Ad:tech New York panelists make the case for ad exchanges

By Giselle Abramovich

November 7, 2007

Some day that will be mobile ...

NEW YORK – With the recent boom in non-premium inventory online such as Facebook, MySpace, YouTube and blogs, it has become difficult for advertisers to reach their target audience. Not surprisingly, many marketers have turned to online advertising exchanges to help them out.

Imran Khan, managing director at New York-based JPMorgan, addressed this issue at an ad:tech New Yorks session titled, “Analyzing Online Advertising Exchanges.” Digital advertising networks give marketers and buyers new options in their efforts to buy online and offline advertising inventory.

“Increasing non-premium inventory results in audience fragmentation,” Mr. Khan told the audience of interactive marketing executives. “Audience fragmentation makes it hard for advertisers to reach their target audience.”

With an ad exchange these barriers come down, resulting in interaction on a common platform.

Non-premium pages account for 20 percent of total display advertising revenue, Mr. Khan said. Social networking site Facebook saw a 136 percent growth in page views year over year. YouTube’s year-over-year page view growth was 100 percent.

An ad exchange is beneficial for advertisers because of the small amount they have to spend, along with better return on investment and more access to inventory.

Publishers benefit from exchanges because they allow better targeting for more valuable inventory with higher prices.

“Advertisers gain easier access to a broad range of inventory, which can be used for targeting,” Mr. Khan said.

People don’t trust online ads as much as they trust other types of media, he claimed, citing that only 26 percent of consumers fully trust advertising on the Internet.

Dan Ballister, chief operating officer for Traffiq, New York, said ad exchanges offer trust, transparency and simplicity for consumers. Traffiq is an ad exchange.

“I believe that the next $20 billion invested in advertising will be smart money,” Mr. Ballister said. “Better tools allow for better budgets.”