Global Ad Exchange Seeks To Solve Quality Inventory Dilemma

Jason Fairchild

A Dentsu subsidiary will give U.S. and European advertisers a portal into the Japanese display ad market, as well as gain. Cyber Communications Inc. (CCI) has inked a multiyear agreement with ad marketplace OpenX Technologies to launch OpenX Market Japan, a self-serve online advertising exchange.

The deal gives Japanese publishers a global ad marketplace to pull in content from advertisers in the U.S., as well as parts of Europe through a prior agreement with Orange in the United Kingdom and France. It also provides U.S. advertisers with access to the Japanese market. The exchange will launch in the fourth quarter of 2010.

OpenX launched 18 months ago with the goal of pooling publishers' inventory worldwide. The real-time impression-by-impression, auction-based ad model aimed at ad agencies, direct advertisers, ad networks, and demand side platforms (DSPs) provides control, options and transparency to gain better return on investment, according to Jason Fairchild, OpenX chief revenue officer.

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While OpenX offers one global platform, regional partners like CCI support sales and marketing for their market. A U.S. buyer can log on and buy inventory in Japan through the OpenX market. OpenX handles the currency conversion, pay the publisher in Japan, and collect the money from the buyer in the United States, Fairchild explains.

It drives global liquidity both ways. "The world needs an alternative in the exchange space, and I think we're emerging as an alternative platform with folks that can help," Fairchild says. "If we went into Japan alone than we'd be the underdog, but we're partnering with Dentsu that has tremendous assets."

Publishers will try to solve the problem of too much display inventory space and not enough quality ads to fill them. Global exchanges similar to OpenX will try to solve that problem.

Overall, advertising declined by 6.3% in 2009, according to a PricewaterhouseCoopers report published in July. Analysts expect the market to increase by 3.4% in 2010, and then grow at mid- to high-single digits through 2014, averaging a 6.6% compound annual growth rate. In the report, analysts project 14.3% CAGR for Internet advertising through the projected period.

Japan led advertising growth in 2009 with $41 billion, followed by PRC at $21 billion and Australia at $10 billion, together accounting for 75% of total advertising in Asia-Pacific. Excluding Japan, advertising growth for the remaining countries during the next five years should average a CAGR of 10%, which could challenge the OpenX Market Japan exchange to gain traction.

For publishers, OpenX Market Japan allows publishers to set the floor or reserve price for each impression. Platform features enable publishers to keep control of floor price set for their inventory. Publisher payments get consolidated for billing. The publishers' tools in Japan are in Japanese, and pricing and billing are in yen.

The marketplace enables advertisers and agencies to define and buy ad inventory based on unique targeting criteria across a combination of large and niche publishers. They can maintain complete control over where their ads are displayed, and have real-time bidding on both the client and server side with immediate access to auctions that aim to guarantee an instant and fair bidding process.

The Orange Ad Market, which launched in July, continues to progress according to the plan, according to Fairchild.

1 comment about "Global Ad Exchange Seeks To Solve Quality Inventory Dilemma ".
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  1. Christopher O'Hara from Krux, September 1, 2010 at 7:55 a.m.

    Watch out, Google.

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