Recently, my agency has been putting a lot of time and resources into the ad exchange space. For those of you paid search folks with SEM blinders on, let me elaborate because the opportunity here for those with paid search experience is about to open up tremendously in the next few years.
Ad exchanges are marketplaces for online display [banner] inventory that have been creeping up on us for the last several years. These technology platforms create major efficiencies for both the buyers and the sellers of online display. Effectively cutting out the sales team and the middle men (i.e. ad networks), advertisers and their agencies can purchase inventory directly through these exchanges in an auction-based model without all of the extra soft costs that usually accompany media buying.
It gets even better – with the rise of demand-side platforms such as Turn, Invite Media and others, users can now manage multiple exchanges from one tool (the same way DART Search or other SEM tools allow you to manage your Google, Yahoo, and Microsoft keyword buys.)
The biggest step for the ad exchange business happened in 2007, when all three major search engine players acquired exchange companies to strengthen their foothold in the space (Google bought DoubleClick, Yahoo bought RightMedia, Microsoft bought AdECN.) Since then, the ad exchange universe has been growing steadily.
The major evolution of exchanges that affects you, the search marketing pro – is the advancing ubiquity of real-time bidding (RTB) across the exchanges. Instead of loading up targeting and bidding instructions in your demand side platforms and letting them buy the compatible inventory, RTB allows you to appraise each and every available impression and decide on the spot whether you want to bid on it and how much it’s worth to you.
For example, in real-time, you may discover an impression that is about to be served to a user who has visited your site multiple times but never purchased. Because of this, you may be willing to pay a premium to get back in front of that person. As well, data providers like Blue Kai and Excelate allow you to import valuable third party data, which may open up the opportunity to be able to identify the cookies on users who have been to certain websites, taken various actions online, belong to your target demographic, etc. There are literally thousands of data points which could influence bidding strategies.
Ad exchanges certainly won’t supplant all media buying as we know it today. But they are here to stay. In fact, the pundits are predicting that there will be tremendous growth in the buying of digital media via these platforms within the next five years. It seems inevitable that a portion of all inventory that can be digitally bought and sold will eventually be on exchanges: search, mobile, digital television, digital out-of-home, etc.
So if these platforms represent a huge shift in the way media is bought today, where are we going to find the human capital to manage these systems? (Hint: the name of this website is a clue.)
Check out this quote from one of the thought leaders in the space, Eric Picard:
I envision a world where media planners will spend the bulk of their time defining the goals of the advertiser, and translating those goals into complex instructions that can be interpreted by software. The ad platforms of the future will match these instructions against available ad inventory that is enriched with targeting attributes based on user behavior and content associations — and then optimized in an automated fashion by very smart systems.
Does that sound like a media buying system you already know and love, SEMers? Sounds like AdWords to me.
There’s further speculation from a recent article about how the market will begin to change as more and more buyers flock to exchange platforms:
–with lots of people targeting the same audience the profits to be made through specialized advertising become more and more spread out… instead of competing for one large pool… you will have price war in each targeted segment as the slice gets more and more narrow.
Does this remind you of what happened in the mid-2000s when paid search keyword costs skyrocketed as the market became saturated with bidders?
In my experience, digital media scares the bejebus out of traditional marketing buyers. And for even savvy digital media buyers, exchanges represent a huge change in what they do. I think it will be you, the search Analysts, that are most prepared to live in this data-intensive, auction-based valuation system. You’ve lived in pivot tables for years. You’ve spent countless nights digging into the most granular of data looking for the trend lines that will make your PPC efforts sing. That’s the kind of mindset that will be worth its weight in gold very soon.
And if that doesn’t make you happy to be in this field, check out this article from Rob Griffin called The Opportunity Impact of Change, where he outlines even more situations where the Search Analyst skill set will soon be in demand.
Opinions expressed in the article are those of the guest author and not necessarily Search Engine Land.