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Could Ad Exchanges Reform The Display Market?

Why are Google, Yahoo and Microsoft putting money and resources behind online ad exchanges? Yahoo recently purchased Right Media, while Google, pending approval, will acquire DoubleClick, which announced it would offer its own ad exchange shortly before the Google deal.

Online ad exchanges aim to bring ad buyers and sellers together into an open marketplace where unsold publisher inventory is assigned a value based on advertisers' interest. Advertisers set the price they're willing to pay for the spot, then the exchange notifies the publisher, which will run the spot if the price meets publisher expectation. By bringing together a lot of sellers--which means bigger targeted audiences--exchanges believe they can help advertisers and publishers get better returns from non-premium inventory. Advertisers also like the transparent pricing and the neutral, Nasdaq-like approach to selling.

But it's still very early days; exchanges need to build their networks--usage is the key--and consolidate. Then, Q Interactive CEO Matt Wise hopes, "One technology platform can cover an enormous swath of the Internet." It's a pain buying ads from so many ad networks, he says. DoubleClick CEO Dave Rosenblatt agrees: "The exchange concept will have the same impact on the display market" as Google's AdWords had on search, he says. That would be some impact

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