The Sunday NYTimes Business section featured an article by Stephanie Clifford on the evolution of display marketing called "Put Ad on Web. Count Clicks. Revise." It's worth a read. Clifford does a good job of covering how the ad exchanges brought an auction pricing model to display. Importantly, she covers how access to new targeting data from 3rd party sources like Blue Kai significantly alters the value of display inventory.
Until recently, targeting data has been controlled by large publishers and ad networks to drive higher CPMs and margins. As Clifford rightly notes, "this combination — real-time [targeting] data and ad exchanges — has monetized what was once considered throwaway space online." The key point is that access to both real-time targeting data and ad exchanges have shifted price control to the marketer and away from the publishers and networks. The result is that while demand builds in the exchange and data auctions, early-to-move marketers stand to benefit from the low prices and good volume available in-part because of the lack of competition. The early mover opportunity in the exchanges is reminiscent of the early days of search marketing with Overture and Google.
One point omitted from the NY Times story was the link between search marketing and the developments in exchanges. Search marketers and their agency and technology partners have been using data to drive bid and copy decisions for many years. In fact, the data-driven, Wall Street-like approach to marketing now being applied to display is core to any successful search engine marketing effort. Efficient Frontier's founder and CTO, Dr. Anil Kamath, brought the quantitative modeling techniques he built for programmatic trading in the hedge fund industry to search marketing in 2002. To those companies like ours immersed in search engine marketing, ad and data exchanges are an exciting development that fit well with our competencies and technology. This "new era" of display advertising is very search-like at its core.
We're actively working on our display and exchange management capabilities. Early testing has shown clearly the opportunity that the exchanges present in delivering efficient results at significant scale to our performance-oriented clients. The opportunity is still evolving as the exchanges develop and improve their APIs, a necessary step for us to automate optimization. We’re thrilled to be a primary participant as the new era of display unfolds, presenting us with a new challenge with a familiar feel.
by Justin Merickel
Vice President of Marketing and New Product Development
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