Online ad exchanges, which work like the Nasdaq stock exchange to match buyers and sellers of ads, are nothing new but they’re starting to heat up again. In the past few years, several of them have been snapped up by Web giants, such as Yahoo with Right Media in 2007 and, last year, Google with DoubleClick, which started an exchange just before the search giant bought it. But with the continuing explosion of Web pages making it difficult for advertisers to contend with all the choices and just as difficult for Web publishers to extract adequate value from that inventory, I think ad exchanges are about to get even more attention.
Today, there’s a new entrant: OpenX Market, launched by OpenX Technologies in Pasadena, whose claim to fame is its open-source ad server used widely especially by small and medium-sized publishers. Tim Cadogan, a former Yahoo executive who’s now CEO of OpenX, says the company aims to open up the benefits of ad exchanges to many more players by making the buying and selling dead simple for both sides. The way it works, from the press release:
Publishers can easily route any or all of their ad impressions into the OpenX Market through tools now completely integrated into the OpenX Ad Server. Publishers define a minimum “floor” price for their ad impressions. OpenX Market then runs a real-time auction for each impression. If the winning bid from the auction is higher than the publisher-set minimum price, the higher paying ad is served and the publisher makes more money. If the winning bid is less, the publisher’s original ad runs.
What sets OpenX Market apart from Right Media, Google/DoubleClick’s AdX, ContextWeb, Turn, and the like? Honestly, I can’t speak for them, but Cadogan is pitching Market as simpler, more focused on inventory that publishers actively load into the system rather than as a secondary market that some exchanges have evolved into, and more focused on smaller publishers that don’t have the scale or expertise other exchanges may require.
I wonder how many exchanges will be able to survive long-term, since it seems like one of those businesses where if one gets really huge scale, most of the buyers and sellers will tend to flock to it. OpenX’s Market will face in particular the relaunch sometime later this year of Google’s exchange, which no doubt will get a lot of attention by virtue of the company’s large customer base.
However it all shakes out, the proliferation of these exchanges is another sign that as advertising moves online, it continues to move light years beyond its offline roots.