Electronic Buying and Selling Coming to Online Advertising
Though long time in coming, electronic buying and selling enters the Online Advertising sector. Just as electronic trading revolutionized financial markets, eliminating middle-men and reducing the buy-sell spread, so electronic trading has finally entered the advertising market.
Google braved the way with its electronic bid based buy and selling of pay per click advertising. Now AdECN Exchange has introduced bid based buying and selling of straightforward advertising, page view based advertising.
Upto now the market for banner based advertising was illiquid and inefficient. Advertising agencies commandeered a large percentage of the fee, widening the buy-sell spread for publishers and advertisers. Worse, the bulk of the inventory beneath a publisher's home page remained unsold. Now AdECN exchange brings visibility and efficiency into buying and selling page-view inventories; the buy-sell spread will come down from its current 30% to single digit percentages, just as in financial markets. Plus a much larger percentage of unsold inventory will be visible to advertisers. Good news for the markets, not so good for the advertising market intermediaries.
Sophisticated advertisers will embrace the new electronic market by adding analytic and technical capabilities to the buying team. Just as investment banks added quantitative and analytic trading PhDs to their investment teams. Electronic trading is already used to buy search based, pay-per-click advertising; extending electronic purchasing into pay-per-view (CPM) advertising should not be a stretch.
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