Monday, 9 July 2012

Ad exchanges and their impact on advertisers and publishers

If you work in digital advertising, you probably heard about ad exchanges. If not, in a nutshell they are technology platforms that enable real time bidding for an online ad spot (display banner, video pre-roll, etc.) based on data collected by cookies. The data is matched with the advertisers’ database and/ or account ID’s such as Windows Live Hotmail, Yahoo, etc to find the exact people advertisers are looking for.

Let’s say you are a travel company and wanting to promote a Fiji package for honeymooners. Then you could say you are after the following user segment: Female, 25-35, IP address from the Australian Eastern Seaboard (NSW, VIC, QLD), have visited in the last 4 weeks. And Mi9, owner of ninemsn (whom I work for), could deliver it. You find an agency with a demand side platform (or create an account and self-manage) confirm campaign budget and bid for the above segment per ad unit impression and algorithms decide the rest in a split second. If you are the highest bidder, when for example Julie from country Victoria logs onto Australian Women’s Weekly site, she’ll see your travel package appear in let’s say the Leaderboard (729x80 pix) ad unit on the page. Much like in this 2min video case study.

‘It’s an ultra-fast bidding process in which the clearing price for the publisher is 1¢ above the second-highest bidder. Each transaction is completed on average within 50 millisecond.’ (AFR)
So advertisers can buy exactly what they want, and set the price extremely competitively. Popular? You bet. Mi9 forecasts, that they will triple the revenue of their ad exchange in Australia in the next three years.

Any downside to all this automatic bidding fantastic? Think industrial revolution and people being replaced by machines.History repeats?Time to retrain…?

Well, it’s not all doom and gloom though, specialist jobs will stay. High impact, imaginative advertising will continue to be in demand, but a large majority of the data entry, campaign management, high volume/low value advertising sales jobs will likely to be phased out over the next few years to come. (Time to retrain...?)

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