AdExchanger.com Beta

Bill Morrison and Robert Coolbrith are equity analysts at ThinkEquity Partners and recently authored a report entitled, “The Opportunity In Non-Premium Display Advertising.”

AdExchanger.com: Are data exchanges the key to unlocking value in social media? Who’s getting it right in the data exchange space?

BM and RB: We’ll defer the second part of your question until a later date. As investment research analysts, it’s hard for us to identify “winners” without the help of industry participants, who provide us with invaluable insight and opinions. In our recent conversations with networks and exchanges, when we asked about the most important new companies in the space, the data exchanges invariably came up. However, it still seems to be pretty early in the development of the data exchange model, and we didn’t sense any clear consensus from industry participants on who is taking the lead.

While data exchanges are certainly “hot,” it’s an open question as to whether an auction-based marketplace is the “right” paradigm for monetization of proprietary consumer insight. People have pointed out the similarities between the data exchanges and the offline list marketing/direct mail model, and we think it’s a fair comparison. In both cases, the buyer pays up front for the data and then leverages the data to market to consumers on an individual basis. But that’s complicated in the online world by the matter of actually reaching the identified consumer, which can be a bit like finding a needle in a haystack. An alternative approach might be to realize that the haystack is full of needles, but of varying types. So, allow the inventory to dictate the targeting, not the other way around.

Regardless of how the mechanics play out, we think third-party data exchanges will be important for the monetization of all display media, but will be particularly important in social media, where the inventory doesn’t typically contextualize well, the platforms are rich with demographic, behavioral, and social data, and current monetization levels make targeting a real priority. One thing we’re currently wondering about is which could be the bigger opportunity for social media: the inventory (where value should be enhanced through the use of both first- and third-party data) or the first-party data that can be directly monetized through data exchanges to enhance the value of display inventory across the Web. The data exchanges, by providing a transparent pricing mechanism for behavioral, demographic, and social data, should help answer that question.

How do you see large publishers evolving as media trading achieves scale?

(more…)

Bill Morrison and Robert Coolbrith are equity analysts at ThinkEquity Partners and recently authored a report entitled, “The Opportunity In Non-Premium Display Advertising.”

AdExchanger.com: Are data exchanges the key to unlocking value in social media? Who’s getting it right in the data exchange space?

BM and RB: We’ll defer the second part of your question until a later date. As investment research analysts, it’s hard for us to identify “winners” without the help of industry participants, who provide us with invaluable insight and opinions. In our recent conversations with networks and exchanges, when we asked about the most important new companies in the space, the data exchanges invariably came up. However, it still seems to be pretty early in the development of the data exchange model, and we didn’t sense any clear consensus from industry participants on who is taking the lead.

While data exchanges are certainly “hot,” it’s an open question as to whether an auction-based marketplace is the “right” paradigm for monetization of proprietary consumer insight. People have pointed out the similarities between the data exchanges and the offline list marketing/direct mail model, and we think it’s a fair comparison. In both cases, the buyer pays up front for the data and then leverages the data to market to consumers on an individual basis. But that’s complicated in the online world by the matter of actually reaching the identified consumer, which can be a bit like finding a needle in a haystack. An alternative approach might be to realize that the haystack is full of needles, but of varying types. So, allow the inventory to dictate the targeting, not the other way around.

Regardless of how the mechanics play out, we think third-party data exchanges will be important for the monetization of all display media, but will be particularly important in social media, where the inventory doesn’t typically contextualize well, the platforms are rich with demographic, behavioral, and social data, and current monetization levels make targeting a real priority. One thing we’re currently wondering about is which could be the bigger opportunity for social media: the inventory (where value should be enhanced through the use of both first- and third-party data) or the first-party data that can be directly monetized through data exchanges to enhance the value of display inventory across the Web. The data exchanges, by providing a transparent pricing mechanism for behavioral, demographic, and social data, should help answer that question.

How do you see large publishers evolving as media trading achieves scale?

(more…)