Brand Marketers Attracted to Adsdaq's Contextually Relevant Ad Model

Adsdaq Exchange Opens to Bloggers and Small Sites to Compete with Google AdSense

The media buying "spread" has returned, attracting a new wave of brand marketers to online advertising with the promise of greater cost efficiencies, enhanced media targeting and better deals for online publishers.

In the 1960s and 1970s, the media buying industry was created by masterminds like Sam Vitt, Norman King, Ed Libov, Dennis Holt, Marty Chapman, Stan Moger, Larry Miller, Kal Liebowitz and others, several of whom built their business on the foundation of what was known as the "spread." Simply, the spread is the margin between what the media seller charges for inventory and the advertiser is willing to pay. By aggressively and cleverly negotiating for below-market rates, early media buying firms were able to both deliver cost efficiencies to clients and generate a substantial profit for themselves. In an age of pricing transparency, the spread is a vestige of the past for most traditional media. But it has reappeared in new media and is a driving force for attracting more brand advertising budgets to online media.

Technology is spurring this new wave of business opportunities in the media buying marketplace. ContextWeb's contextual ad exchange (www.Adsdaq.com) enables buyers to place their web ads in content that is contextually relevant at significant discounts compared to site-specific advertising, while at the same time enabling publishers to generate significant premiums for that inventory. Sound impossible? Not as explained by ContextWeb founder and CEO Anand Subramanian and SVP Strategic ProductsJay Sears. "We allow publishers to define their CPM and Adsdaq discovers advertisers willing to pay their prices," Anand explained in an exclusive interview with Jack Myers Media Business Report. "We have created a system that will find efficiencies without compromising advertiser costs by allocating advertising contextually. We have proven internally that our CPM is higher sometimes even than a publisher's own sales execs are selling for." To date more than 1,000 online publishers and 350 advertisers and agencies (mostly large agencies and major brands) are using the Adsdaq exchange

Sears explains "the Adsdaq online exchange follows an 'ask' and 'bid' model. Brand advertisers can get the reach and pricing they are used to with reach campaigns, but maintain the control over content they are used to with site specific advertising." An auto manufacturer, for example, will pay costs-per-thousand (CPM) of $20 and up for advertising on content specific sites such as Edmunds.com. The same advertising on ad networks such as Advertising.com can be purchased for CPMs of only 10% that cost.

Adsdaq enables media buyers to place advertising in content -- on non-endemic sites like the Associated Press and hundreds of others -- that is equivalent in value to highly targeted sites, but at substantially lower prices. Publishers are able to establish a pricing floor in the Adsdaq exchange that assures them a premium over their standard CPMs. "It's a complement to the site specific buying model that guarantees content adjacency," Sears explains.

Comparing Adsdaq to other online exchanges such as Yahoo's Right Media, Microsoft's AdECNand the anticipated Google/DoubleClick exchange, Sears outlines four primary differentiating factors. "The first, Adsdaq is a clearing house for premium inventory. The other exchanges are [primarily] for remnant inventory," he claims. "Second, pricing control is in the hands of sellers as well as buyers. There are probably 300 ad networks and two main ad exchanges, all geared to advertisers. The Adsdaq model is an optimization model that serves both the advertiser and publisher." He adds, "Traditionally publishers have relinquished inventory to exchanges and networks that are not focused on delivering good pricing, but on capturing market share. The market does not yet know how to price itself. Third, the Adsdaq exchange is contextual in nature and advertisers buy for specific content adjacency, adding value to inbound advertising inventory.Fourth, and the newest innovation, the Adsdaq exchange is open, introducing a self-service component enabling any size buyer and seller to participate."

The open exchange remains in beta format and Anand projects when fully launched in late-September, it will attract many of the 98 million bloggers and nearly one million Google AdSense publishers. "There are a lot of small sites that brand advertisers wouldn't use because they are unaware of the content or quality," Sears suggests. "We guarantee their ads will only show next to relevant and appropriate content on these sites." He points out Adsdaq does not use key words but depends on a taxonomy that looks at all words on a page to avoid inaccurate and negative context.

While contextual advertising is compared to behavioral targeting, Anand points out "behavioral targeting is about the user, plus it depends on cookies and past historical data. From a contextual point-of-view, we use just-in-time insights and we don't need cookies or historical data. In niche and long tail content, contextual advertising works better. The content is explicit and about a subject matter the users are interested in at the time they are looking at it."

ContextWeb, which was founded in 2000 as a technology licensing company and "reinvented" in 2004/2005 as a media company, boasts July comScore numbers of 70 million unique users and four billion ad impressions served through the Adsdaq exchange. Anand claims they currently reach 41 percent of the U.S. population, up from 30% a year ago. The company plans to launch a business-to-business exchange in mid-2008.

For more information, contact Jay Sears at sears@contextweb.com