Comments on: An Overview of an Ad Exchange http://www.conversionrater.com/2008/02/15/an-overview-of-an-ad-exchange/ A discussion of ecommerce, online advertising, Web 2.0, web entrepreneurship, and just making the web convert for your goals. Thu, 08 Jan 2009 12:46:39 +0000 http://wordpress.org/?v=2.6.1 By: Jordan Mitchell http://www.conversionrater.com/2008/02/15/an-overview-of-an-ad-exchange/#comment-235434 Jordan Mitchell Sat, 16 Feb 2008 18:58:59 +0000 http://www.conversionrater.com/index.php/2008/02/15/an-overview-of-an-ad-exchange/#comment-235434 It's funny. I read his post and like most descriptions, including that found on the Right Media Web site, it still feels like hand-waving. The basic principles are indeed sound -- no one can argue that the more demand you are able to leverage for your inventory, the better the competition and the market will provide you the best rate. But outside the *theory*, are the concrete benefits really there yet, or is the exchange model dealing with some basic issues, such as: -- it's all remnant inventory that can't be sold direct, so the market has already valued it to some extent and it's not much! Then you add in the 10% intermediary fee (not paid by you) and are you as a publisher better off? In other words, are the market inefficiencies that poor where the exchange model demonstrates continued lift? I'd like to see some case studies. -- is the demand greater than the supply? I saw your other post where you mentioned 6,000 buyers and 13,000 selllers on the exchange. If there's just a lot more supply than demand (which I believe to be the case in display ads), then I'm not sure an exchange will do much for you. If the demand is greater than supply, then you're better off selling direct yes? -- don't most ad servers now allow you to optimize their queue using eCPM rules (instead of schedule)? I've been talking a bit with Right Media and it still doesn't feel like a place for buyers to get a great deal on inventory and publishers to make more money. It’s funny. I read his post and like most descriptions, including that found on the Right Media Web site, it still feels like hand-waving. The basic principles are indeed sound—no one can argue that the more demand you are able to leverage for your inventory, the better the competition and the market will provide you the best rate.

But outside the theory, are the concrete benefits really there yet, or is the exchange model dealing with some basic issues, such as:
—it’s all remnant inventory that can’t be sold direct, so the market has already valued it to some extent and it’s not much! Then you add in the 10% intermediary fee (not paid by you) and are you as a publisher better off? In other words, are the market inefficiencies that poor where the exchange model demonstrates continued lift? I’d like to see some case studies.
—is the demand greater than the supply? I saw your other post where you mentioned 6,000 buyers and 13,000 selllers on the exchange. If there’s just a lot more supply than demand (which I believe to be the case in display ads), then I’m not sure an exchange will do much for you. If the demand is greater than supply, then you’re better off selling direct yes?
—don’t most ad servers now allow you to optimize their queue using eCPM rules (instead of schedule)?

I’ve been talking a bit with Right Media and it still doesn’t feel like a place for buyers to get a great deal on inventory and publishers to make more money.

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