The Ad Exchange for the Next Hundred Years

— Jay Hirschson June 29, 2007

The buzzword of the year in the online advertising industry is transparency, which has been promoted to a great degree by both ad network incumbents and new ad exchanges alike. Google/DoubleClick, Yahoo!/Right Media and some newcomers, claim their platforms provide buyers with degrees of transparency previously unknown in the search and display markets, allowing them to know where their ads appear after these ads have been served. As anyone who has purchased online media knows, visibility into a campaign's constituent publisher-base is a significant milestone. In every case, the networks laud the promise of their respective operational and economic efficiencies, and what's more, audaciously declare a kinship with Wall Street.

Apparently Wall Street agrees. The recent acquisitions of Right Media and DoubleClick by Yahoo! and Google respectively, demonstrate the great value financial markets place upon the principle of a transparent exchange. The securities markets do indeed demonstrate the beneficial influence of transparency on a market and Wall Street bankers are correct to esteem it.

Unfortunately, the companies making headlines with their boasts of transparency, actually offer a version of transparency at odds with the traditionally understood concept of the word, which broadly holds that the more information available to buyers and sellers in a marketplace, the better.

What passes for transparency at the incumbent ad networks is, in fact, a hollow imitation of the economic ideal of the free flow and equitable dissemination of information, which forms one of the pillars of a healthy free market system.

What is wrong with the incumbent networks’ claims, is that their versions of “transparency” i.e., updating their interfaces, refitting their reporting services and otherwise generally repurposing their existing blind buying platforms offer no benefit to the sellers in the market who are forced, again, to assume the role of mere commodity (traffic) provider. Putting a spotlight on sellers, allowing them to post their inventory with as much descriptive detail and segmentation information possible, and have this data accessible to all buyers (and sellers) in the market, will enable them to promote their inventory to buyers who can appreciate its value, and to receive the best market prices for their properties.

Recent claims for transparency likely exasperate anyone who respects the need of sellers to participate fairly, efficiently and on common ground in the online media marketplace. I am not aware of any publisher-side environment at any ad network, where sellers can so much as see what the bids are for their own traffic. They are usually kept very much in the dark.

Just as venture capitalist and blogger Fred Wilson called for in his seminal post: When Is a Market Really a Market?, a true open exchange such as TRAFFIQ delivers this benefit and more to publishers, giving them full visibility into what advertisers are willing to bid for their inventory, as well as into the ongoing bidding and historical sale prices of similar traffic, including the CPM and CPC such traffic has commanded in the past.

When TRAFFIQ is launched this July, it will offer the equal dissemination of this information to all market participants, empowering them to make the right choices for their respective needs. It will be the only platform that truly resembles a genuine financial exchange, with its free market economy, providing all of its constituents with the ability to reap the greatest reward with the least amount of risk.

I look forward to seeing you all there.

Regards,

Jay Hirschson
Chief Financial Officer
TRAFFIQ—The Internet Traffic Exchange