The Conflict Free Ad Exchange

Posted by Darren on Jun 24, 2010 • (Comments)

Picture 9Today’s ad exchange landscape is fairly complex but most people know who the big players are:  Google’s AdX, Yahoo!’s RMX, Pubmatic, Adnexus, Admeld’s MeldX, Adsdaq, Adbrite, and maybe, Microsoft AdECN.

With the majority of the above players including the big two (AdX, RMX), there is a major conflict.  They also sell media.

It’s like the Nasdaq also selling/providing liquidity for their shareholders.  Isn’t this a conflict of interest?

I know it’s early days within this space and most people are gravitating to where the money is.  For good reason.   Keeping the lights on and making a market today is better than being out of business in 12 months with only a dream.

When will we see a truly independent ad exchange emerge that can generate enough revenue to actually make it an attractive business for some group to start?  Behind closed doors, we talk about this all the time but everyone would rather be Goldman Sachs than the actual plumbing/exchange itself.  … and potentially for good reason.

I’d like to see a conflict free exchange emerge.  I’m sure many others would to.

Tangentially related posts:

This post was written by Darren Herman (@dherman76) who is the Chief Digital Media Officer of kbs+p/The Media Kitchen and the founder of Varick Media Management.  This post represents personal opinions and views, not necessarily reflected of his employer.

Tagged as , , , , , , , + Categorized as Advertising & Marketing, Startup & Venture Capital, Technology
  • Tim Cadogan
    Hi Darren - terrific post. At OpenX we couldn't agree more, which is why we built OpenX Market. The first truly independent second generation exchange built from the ground up. We've been running for more than a year now (we launched in April 2009) and OpenX Market already reaches nearly 400 million unique users per month (384 according to Quantcast).

    A few fundamentals: OpenX Market runs a full real-time second-price auction for every impression. For buyers we support both rules-based bidding and real-time bidding for buyers, as well as complete set of retargeting tools. We power a complete clearing house on the back end to make life simple for publishers and advertisers. We provide a range of quality tools for publishers and through our Price Protection feature we enable publishers to set exact floor (reserve) prices for their inventory so they can participate in the OpenX Market without taking any economic risk.

    Crucially, we are open to *all* classes of buyers and sellers. We're delighted if a publisher already uses OpenX's ad server, but OpenX Market integrates with any ad server. Similarly on the buy side, we are are open to intermediaries (ad networks, DSPs, agencies) but also direct advertisers. We strongly believe having as many, diverse participants as possible creates a thriving marketplace.

    Furthermore, we are totally transparent. We charge a 20% transaction fee for winning bids. It's the same, worldwide, for everyone. In the other exchanges you mention, it is extremely hard to find out what the economics are, largely because many of them are individually negotiated with participants.

    The approach is doing terrifically well and we've started to roll it out internationally through our global alliance model of regional partners. Our first announced partner is France Telecom/Orange who is operating the Orange Ad Market in Europe, which runs as the local European version of the OpenX Market. All demand and supply flows into one single global market to maximize competition. And of course we support the local languages and currencies, as well as cross-currency bidding, meaning a US buyer can bid in $ for French supply in Euros, and we handle the conversion through our clearing-house.

    I thought I'd share a small sample of press coverage:

    http://techcrunch.com/2009/04/...
    http://www.businessweek.com/th...
    http://www.reuters.com/article...
    http://www.forbes.com/2010/03/...

    We think providing an independent exchange platform is hugely important for the industry. We're glad you and other influential players see it the same way and hope we can play a key role providing this service.

    All the best

    Tim Cadogan
    CEO
    OpenX
  • Ben Trenda
    Darren- Well put. You're about to get what you're asking for... Stay tuned.

    Ben Trenda
    the Rubicon Project
  • Al Silverstein
    Hello Kettle...
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