Advertising Exchanges in The New York Times

New York Times on Ad ExchangesAd exchanges received a plug today in the New York Times when Stephanie Clifford wrote an article entitled “Leftover Ad Space? Exchanges Handle The Remnant” about companies looking to take advantage of the efficiencies of exchanges by building tools that enable online advertising traders much the same way traders stock exchanges depend on tools and data to make business decisions. Joe Zawadzki’s Media Math is one of these “tools” companies.

The title and tone of the article could not have been further from what ad exchanges such as Microsoft’s AdECN, ContextWeb’s ADSDAQ, Right Media and DoubleClick’s AdX Advertising Exchange would want. Each ad exchange struggles to prove to advertisers that their offering is not just a scary remnant offering but a premium opportunity offering advertisers unprecedented control.

Quoting data from ThinkPanmure (Its analyst, Bill Morrison, is one of the few authorities on online advertising exchanges on Wall Street), The Times’s Clifford makes the case for the monetization of remnant advertising inventory in advertising exchanges:

“In 2007, exchanges sold about 15 percent of the remnant inventory, and about 5 percent of online display advertising overall, according to ThinkPanmure, a research and financial services company. Most of the other 85 percent was sold through networks.”

In a typical display of the media’s lack of understanding of advertising exchanges and their struggle with the rapidly changing online advertising industry, Clifford writes:

“The major appeal of exchanges is that with some analysis, advertisers can buy ads one by one, and track the performance of each ad. This contrasts with ad networks, which roll up broad audiences for advertisers (often using the exchanges) through their own sales forces.”

Not quite. Tracking by ad unit has been there with ad networks and ad exchanges.

What advertisers do is buy ad placements on websites not just ads, and then run their ads – banner ads, for example – in those placements. Advertisers can then track the individual ad placements performance along with whatever ad or ads they run in those placements.

Now, some ad exchanges do allow you to buy individual placements on single sites (such as Right Media and DoubleClick), but others such as contextual advertising exchanges (ADSDAQ) offer a different value proposition and continue to aggregate traffic similar to ad networks but offer exchange modalities such as the simultaneous double auction for inventory by both publishers and advertisers.

The article gives the sense that there’s a “one by one” purchase and delivery of ad placements. An average Joe reading the article they must wonder, “Is there some guy looking at this web page, too, and making decisions to show me ads every time I view a new page?.” We suppose, to a degree, this could be true. Robust advertising exchange technology does make decisions in real-time. But, in reality, inventory is still rolled up and the effective matching by technology is made in the ad exchange.

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