touch and speaking to ad exchanges.

Social Media and Ad Exchanges

Social media and ad exchanges are rapidly growing models that enable consumers and companies, respectively, to create their own networks (blocks of actionable media in the case of ad exchanges). Neither is making beaucoup dollars at the moment whether for the social destination and exchange owners or their participants – the exception being aggressive direct response/CPA advertisers running strong amidst abundant and inexpensive inventory of – social ad media on the exchanges!

In social media, web properties such as Facebook and Myspace enable users to create unique and meaningful networks of friends, applications and even brands that best reflect each individual’s world. In the future, these networks will become as important as “air” with effortless portability of personal information, Li suggests. Life doesn’t move online (totally), but it gets managed online.

Likewise, buyers, sellers and technology companies using the modular architecture of the advertising exchange will enable the aggregation of blocks of media with relevant audiences across the exchange. Here, liquidity will be the essential element – the final capitulation by all parties. Liquidity is life for the ad exchange.

Drinking The Liquidity of Ad Exchanges

The increasingly liquid exchange will add value to online display advertising inventory beyond the functionality of an ad server with an open auction attached.

Insight into media through the vast, shared, data mining technology of the exchange will offer the end game to ad traders of online media: competition for inventory (improving yield for publishers) and opportunity for advertisers (improving ROI).

In social media, new ways to deliver value for advertisers and publishers are being refined whether using behavioral, contextual or other data-driven processes. Yesterday’s pronouncement by RBC analyst, Ross Sandler, regarding Facebook eventually overtaking Google in uniques is no joke. Social media is the ultimate aggregator of humans. The revenue model is still ahead and inevitable.

Ironically, the evolution of the online ad display exchange marketplace will be an important part of what unlocks value for social media tomorrow as exchanges are able to reveal the “premium” in the “remnant.”

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