Are Ad Exchanges Going To Be Big In 2009?

I strongly feel that 2009 is the year that Ad Exchanges move into the mainstream.

Online media is becoming more sophisticated. It is becoming more fragmented. And it is becoming more challenging.

Ad Exchanges offer a viable avenue for advertisers to start taking more control over their display advertising campaigns. It will start giving advertisers more control and more flexibility.

For those that are unsure of what an ad exchange is, I will first explain what makes an ad exchange and how it all works (as simply as I can!).

Ad Exchanges - What Are They?

An Ad Exchange is a virtual marketplace whereby advertisers (and networks) have the opportunity to purchase ad inventory that publishers wish to sell.

Why Is It Different From A Network?

With a network, you can buy inventory across a variety of different publishers (often blind) for a set price. An Ad Exchange however lets you compete in some cases against other publishers and advertisers for inventory on certain publishers. In some cases, it could be seen as cutting out the middle man.

Why pay network A £1CPM for inventory on site A when you could buy it yourself for £0.60CPM?

Ad Exchanges Can Offer A Greater ROI

Ad Exchanges can offer advertisers a much greater return on investment. With a network, not all inventory you buy will work for you. A good network will ensure you spend as much as possible whilst also delivering against your KPIs

What if however half that inventory is wasted and doesnt convert, merely inflating your ROI?

On an ad exchange, you can bid higher for the inventory that is working for you and bid less or terminate all spend on the inventory that is not. It is an auction model and operates much in the same way that PPC used to.

Alot of media is now becoming fragmented and ad exchanges allows you the opportunity to purchase this long tail of inventory on a profitable, scalable platform.

Working on ad exchange platforms does require a certain level of nous. This is why many response focussed agencies and advertisers should be looking to significantly increase the level of investment they have with ad exchange platforms.

Why Are Search Engines Getting Into The Ad Exchange Market?

Yahoo purchased Right Media (the largest ad exchange platform), Google purchased Doubleclick (who also have a similar platform). It is clear that the display advertising market is something that Search Engines intend on investing in further. They have too!

Search volume will always be finite. Users are searching more these days (typically increasing the volume of searches per every purchase online) but the volume can be argued as being finite.

95% of users time online is browsing content. It is to a certain extent untapped gold for Search Engines. They must invest in this market to continue to scale their respective businesses.

Do Networks Still Have A Role To Play?

Networks still have a role to play and always will. They provide mass reach to specific target markets and are critical for aggregating online audiences.

Networks offers scalable solutions that advertisers in house may simply struggle to match. Firstly, you would need a team dedicated to run an ad exchange programme. As an advertiser are you geared for this?

They also have bags of experience in buying media, with sophisticated tools to underpin the performance of a campaign. Again, as a single advertiser, can you compete with this?

Lastly, they will also have access to inventory that can not be bought on an exchange. Remember, not all inventory from publishers will be accessible to individuals such as you and I.

Ad Exchanges are certainly becoming more mainstream. Display advertising is certainly becoming more sophisticated. Whether the two go hand in hand for all advertisers is another matter.

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