provided by: 
Google buys DoubleClick, Yahoo buys
RightMedia. Microsoft buys aQuantive and
AdECN. Important? Absolutely. Relevant to
you as a website owner in constant pursuit
of Web success? Maybe not right now, but
definitely in the near future.
Those acquisitions, made by these already
massive media and software outlets, indicate
not just their focus on Internet advertising
as a whole, but more specifically the
viability of the ad exchange model. Unfortunately,
few people grasp the actual value
proposition these exchanges provide, much
less the players in the advertising network
space or how to make them work to their
advantage.
How Ad-Serving Works (In General)
There is more to the economics of the advertising
exchanges than the "advertiser
buys, publisher gets paid" scenario. In fact,
there are often numerous variables (and
often middlemen) that come into play - all
of which affect these advertisers and their
publishers greatly. As such, it is important
to understand how all the pieces come together.
Most publishers, networks and advertisers
(regardless of size) have their own ad
servers. What happens is that a website
must request (typically through an HTML
or JavaScript snippet) content from the ad
server. When a user loads a page, the code
informs the browser to open a new in-page
window which returns content from the ad
server.
The situation gets more complex however
when each and every party (advertiser, network,
and publisher) has their own ad server
- specifically when each has their own tracking
and reporting to follow. Unfortunately,
this is where it gets complex. The problems
with stand-alone ad servers are that there are
pricing inefficiencies, integration challenges,
high latency and often slow ad serving.
Pricing inefficiencies come to light when
advertisers (as they rightly deserve) request
more advanced targeting (geographic, demographic,
and psychographic). This adds
a much more dynamic and complex level
of ad serving which smaller networks have
difficulty achieving with any measurable
success. In the end, smaller publishers
must implement manual processes while
larger publisher develop advanced prediction
algorithms to serve the right ad, to the
right person at the right time. The result of
this advanced segmentation is the majority
of dollars spent on ad networks goes to the
larger players.
Technology integration makes the ad serving
process much more complex as well.
Enter prediction algorithms, contextual
targeting and behavioral marketing and
finding the right mix which produces the
best return on investment for advertisers
and the highest revenue for publishers is
nearly impossible. The only solution for advertisers
and publishers is to either accept
pricing inefficiencies or work harder (or
smarter) to develop advanced segmentation
technologies.
Latency and slow adserving are other problems
as they currently exist outside of ad
exchanges. Why is this an issue? Each request
made from a web page takes time - crucial
time. The more nodes that a user's browser
must make to get to an ad, the longer the
page will take to fully load. When a page is
not completely loaded, the number of impressions
will not add up.
The Solution: Centralize
The answer for many of the larger enterprises
has been to centralize their entire
ad serving needs into one central location
- commonly called an exchange - which
serves up the ads. DoubleClick, RightMedia
and smaller independent agencies like
AdECN (recently acquired by Microsoft)
operate in an environment where pricing
inefficiencies, technology integration and
latency are less of a worry as everything is
centralized. There is obviously a lot of value
being brought into the market through
these exchanges and large-scale advertisers
(and publishers) recognize this.
For example, Terra Networks, a popular
Internet portal for the U.S. Hispanic
audience, announced in late June that it
began offering the DoubleClick DART Adapt
system as an enhancement of its online
advertising service which Terra hopes will
help clients maximize the performance of
their online campaigns. A number of Terra
Networks' clients have already experienced
significant improvements to their online
campaigns as a result of DART Adapt (in
some instances seeing increases in clickthrough
rates as much as 200 percent).
The problem as many see the situation
however is that since both Yahoo and
Google (and now Microsoft) have their
own exchanges, it will be nearly impossible
for them to offer a neutral environment,
instead perhaps favoring their own proprietary
advertising outlets.
If your enterprise is simply not large
enough to compete with the likes of the
Google's and Yahoo's of the world when
it comes to serving, buying and selling
advertising, know that there are alternatives
which work exceedingly well. For
example, OpenAds, an open source adserving
solution, is immensely popular and is
currently used on over 20,000 publisher's
websites. So what kind of opportunity exists
for users of OpenAds and the company
itself? According to James Bilefield, CEO of
OpenAds, "The industry has consolidated
fast over the past few months, and many
online publishers are getting concerned
about the consequences. In this environment,
Openads, which offers a fully independent,
reliable and free solution used
by thousands of publishers all around the
globe, offers a really attractive choice for
their ad serving needs."
It's the "choice" that is, and will remain, so
appealing to independent publishers.
Read full article at websitemagazine.com