Monday
Jul122010
Will Online Display Buying Look Like the Nasdaq?
Monday, July 12, 2010 at 03:28AM
Anyone who has run a sizeable online banner advertising campaign knows that putting together a media plan, sending out an RFP and making choices can be a long administrative battle. Then add the effort for distributing and trafficking the creative and you have a process that the nicest possible thing you can say about it is “inefficient.” Or as someone else said – “It is easier to buy nuclear arms in the former Soviet Union than to buy online ads.”
For many industry insiders in the ad inventory aggregation business, this is an old conversation. But the technology and the marketplace seems to be coming to a head on what models are going to emerge. The first evolution of adding buying efficiency to the market were Ad Networks. They were born to aggregate unsold inventory from publishers and give advertisers one place to go to reach a wide audience. The main function of the ad network was administration efficiency. The market is evolving at such a pace that this simple aggregation model is not enough and new models are evolving.
A simple comparison would be real estate brokers to real estate auctions. One helps match buyers and sellers the other adds price transparency, removes friction, and enables a transaction to occur immediately. The first evolution of ad networks was to essentially act like a broker. Now there are new models that will estentially act like an auction and go by names like Ad Exchanges, Real Time Bidding, and Demand Side Platforms.
Nasdaq-like exchanges are developing in the market to add transparency and liquidity to the market. Large media buying shops are building trading desks to buy and sell inventory on an open market. It will be interesting to see how this develops since a market works best when there are a large number of participants. Despite Banner Advertising being a $23 Billion market, the bulk of that money is being handed from large advertisers to large publishers. 70% of the revenue is captured by the Top 100 Web Properties from the top 200 Advertisers.
Here is a link to an article that gives a nice snapshot of the issues at hand in the market.
http://www.adotas.com/2010/07/mcgrorys-and-right-medias-evolution-part-ii/
I know exchanges will reduce friction in the market and improve price transparency. I think this helps advertisers but publishers are going to see further pressure put on their pricing power.
For many industry insiders in the ad inventory aggregation business, this is an old conversation. But the technology and the marketplace seems to be coming to a head on what models are going to emerge. The first evolution of adding buying efficiency to the market were Ad Networks. They were born to aggregate unsold inventory from publishers and give advertisers one place to go to reach a wide audience. The main function of the ad network was administration efficiency. The market is evolving at such a pace that this simple aggregation model is not enough and new models are evolving.
A simple comparison would be real estate brokers to real estate auctions. One helps match buyers and sellers the other adds price transparency, removes friction, and enables a transaction to occur immediately. The first evolution of ad networks was to essentially act like a broker. Now there are new models that will estentially act like an auction and go by names like Ad Exchanges, Real Time Bidding, and Demand Side Platforms.
Nasdaq-like exchanges are developing in the market to add transparency and liquidity to the market. Large media buying shops are building trading desks to buy and sell inventory on an open market. It will be interesting to see how this develops since a market works best when there are a large number of participants. Despite Banner Advertising being a $23 Billion market, the bulk of that money is being handed from large advertisers to large publishers. 70% of the revenue is captured by the Top 100 Web Properties from the top 200 Advertisers.
Here is a link to an article that gives a nice snapshot of the issues at hand in the market.
http://www.adotas.com/2010/07/mcgrorys-and-right-medias-evolution-part-ii/
I know exchanges will reduce friction in the market and improve price transparency. I think this helps advertisers but publishers are going to see further pressure put on their pricing power.
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