About two years ago we witnessed the birth/rebirth of ad exchanges and much of the press, myself included, touted them as the next big thing for online marketers looking to take control of their
campaigns. The promise was that of a self-service platform which provided unparalleled access to management of your efforts. However, it's now two years later and exchanges haven't delivered on that
promise, having become just another way to launch an ad network.
The ad exchange model really started back in 1996 with Flycast -- but Flycast was far too early. It promised a self-service
platform for agencies to manage their own network buys and people took note. I tested it back then and it was a great solution, but it never saw the widespread adoption that one would have hoped for.
This second act of the exchange model promised the same level of access and control on a broader scale -- but the simple fact was that exchanges are not that simple. They're complex, they require
training and just as much, if not more, work than the current model for online buy management. As a result, the exchanges have not taken the foothold that they'd hoped.
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There is so much work
in the beginning to understand and fully utilize all of the intricate details of the ad exchanges that most agency people have pushed them aside. They require the creation of relationships in the
system, management of the relationships and legwork to make sure they are effective.
Exchanges should be as easy as AdWords and AdSense, but unfortunately they aren't. In many cases we've
seen ad exchanges hire salespeople to pitch the product and manage buys for agencies, which means they're no different than a traditional ad network.
I was told a long time ago that an idea
which saves time is worth money, and in theory the ad exchanges do that, but the promise of the experience didn't match the actual experience, and therefore we aren't seeing the value.
One
reason that ad exchanges missed the boat is because they're not filled with premium inventory. I know this statement will generate some angry responses and a defensive stance from people reading this
who work at an exchange, but the simple fact is that premium inventory does not make its way to an auction-based model. The inventory is class 2 or class 3, and in many cases is being run from one
network or exchange to another, getting passed around more than the donation basket at church. Too much of the time, when you buy the inventory on an exchange you lose control of where it may have
originally come from; most advertisers, and especially brand advertisers, are uncomfortable with that level of intangibility and stay away from advertising on these platforms.
What's
interesting is that some agencies have been using the exchanges to power their own ad networks, but the development, launch and management of these programs takes time, requires lots of legwork and
may not provide a strong enough ROI to be valuable to them in the long run. Just because it's built by the agency doesn't mean the media buyers will be buying it, and if they are pushed or prodded to
be buying inventory on those platforms, then that becomes a conflict of interest, and potentially affecting buyers' ability to be objective in evaluating overall media opportunities.
The ad
network and exchange space is quite cluttered. Consolidation is, however, definitely taking place as advertisers are focusing their efforts on key partnerships, but rarely do I hear of an exchange as
a valued partner. They are interchangeable and expendable in the view of most brands, and not valuable to many others.
Maybe stage 3 of the ad exchange will be more like Google AdWords: a
truly self-service, easy-to-use platform where marketers can test out messaging and manage their buys in an effective manner. Either that, or the pendulum is going to shift back to fully integrated,
fully customized solutions that require the depth of relationship to manage. I predict the latter. This is still a relationship business -- and no matter what technology comes to the forefront,
marketing is about people.
Don't you agree?