Adotas

Where media buyers start online





Spotlight

ADOTAS Conversations: Bill Urschel, CEO, AdECN

Written on
Sep 25, 2006 
Author
Sarah Novotny  |
Share
ADOTAS Conversations: Bill Urschel, CEO, AdECN

What sort of targeting is available in the AdECN Exchange?

We built the targeting engine to be an open platform. We offer a dozen ways to match ads to viewers now, and can plug in new ones as they pop up.

Aside from the basic run of exchange with geo-targeting, day parting, and the other staples, we offer three levels of live contextual, in which we read the web pages on the fly for relevant content. This works extremely well with blogs and news sites, whose content is changing constantly. We also offer behavioral, including a viewer’s recent search queries, and profile-based targeting: age, gender, income, and that sort of thing.

Where do you get your profile data?

We cull it through relationships with our partners. Here’s how it works: when a viewer lands on a webpage in the exchange, we can tell if that viewer is known by one of our partners. If so, we query the partner, who tells us about that person, but obviously never their name or other data which identifies the visitor. We have a strict privacy policy and adhere to those already adopted throughout the industry. Our partners, in turn, get paid for each profile. What this means is that the AdECN Exchange is not only a market for advertisers and publishers, it is also a market for data providers.

Even if the targeting is dead on, and the bid is what the advertiser wants to pay, aren’t some sites or pages a lot better than others?

Yes, and different ad spots on the same page can be better than others, quite significantly.

We protect the advertiser from overpaying for underperforming ad spots with something we call SpotBot. It works like this: we track the performance history of every single ad spot on every page on every site in the exchange. A moment before the auction, we look at that history. If the spot performs about as well as its peers, other spots of the same format in the same subject category, we let the advertiser’s bid go through unaltered. But if the spot underperforms its peers, say by 35%, we decrease the advertiser’s bid by the same percentage.

We don’t calculate the theoretical value of an impression for an advertiser, but we do adjust his bid to the relative value, based on the history performance of that spot. It’s not enough for an exchange to be an open market: it also has to be a fair market.

What do you mean by “performance history.” Is that just the spot’s click-through ratio?

The CTR is important, but we also take into account conversion history and other factors that I am not at liberty to comment on.

We’re talking about just display ads, aren’t we? Does this tie into search at all?

Mostly display ads, yes. But we built in an interesting feature for our members. They can take a feed from a search engine, such as Yahoo, MIVA, and most others, as an XML file. This file contains the advertiser’s bid, the search words, the CPC bid, and the text for the ad. Our member can load this in, and the exchange will treat it as so many CPC campaigns. When one of these CPC bids wins an auction, we show the text ad in a graphic frame. If the ad gets clicked on, the search engine pays the member. So, basically, search and display start to blend here. It can be a nice little arbitrage revenue stream for a member of the exchange.

Why work with a brokerage model, like the stock market, rather than directly with advertisers and publishers? Isn’t that an extra step?

AdECN works only with its member ad networks (and similar entities) for two reasons:
First, online advertising — done right — is a complex business, requiring real expertise and service, which our members provide today to their clients. It gets even more complicated because our members have so many different business models — CPM networks, CPC networks, CPA or affiliate networks, agencies who do all three and creative and analytic work besides, not to mention blending in search and email campaigns. I couldn’t hire enough customer service reps.

Second, AdECN is a financial clearing house that collects from all of the members and pays all of the members. They don’t have to run around collecting from each other. Also, we guarantee that every member will get paid for the inventory they sell in the exchange — whether or not we collect from the other party. If AdECN took on a gazillion advertisers with all the attendant collection problems, AdECN could not make that guarantee. You can’t be an exchange of any sort if you can’t guarantee payment.

Again, we borrowed from the stock market model, which requires all buyers and sellers of stock to work through a member brokerage — for the same two reasons. It works.

What exactly does a member get with his seat on the AdECN Exchange?

First of all, members get real-time access to the traffic in the exchange. We provide a web-based interface, which, by the way, they can private label for their advertisers and publishers, if they want their clients entering their own campaigns and inventory. It’s through this interface that they participate in the real-time, per-impression, highest-bidder-always-wins auction, and specify all the targeting, the metering, the frequency capping, the reporting, and the exclusions.

AdECN also provides the ad serving, although if the member wishes, he can use a third-party ad server instead. AdECN also acts as the financial clearing house. We collect from all members and pay all members, guaranteeing that every member gets paid for what he sells. It’s up to the members, of course, to collect and pay from their own clients.

Does a member have to run all of his traffic through the exchange?

No. A member can run nothing through the exchange, and just use our hardware, software, and bandwidth as the infrastructure for his own closed system. Or a member who is very heavy on the publisher side might opt to run all of his publishers but none of his advertisers (and vice versa). Most members, however, will use the exchange only when they are certain it will make them more money than using their own client to fill the transaction.

The member can set a profit threshold at the auction level. We run the auction for the impression, then check to see if the filling transaction from the exchange makes him his X percent more money than using his own client. If so, we use the exchange client. If not, we use the member’s client. Actually, we have an interesting variation on that scenario: a member can also specify that the exchange pick the winner who makes his publisher the most money, rather than himself. It’s up to him to decide whether this is enlightened self interest, or not.

What does a membership in the exchange cost?

We charge a one-time, upfront fee for the seat, which varies depending on the amount of volume we expect from that member. Again, it’s like buying a seat on the New York Stock Exchange. On an ongoing basis we charge a small fee per transaction. It starts at 4 cents CPM and goes down on higher volumes. It’s a flat fee, not a percentage, and it’s about what most members pay for the ad serving alone.

Can the AdECN Exchange handle ads for other media, like television?

At the moment, no, but that is a limitation of the other media, not AdECN. AdECN is all about the uniqueness and value of each individual impression. When each television set has a unique IP address, AdECN will be able to target to the individual viewer linked to that address, showing each viewer potentially a different ad in that same 15-second spot, and advertisers will pay different amounts to show different ads to different viewers. AdECN does exactly that today on the web. But for now, television is not granular enough to benefit from the AdECN exchange.

Mobile devices, however, which have something like an IP address, are very close to being venues for AdECN advertising. The remaining hurdles are just business issues: the new ad formats for the small devices are their own economies, requiring more advertisers to support them, and the wireless carriers are playing gatekeeper in the middle between the advertiser and the phone user. When there are two healthy ad networks serving mobile devices, AdECN will get involved.





Reader Comments.

As an advertiser I can say I’ve tried the Right media marketplace system and it just does not work. Campaigns convert at a higher conversion when compared to the bigger networks such with 247 and Maxonline. In their marketplace the bulk of the campaigns come from the networks exchanging campaigns with the same publishers. These networks do not have a high level of quality sites. On screen shots I’ve questioned ads showing up on warez sites adult sites and banners stacked one on top of the other. There is no guidance on this marketplace. It is like the wild wild west. Right media looks the other way just to boast the amount of impressions it serves not click rate or conversions. The sad fact is the marketplace is full of low quality sites who accept any low cpm cause they can’t get into the non-Right media networks. The only thing Right media is spawning is huge amounts of nothing sites where illegal downloads of programs, music, and videos are shared. As an advertiser I asked for a site list. Had some hesitance but got a list of sites where my ads would likely appear. When comparing the sites with the site referrers in our logs NONE of the sites were in the referral lists to our sites. There other referrals were from networks use the same marketplace system. I know it is not allowed to post the links to the sites in the comment section but the list would make an advertiser vomit.

On the other hand, I think the adecn is a system that can work. The system looks like it will be impartial and will not be owned by the network that runs it. Over the two I would pick adecn over the Right media marketplace. Whether major sites accept giving their site up to the open market sill remains to be seen. At least they do not try to push off their 2 billion a day impressions through networks recycling the same ads. Pure crap clear and simple.

Posted by Charles Charnel | 3:24 am on September 16, 2006.

Charles,

What campaign did you try? Vizi Media, who is affiliated with Adotas, participates in the Right Media Exchange. Maybe if you worked through the Vizi Direct network, you wouldn’t have had conversion problems. Shame that you only saw bad inventory – great new sites like Tribune, Fox Interactive, Community Connect, LookSmart and Tickle are there. You could always request just to run on those sites that are trusted.

Posted by Adv guru | 1:11 pm on September 16, 2006.

Shit in shit out i say.

Posted by Davey Sprocket | 1:39 pm on September 20, 2006.

Leave a Comment

Add a comment

Pages: « previous page 1 2 3

Tags: , , , and
Article Sponsor

More Spotlights


  • Right now, at the beginning of 2012, what are you watching the most closely for its ad and marketing opportunities?

    View Results

    Loading ... Loading ...

Latest News

News Archive

Spotlight

Sponsormob Leads the Way Into RTB for MobileADOTAS – For more than half a decade, Berlin-based tech firm Sponsormob has remained relevant in an industry characterized by [...] more...


Adotas Partnership