May 3rd, 2009
One of the things that boggles my mind is how massively fragmented and confusing the display world still is. It’s been over three years since the first ad-exchange launched yet the world hasn’t significantly changed. What makes matters more confusing is that there is no consistent terminology to describe what a company does. It seems everybody describes themselves as either a platform, marketplace or exchange — so what’s the difference?
A company can call itself a publisher, an agency, a network, a broker, a marketplace, an exchange, an optimizer — what does it all mean? What’s the difference between Right Media and Contextweb? Admeld and Rubicon? That’s really the problem — today’s commonly used labels are useless.
Instead of evaluating a company based on labels, evaluate it based on the services it provides, technology it has, the partners it works with, the revenue model and the media revenue it facilitates. Note — below I focus entirely on companies that in some shape or form touch an *impression* — either as a technology provider, buyer or seller. There are peripheral companies that provide a whole world of supporting services, but I’m leaving those out for now to avoid confusion.
Each company provides certain core services to partners, customers and vendors. These primarily center around the relationship the company has with the media that flows through it.
|Selling of Owned & Operated Media||The company represents and sells media inventory that it owns.||Yahoo selling inventory on Yahoo Mail.
New York Times selling it’s inventory
|Company’s sole objective is to maximize CPMs and revenue.|
|Arbitrage of Off-Network Media||The company resells media inventory that it acquires from other services.||Yahoo selling users on the newspaper consortium.
Rubicon selling inventory from it’s network of publishers.
|Company takes arbitrage of the inventory which means that it’s incentivized to buy low and sell high to maximize it’s own revenue rather than that of the inventory owner or the advertiser.|
|Inventory or Advertiser Representation Services||The company helps inventory owners sell inventory at a fixed margin.||AdMeld serving as a direct rep for publishers remant
X+1 managing all campaigns for a specific advertiser or agency
|Company is incentivized to maximize revenue for the inventory owner or ROI for the advertiser.|
|Data Aggregation||Company aggregates user data and resells it||BlueKai’s data exchange
Exelate’s data marketplace
|Company hates Safari and IE8|
There are certain core technologies that define what a company does. Note that you will find technologies such as dynamic creative optimization, behavioral classification and contextualization missing from the below list as they are differentiators — they don’t define what a company does but provide a competitive advantage over the competition.
|Internally available adserver||Company has a proprietary in-house adserving system.||Specific Media has it’s own proprietary adserving technology that it uses to manage it’s network.||Company sees technology as a competitive asset against competitors.|
|Externally available adserver||An adserver that the company licenses (either free or paid) to third party companies to manage their own online media.||OpenX providing their hosted adserver to publishers
Invite Media’s cross-exchange Bid Manager platform
Google’s Ad Manager
|Multiple companies using the same platform provides both aggregation and consolidation opportunities. Technology in this case helps build an open platform (since everyone has access).|
|Internal Trading||Inventory run through the externally available adserver can be bought and sold internally||Google’s AdEx allows multiple participants to use the externally available adserver to buy and sell media.
Right Media’s NMX customers can buy and sell media to each-other directly.
|There is a network effect related to the size of the platform. The more participants the more value there is for everybody involved.|
|Buying APIs||Company provides an API, either real-time or non, through which buyers can upload creatives and manage campaigns.||Right Media allows it’s customers to traffic line items and creatives using it’s APIs.||Company is empowering buyers to be smarter by enabling deeper integration across platforms. The stronger the APIs, the more the buyers can spend.|
|Selling API||Company provides a real-time API through which sellers can ask in real-time how much company is willing to pay for an impression.||Right Media and Advertising.com respond in real-time to a ‘get-price’ request from Fox Interactive Media’s auction technology||Company can value inventory in real-time.|
Last but not least, the size and the partnerships of a company matters. I’ve written before about the perils of building technology in a void. You can have the most amazing platform that provides great services, but if you’re only running a few thousand dollars a month it’s all moot in the grand scheme of things.
Size can be measured either in impressions or revenue, the latter being far more telling. Getting a billion impressions of traffic a day isn’t hard these days — between Facebook and Myspace alone you probably have close to fifteen billion impressions of traffic running daily.
There’s a huge difference between a partnership and a media relationship. If you’re willing to foot the minimum monthly bill, anybody can buy Yahoo’s inventory through the Right Media platform. That doesn’t say much about who you are as a company. A partnership is different — it might be deep API integrations tying two platforms together or co-selling and marketing a joint solution.
What does it all mean?
Phew… that was a long list, so what does it all mean? Well, the above provides a slightly less fuzzy framework than the classical “ad-network”, “marketplace” or “exchange” commonly used labels to describe a company. Let’s look at a few examples:
Rubicon Project provides publisher representation services through it’s network optimization platform,
arbitrages inventory through it’s internal sales team has both an internal and has an externally available adserver ( one for the sales team and one for publishers) and is rumored to be working on real time buying APIs. That’s a hell of a lot more descriptive than “publisher aggregator” or “network optimizer”. The one thing I always find confusing about rubicon is that it their incentives seem to be fundamentally misaligned. How can you both arbitrage inventory and serve as a publisher representative? Updated (5/3/09 @ 8pm EST) — I seem to be misinformed. Per comments, Rubicon does not sell inventory directly to agencies.
Compare this to AdMeld which provides publisher representation services through it’s network optimization platform — an externally available adserver — and provides buying APIs (currently via passback). So what’s the difference with Rubicon? Well, one has an internal ad-network and the other doesn’t — different incentives. Publishers are starting to treat Rubicon as another ad-network in the daisy chain whereas AdMeld sells all remnant inventory as a trusted partner.
ContextWeb has an internal adserver (with a self-service interface… I don’t count that as external), they arbitrage inventory, and provide buying APIs. Compare this to Right Media which has an externally available adserver, buying and selling APIs, internal trading, data aggregation and arbitrages media (through BlueLithium/Yahoo Network). Both are “exchanges”, but clearly there is a pretty big difference between the two!
Of course if you get to Google your mind starts to explode just a little bit — as they do everything. Seriously. They buy & sell, have multiple adservers, provide buying APIs, internal trading, data aggregation…
I hope this post has given you some ways to start thinking about companies in the online ad space. I’d love to hear your feedback in the comments — what core services & technologies am I missing?
Now — next time someone says — “I’m an exchange”, why not ask — “Ok, that’s great, but what do you really do.”
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