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Ad Networks will Struggle in a Global Exchange based OPEN Marketplace

That's nothing new to proclaim here on my instablog. It's all been said here before. Now, even some of those in the 'industry' are starting to say something similar and or, are at least, they're beginning to tell WHY this will be so.

Telling of the reasons why, many Ad Networks will Struggle in a Global Exchange based OPEN Marketplace.

Eric Dahlberg - MSFT has posted what is an excellent 'Part 1 of 3' post, over on the Microsoft Advertising Blog entitled, The Microsoft Media Network and Microsoft Advertising Exchange. He ultimately poses the following question that he also provides an answer to, within:

"With exchanges dis-intermediating ad networks’ relationships with publishers, and with any buyer able to leverage a DSP integration into instant universal reach, can ad networks survive this brave new world?"

.. more

The question is, "can ad networks survive this brave new world?"

For LOOK shareholders, this is a good read. Other references that he makes that do need to be taken on-board that should help understand Looksmart's (ultimate) independent role, do include the following:

<"Increasingly, remnant impressions are being brokered in the real-time-bidded environment of ad exchanges, where impressions are auctioned off one at a time to the highest bidder.

In this marketplace, the notion of volume discounts doesn’t apply.

A small bidder competes on equal terms with a large one, effectively leveling the playing field between buyers
. ">

<"Because of the operational inefficiencies associated with a typical [ad network] buy, publishers were somewhat limited in the number of ad networks they could practically work with.

This led most publishers to seek out partners who could monetize large chunks of impressions
[through Exchange "inter-connections" that'll be provided by Looksmart, Is my belief], at a relatively good price. ">

<"In an exchange environment, publishers can efficiently expose their inventory to a much larger set of demand.

Through an exchange, they can indirectly work with hundreds of different buyers, finding the one who can afford to pay the most for each individual impression
.">

And certainly in regards to Looksmart's (now) offering of and that's a  complete concentration on 'Performance Marketing' and that ability given to advertisers (buyers), to now get to 'drill-down' their audiences or, to even target individual users, across the total LOOK Marketplace:

Why?

<"Because buyers get to eliminate the waste, they can de-average their buys and pay a higher CPM for the laser targeted impressions they wind up purchasing.

Sellers wind up spreading their impressions over a larger group of buyers
[in multiple Exchanges that are gradually now, all getting to be "inter-connected"], than in the old model, each of whom pays a higher CPM but consumes a smaller number of impressions.">

It's important to note here that Looksmart (that has admitted to now 'managing' a couple of billion queries a day, in it's global marketplace - see Current Report) has advised that during this quarter it will make the move, to now be providing the higher priced 'performance based' marketing to it's advertisers. (CPV - CPA)

That's right across it's quickly growing (and, has recently told that they added 30 publishers), advertising network/s & or, global marketplace.

The Co had also used the Microsoft/Bing/Yahoo integration, as reason enough for dropping revenues during the Q1 Period. - The Co said that this will get back to 'normal', in time.

Yesterday I reported having had Google Ads 'served to me', over on Yahoo Finance.

GOOGLE Ads   - - - Re: GOOGLE Ads


And according to the Alexa Looksmart.com ClickStream, Google are clearly shown as being the strongest of all Looksmart marketplace involve-ees. Yahoo are there, too! (Plus Facebook, ask.com, etc)

www.alexa.com/siteinfo/looksmart.com#

And a reminder that in Looksmart's Q4 2010 CC, we were also told:

< In 2011, we plan on expanding our direct publisher relationships by signing up significant publishers in the major types of traffic that we are targeting. - - We would also improve our publisher onboarding process in order to accelerate revenue generation from new traffic added to the network. >

seekingalpha.com/instablog/36191-looking...

My own question now is, does anyone really feel that Google would be getting that 'clear go' at Yahoo Finance 'users', WITHOUT it having to gain access via some 'go-between', in getting to serve those Ads?

Today, Zacks have told us that Google Grows in Display Ad Market, and that ....."Google’s own study of its GDN revealed that roughly half the advertisers running campaigns on both search & display networks saw equal or better cost per acquisition (“CPA”) on the GDN."

How interesting!!  :)

In Looksmart's 2010 10-K Annual Report, the following was advised:

......... "LookSmart operates in a large online search advertising ecosystem serving ads that target user queries on partner sites.

......We operate in the middle of this ecosystem, acquiring search queries from a variety of sources and matching them with the keywords of our search advertising customers." 


Looksmart advised that it's (Looksmart's private labeled) "Publisher Solutions", is about:

"Connecting multiple installations of the AdCenter for Publishers together allows LookSmart to create an open marketplace environment that empowers publishers to share, leverage, and exchange their advertisers for expanded distribution."   

Looksmart has also told the market in it's 10-Q, that:

........"Our largest category of customers has been intermediaries, the majority of which purchase clicks to sell into the affiliate networks of the large search engine providers". 

Just how "slow" is main-stream media (plus the many prominent sites like adexchanger.com and advertising/search industry EXPERTS/sites), in their NOT advising, of the above?

Such is the total CORRUPTION of the markets. Is all, my opinion.

LOOK: 3:59PM EDT: $1.70  Up 0.01 (+0.59%)

LC

Disclosure: Long LOOK and so happy to be so...
.