Ad exchanges abound. Right Media, DoubleClick AdX, and Microsoft’s AdECN have thus far focused on addressing the non-premium display spot market, while just one is focused on premium inventory – ADSDAQ. Here is an internal Q&A we did with Jay Sears.
Adotas: ContextWeb, Inc., a contextual online advertising exchange, recently announced that it had opened its ADSDAQ ad exchange to all site publishers and will soon open it to all advertisers. I asked Jay Sears, Senior Vice President, Strategic Products and Business Development for ContextWeb why he considered this is an important benchmark in the evolution of ADSDAQ.
Jay Sears: Until recently, the ADSDAQ exchange had been only open to a select group of publishers, including A&E Television Networks sites like History.com, Biography.com and AETV.com, Raging Bull and Salary.com. By opening to more publishers we will increase ADSDAQ’s reach to audiences found on niche content sites and blogs.
Advertisers have a unique challenge—their customers are now spending less time on large sites and portals and more time on small and medium publisher sites—eMarketer says 61% of U.S. Internet users spend most of their time online viewing content not from the top 20 domains.
According to Media Screen, interest in the products and brands advertised on smaller sites and blogs is actually higher than on larger sites, 42 percent versus 38 percent. The latest Technorati survey said there are 98 million bloggers. These are passionate people producing rich, niche content. ADSDAQ allows these publishers to send us their inventory first while continuing to work with Adsense and other alternatives as well.
This will give advertisers participating in the exchange reach to a much larger audience and a greater amount of inventory that will meet their preferred pricing. Moreover, we are giving ad agencies more actionable insights that they can bring to their clients and use to refine their buying.
We also plan to use our self service tool to open ADSDAQ up small and middle market buyers and sellers—it’s a huge market that is still largely ignored by the largest media companies.
Adotas: What other media companies, do you mean the other ad exchanges like RightMedia?
Sears: RightMedia is solving Yahoo!’s business problem, an untold amount of remnant inventory that is severely under-monetized. If Yahoo! can move the needle on a piece of remnant inventory in their email product from $0.05 to $0.07, that is a win for Yahoo! and for the direct response offers being run in that inventory.
ADSDAQ solves the problem of brand control for agencies and their brand advertising clients. We create contextual and other highly targeted opportunities on content pages from big and small publishers. These opportunities provide control for branded creative and guarantee performance around campaign goals.
Most investment banking analysts are now showing the growth rate of branded advertising to surpass the growth rate of search. These dollars will need to follow the customer and the customer is no longer spending as much time on the portals. Witness the giants including AOL and its Platform A and Yahoo! and its purchase of BlueLithium—these are all moves to create “off-portal” reach so these companies can continue to deliver customers to their advertisers.
ADSDAQ takes inventory from publishers of all sizes and delivers the reach of an ad network, combined with the qualities of a site specific or portal buy. We can do this by using our real time contextual engine to pull premium, category-specific inventory from large and small publishers across our exchange.
Adotas: What’s the difference between an ad network and ad exchange? What do buyers or sellers need to know?
Sears: Most traditional ad networks are biased in favor of the advertiser. Because of this, publishers typically only contribute remnant inventory—there is no economic incentive to provide higher quality inventory for the advertiser. Consequently, the advertisers get what they pay for…the exceptions are the few site rep networks that are biased in favor of the publishers and who can only provide nominal scale to the advertiser.
Exchanges are neutral platforms where transparency and control of various sorts (pricing, placement, blocking, etc.) are given to buyers and sellers. And like there are different ad networks, there are different exchanges.
ADSDAQ gives buyers and sellers control and the exchange makes the match only when the objectives of buyer and seller have been met.
Adotas: Where do you expect your core business to come from?
Sears: Right now, the dollars come from ad agencies. We work with 9 of the 10 largest marketing companies in the US including Omnicom (OMD, Agency.com), WPP (Mindshare, Ogilvy, JWT), IPG (DraftFCB, Initiative, Universal McCann) and Publicis (Digitas, Mediavest, Modem, Starcom). In 2008 we expect to add more client direct and self service advertising business as a compliment to our current work.
Adotas: How about on the publisher side of the equation?
Sears: We love publishers because they are mercenaries. We let sellers set a CPM “AskPrice”; we conduct a real-time “valuation” of each impression using our contextual and optimization engine and we pay for the impressions that work for our advertisers. For any impressions not used by ADSDAQ, we traffic and serve these to a publisher’s backup network such as Adsense, Advertising.com, BURST, RightMedia or others.
Publishers have zero risk because they get the same dollars or do better when ADSDAQ clears the inventory at their requested price. Our advertisers have a wonderful and unfair advantage by our ability to look at billions of impressions and pull out just the ones that work for them.
Adotas: Where do you see ad networks, and ad exchanges evolving, say in the next three to five years?
Sears: As time spent by customers continues to fragment, there will be more and more niche content publishers and blogs. We will focus on facilitating, adding value via contextual targeting, aggregating audiences and removing friction from the buy sell process.
Exchanges and networks with unique technology such as contextual and behavioral will flourish. Vertical networks will succeed by knowing their clients better than generalists. The rest of the “YAANs” (Yet Another Ad Network) – those with no technology, no specialization, will be crushed, wiped out, gone.
Adotas: So will online ad spend will look very different in three to five years?
Sears: Yes. More brand dollars in addition to direct. And we will all be expected to deliver both results and insight.
Adotas: Can you sketch out a few trends for us?
Sears: Fragmentation will continue to create huge opportunities for those of us that can re-aggregate the audience for the advertiser. Brand dollars will continue to accelerate with increased demand for premium inventory and especially graphical and rich media placements. Online media companies will need to deliver actionable insights along with premium audiences. Advertisers will spend more and rightly demand more.
Adotas: Fascinating. What excites you about online advertising or the larger online economy, going forward?
Sears: It is still the proverbial first inning.