Will Niche Ad Exchanges Work?

Glam Media has announced the launch of their own ad exchange, which is interesting for a couple of reasons.

First, without knowing much about the implementation and their plans for it I’ll question whether it’s really an ad exchange. There have been companies in the past who have dressed up their ad networks with slightly altered technology and then labeled themselves an ad exchange because it’s a hot buzzword.

I don’t really want to debate that now though, my bigger question is that the general notion of an ad exchange is that it provides liquidity and efficiency by bringing lots of buyers and sellers on to a common platform.

If Glam’s ad exchange consists of only their publishers on the supply side, and then Glam’s advertisers on the demand side, I don’t see how it adds any liquidity or efficiency. If they let their advertisers buy directly from their publishers through the exchange and remove themselves as the middleman, then this provides some value, but why would Glam do that since it kills their margins?

So according to their CEO, it’s purpose is to fill their unsold inventory. I’d take this to mean that when Glam represents a publisher, they’ll sell guaranteed campaigns and then put all the unsold inventory into their exchange. Why not just put that inventory into a much bigger and liquid exchange with tons of demand?

If it’s due to quality or minimum CPM concerns, most exchanges have controls that allow you to control what quality of ads you see and set a minimum CPM. Adding more fragmentation to the display landscape makes things tougher on all parties. However, I can understand Glam wanting to try and improve their place in the world and help their publishers, I just think it will be interesting to see if their exchange can exist alone.

I’d definitely recommend they try to at least tie in their exchange to other exchanges to improve liquidity either way.

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