When we launched Direct Media Exchange (formerly known as RMX Direct) last year it was to our knowledge the first free ASP ad server for publishers. Although at that time, and still today, it’s a very basic ad server which has some unique abilities focused on getting monetization for inventory from the Right Media Exchange as well as allowing publishers to manage other ad networks who buy from them.
It wasn’t the only free ad server in general, as phpAdsNew existed as an open source ad server where publishers host the code themselves.
We know though that we would soon have more competition in the free ad server space. Over the years ad serving has become more of a commoditized service, and if you do it right you can give it away and make money in other ways.
Recently we’ve seen that phpAdsNew has changed their name to OpenAds and received $5 million in venture capital to help turn the open source ad server into a business. Then news hit this past week that the parent company of ad network Tribal Fusion has launched their own free ad server called Expo9.
There were also rumors for a long while that Google was building their own ad server they planned to release to free, and it’s still possible that they do that or eventually make DART free after acquiring DoubleClick.
There are two main questions that come to mind:
1. How do companies make money if they are giving it ad serving away for free?
In the case of Direct Media Exchange, we make money by charging the networks who are part of the Right Media Exchange a very small revenue share to have access to the publisher inventory.
OpenAds plans to offer consulting services on using their software, as well as helping publishers sign up for ad networks and splitting the revenue with ad networks. Essentially acting as an affiliate for the ad networks.
With Expo9, I imagine Tribal Fusion is hoping to grow the volume of publishers and advertisers using their ad server to make them buy and spend more with Tribal Fusion’s ad network. I’m not sure how integrated their ad network will be in their ad server since I haven’t used it.
If Google ever goes free, you can bet that they’ll make Adsense and Adwords integration a key part of the ad server, hoping to get advertisers to spend more money easier, and for publishers to give Adsense first right of refusal on their inventory.
2. Should all ad serving be free?
No, not necessarily. Obviously free is a great price for the publishers paying it, but everything has a price. Publishers need to be careful and aware of what “free” is costing them. They need to make sure that the ad server they use is openly allowing them to work with whatever ad networks/buyers they want, and that their inventory is not held captive. We feel this is a strength of Direct Media Exchange as we auction each ad impression and send it to the advertiser who is willing to pay the most for that particular impression, regardless of who the advertiser may be.
Beyond that, there are some reasons you’d want to pay for ad serving. If you are getting access to amazing things, great service, consulting, and other value-added services it makes sense to pay for that. It can also provide more commitment from the ad serving company and the publisher client when they both know the product is being paid for.
I don’t think paid ad serving will disappear, but there should continue to be more improvements in free ad serving coming, as well as more competitors entering the space. That’s a good thing for publishers.