What Exactly Is An Ad Exchange Really?
An experience today made it blatantly clear to me that being in the ad exchange business I take it for granted that I know what actually is an ad exchange.
I'm amazed, but it had never really occurred to me that most people think an ad exchange is more like a link exchange. Meaning that an ad exchange is a system where websites swap ads with each other. That really isn't the case at all, but based on the words themselves and the concept of link exchanges I can see how people come up with that conclusion.
The good news is that ad exchanges are growing in number, size, and prominence. iMedia recently did a round up of ad exchanges that's worth taking a look at. They start out by summarizing the concept, then giving the same interview questions to all the major ad exchanges that exist.
It starts out with Adbrite. First, I would probably classify Adbrite as a marketplace instead of an actual exchange, but that's kind of semantics. Either way, it should be understood that Adbrite is a much different system then something like the Right Media Exchange. Adbrite is setup so individual advertisers choose to advertise on individual publishers on a couple of set pricing types. An actual exchange can contain many different types of companies and pricing and is a more dynamic (and some might say confusing) environment. I also must applaud Adbrite for providing actual client examples and numbers in this article. Part of the definition of "exchange" to me conveys an open environment, and as we'll soon see some other exchanges are intending to keep things secret.
Next in the iMedia article is AdECN. AdECN is very heavy with the exchange terminology and likes to compare themselves to financial exchanges. This is great, but they didn't disclose any customers or numbers for this article citing confidentiality. Most financial exchanges are pretty open with these things, it's part of what makes them work by nature. It's also interesting that AdECN used to make their transactions per second number public, but won't disclose anymore. I also have a problem with this quote: AdECN is the only real-time, auction-based, neutral exchange for online display advertising. Really? I would argue that a few other exchanges all meet that criteria.
Next on the list is Contextweb's ADSDAQ. Another one that likes the financial exchange comparisons, and that's cool with me. Right away I have a problem with the opening line though: Since its inception in early 2005, we have built the ADSDAQ exchange by offering a CPM AskPrice to publishers. While Contextweb may have been operating in 2005, they didn't launch their exchange, or at least talk about it as an exchange until quite recently. As you can see from Archive.org, the ADSDAQ website didn't go live until May of 2007. As far as I know, this solution was still in beta in June (as seen in the signature of this forum post). So I think it's odd to be billing your exchange as operating since early 2005, maybe I'm just being picky though.
I do like that they are releasing names of clients and data though, and it seems like an interesting system.
Next on the Exchange hit list is Datran Media's Exchange Online. Datran's big difference is that they focus on email advertising, which definitely puts them in a unique position today. I'm admittedly not an expert in the email advertising area, so I'm not sure I can really evaluate it well. Again though, a quote I have a problem with: EO.com is the first exchange to support cost-per-acquisition pricing. Maybe in email advertising this is the case, but numerous exchanges have already been offering CPA pricing. Right Media's Exchange launched in early 2005 with CPA as one of the main pricing types.
DoubleClick's beta exchange is the next to be looked at, but like AdECN DoubleClick doesn't release any clients or numbers. Being that it's still in beta and not publicly launched, I'll cut them some slack on not feeling comfortable releasing that information yet.
Lastly is my biased favorite, the Right Media Exchange. Undoubtedly the largest and oldest of the exchanges, I feel the profile is pretty good with releasing the names of real clients, and giving out data. The big question now is how our integration with Yahoo! goes, and what the future holds for the exchange with Yahoo's resources, talent, and relationships involved.
The exchange area is posed for more growth over the next few years, and we'll continue to see more companies enter the space. It should be a fun ride.
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Pat is the Director of Business Development at Right Media, the business unit owner for RMX Direct, and the author of the Conversion Rater blog.
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