Jay Sears - In the Debate on Ad Exchanges and Ad Networks, Let's Not Forget about the Advertiser - MediaBizBloggers.com

Spanfeller, Calacanis, Millard Raise Legitimate Concerns

Forbes.com CEO Jim Spanfeller, while at Needham & Company's Third Annual Internet and Digital Media Conference last week, predicted ad exchanges and ad networks have hit their zenith. He commented these platforms will be relegated as unimportant as publishers take increasing control over selling their own media. "By working through networks, you're basically moving advertisers away from the content group, and that's inherently a bad idea," said Spanfeller, according to a report in MediaPost.

If fact, the exact opposite will happen. And Jim Spanfeller will be happy about it.

The very best exchanges and networks will prosper precisely because they will enable (among other things) branded publishers to meet the goals of the advertiser—including expanded reach across content rich pages and enabling campaigns to meet ad delivery volume when they otherwise could not achieve this goal.

A few weeks before Jim's comments, Mahalo founder Jason Calacanis pointed out some serious shortcomings of the ad network model in a rant in Silicon Alley Insider.

None of Jason's comments are new news. They are old, and real, problems being addressed by various innovators in the ad exchange and network business.

All of the things Calacanis mentions—giving inventory away, punch the monkey ads, taking 50% share on a bad CPM—are issues around the old ad network model. Models with no or limited controls for publishers have a real and adverse effect on the entire industry. Many of the newest platforms avoid these issues and offer scale, control and insight for publisher and advertiser alike.

Our newest board member, Wenda Harris Millard, President of Media for Martha Stewart Media and an early innovator at both DoubleClick and Yahoo!, correctly pointed out at the IAB Annual Meeting that we all need to "distinguish between quality and commodity" and not sell inventory like "pork bellies". She also said "My space is your space" and encouraged all of us not to run into our corners and call each other names, but have a real discussion about co-opetition, being frenemies and the fact that many market players are getting into each other's business.

At ContextWeb, we operate the ADSDAQ Ad Exchange (not an ad network), which is a platform with controls (a lot of them) for both advertisers and publishers.

On the ADSDAQ Ad Exchange, publishers can control the CPM price at which they offer their inventory on the exchange. They can also block advertisers they don't like. We also use our contextual engine to categorize inventory into individual pages of specific content types, so we don't create channel conflict for the 200 or 300 web publishers that do have inside sales teams.

Other market players are spending a ton of money to try to provide valueto advertiser and publisher alike. Smart buyers and sellers realize if you are not delivering value, and if your only proposition is price, your business life will be deservedly short.

The big portals—Yahoo!, AOL, Microsoft and Google—have spent in excess of $10 billion in the last 12 months building platforms. Sites—including top tier brands such as Spanfeller's Forbes and Millard's Martha Stewart—are creating "extended networks" of sites that share their brand values.

And ad networks are specializing. Adify reports 75 vertical networks, from Travel Ad Network to the Gay Ad Network to Sustain Lane, a green network. Other networks have driven into contextual, such as site-specific text link providers Quigo and Industry Brains, and into all sorts of behavioral targeting, including respected firms such as Revenue Science and Tacoda.

And after we are done with the debate about the value of the network and exchange models, let's not forget that we're all here to help address the key problem facing our collective customer - the advertiser.

How do we best reach the advertiser's customer in an age of media and audience fragmentation? It is going to be a collective effort, and advertising exchanges and networks will be at the center of many of the solutions.