Are those pork bellies or M&M’s in the picture?
Ad exchanges get premium billing in Razorfish’s just-released 2009 Digital Outlook paper (PDF here).
In the “What’s emerging” section of the paper, Razorfish has imbibed the ad exchange Kool-aid with a four-page spread entitled, “Ad Exchanges: Revolutionizing the Buy-Sell Process.”
The exchange feature is even before the mobile marketing profile. Shoot me now!
From the paper:
“With the four major portals all either acquiring or building ad exchanges in the last 18 months (Yahoo!’s Right Media, Microsoft’s AdECN, Google’s DoubleClick and AOL’s BidPlace), these platforms now have the scale and resources to transform the way digital ad inventory is bought and sold in2009 — and beyond.”
Well, that’s exactly right. Uh, er, except with its current lack of transparency, I’m not so sure you can call Platform-A’s BidPlace SB or the coming Pro version an ad exchange (Maybe that happens down the road?).
Nevertheless, the ad exchange model has arrived in wider, digital agency “thinking.”
Joanna O’Connell, Manager of Strategic Development, of Razorfish’s Ad Exchange Practice, evidently co-wrote the piece with Matt Greitzer, VP of Search and Josh Palau, Vice President, SEO, Global. Please note that the Search group at Razorfish is involved.
With exchanges’ focus on ROI and yield, it makes some sense that DR-types in the Search group would have input especially as Google (soon) and Yahoo! (sooner) begin to allow re-targeting of keyword search requests on their display ad networks and exchanges. This is a big opportunity in display advertising that few advertisers – or publishers, for that matter – seem to understand.
Search is closer to the end of the purchase funnel, remember? Re-targeting user intent will prove powerful and raise CPMs turning remnant inventory into premium.
Display advertising online is not dead and anybody that says so lacks an understanding of the power and technology of ad exchanges as display is morphing from the heady days of large publisher, premium inventory CPMs with little insight on performance.
In the final few paragraphs of the ad exchange feature, Razorfish takes a swing at exchange “threats.” Privacy is mentioned, as usual. Ok, fine. We think the ad exchange will find a way to mesh neatly with privacy concerns because the marketplace wants insight – but whatever… let’s talk about the other threat.
The other threat is a house of cards. Razorfish essentially sees branded, publisher vertical ad networks as capturing a significant slice of the advertiser pie.
Last year, ESPN turned its back on ad networks, while Turner Digital and Forbes started their own. The goal, in each case, was for the publisher to have complete control over its inventory and audience. Obviously, that may make them slow to adopt the exchange model as a viable source of revenue. If well-known, branded publishers shun the ad exchange channel, the future of ad exchanges could be limited.
Perhaps Razorfish is being deferential to the branded publishers from whom its partner agencies buy today. But, brand-safe inventory is and will be solved by exchange technology and controls.
As we have stated before, yes [ESPN], there have been problems with nefarious remnant inventory and advertisers infiltrating exchange models from time-to-time. It will happen again. But, the marketplace needs controls, and exchange technology providers will respond.
Consequently, there will be no better place than the open auction of the liquid exchange to monetize inventory.
If ESPN and a few others want to stand by the side of the road with a majority of their online display ad inventory, they will only hurt themselves as they learn that the market for their favorite form of reckless, attribution-free brand advertising is over.
Here are even cooler ideas (yeah, we said “cooler”!) for ESPN, Forbes and other similar pubs: grow to embrace the exchange model; learn how to trade; become experts at buying and selling inventory in your chosen vertical while continuing to provide integrated sponsorships with your direct sales team.
Many regional interactive marketing associations are busy with panels and symposia about digital marketing strategy and tactics – even exchanges!
It’s been a while since we served up linkage. So, here we go – ad exchange-related news.
Darren Herman of 
