Madison Avenue is borrowing tactics from Wall Street, as major Web companies like Yahoo, Microsoft and Google enter the online advertising exchange business. The move reminds
The New York Times
of the time when technology came to the stock exchange, and started serving up more sophisticated financial instruments.
Joe Zawadzki's Mediamath is one such firm that's leveraging ad
exchanges to buy and sell ads instantaneously. "Right now it's more the in-the-moment, taking advantage of the spot market with aggressive bid management," Zawadzki said. "But we're certainly thinking
about where that goes later in terms of secondary markets, derivatives, options, hedges, all the rest." Derivatives? Options? Hedges? Yikes...
Ad exchanges are a viable, if more
labor-intensive alternative to ad networks. Whereas ad networks let advertisers buy reach, ad exchanges sell inventory on a one-one basis, allowing advertisers to track the performance of each ad.
When big publishers can't sell all of their ad space, they turn to ad exchanges to sell the leftovers. The exchanges deliver ads at much lower rates than the publishers' original asking price, usually
something like $1 per thousand impressions, versus $20 and up for premium inventory.
Read the whole story at The New York Times »