The Pros and Cons of Using Online Display Advertising Exchanges

online display advertising exchangesDeciding whether or not online display advertising exchanges are right for your company’s needs can be a difficult task if you are not knowledgeable about online marketing. First, you must learn what online display advertising exchanges are and how they work.

These exchanges are basically virtual marketplaces where advertisers, like you, connect with publishers who display your ads via a platform that operates much like an auction. The advertisers who pay the most money to the publishers get the best advertising placements, and their ads are shown more often.

This auction-based platform means that there can be some pretty stiff competition between marketers who are going for the same customers, keywords and advertising real estate. Due to this competitiveness, the exact cost for a campaign on an online display advertising exchange is hard to estimate. Some exchanges will have more competition than others, so costs will vary widely. There are some private advertising exchanges, but most are open to the public. Therefore, anyone can create a campaign and purchase advertising space from publishers.

Publishers do have a say in which ads are shown on their advertising space. They have the right to reject certain ads or advertisers if they have a problem with the content or the product being promoted.

Online display advertising exchanges are different from advertising networks because they allow publishers and advertisers to connect directly with each other instead of having to go through a third party. Because of this, advertisers know exactly where their ads will be displayed, and publishers know exactly who to contact if there is ever an issue.

Here are some of the most popular online display advertising exchanges:

At the current time, Right Media is the top online display advertising exchange around. Yahoo bought this company for about $680 million, and experts agree that it was worth every penny. Executives at Right Media feel that being associated with Yahoo will attract more people to the advertising exchange, which will only increase its success.

Online display advertising exchanges are a great option for advertisers who are looking for a cheap way to advertise online, but it is, usually, not a good idea to use them as your only marketing strategy. One of the problems with using exchanges exclusively is that they, usually, have an inventory that is made up of impressions that have not yet sold. Therefore, the ad spaces you buy are likely to not be on the premium sites or in the most visible locations.

There are a few online display advertising exchanges that work a bit differently in that they give advertisers the choice to put in bids for inventory that is high-end or low-end. ContextWeb (Adsdaq) is one exchange that sets itself up as a platform for premium advertising space.

Publishers on ContextWeb have to establish an asking price, and then the system makes sure that they are paid that price. There are also some exchanges that will allow advertisers to set additional options such as site targeting and page targeting, but this significantly increases the CPM rates.

As a whole, online display advertising exchanges work as an automated platform that allows people to buy and sell advertising space for relatively cheap prices. Publishers are able to get rid of their leftover inventory and select the ads they want to promote before they appear on their websites. Advertisers can select which publishers they want to work with and have better control over the cost of their campaigns. It is a good idea for advertisers to play around on the exchange at first to get a feel for how everything works before they start a campaign.

Here are some of the major advantages of using online display advertising exchanges:

  • Very Cheap CPM (cost per impression) Rates: In most cases, advertisers can buy inventory on the exchange for extremely low CPM rates. Sometimes these rates can be less than 50 cents.
  • A High Level of Transparency: Advertisers always know where their ads will show up and when. There are never any secrets when it comes to ad placements. Some exchanges even let advertisers see their competitor’s bids as well.
  • Plenty of Targeting Options: Different exchanges will offer different targeting options, but in most cases, advertisers can target their advertising audience by location, language, category, age, interests and much more.
  • Predictability, Simplicity and Efficiency: By using an online display advertising exchange, advertisers and publishers have access to a system that makes selling and buying online ad space simple. The sizes of the ad spaces are uniform, and there are no unwanted surprises.

As with any type of online advertising strategy, there are also a few cons to be aware of when dealing with online display advertising exchanges. Here are some examples:

  • Most online display advertising exchanges do not offer premium advertising space. They usually reserve those spots for direct orders from exclusive clientele.
  • The inventory being sold on many exchanges is leftover space that publishers were not able to sell elsewhere. There is an increased chance that the ad space advertisers buy on an exchange will be in a spot where website visitors rarely look. Since the visitor viewed the page your ad was on, it will still count as an impression for your ad no matter if it was actually looked at or not. However, advertisers who have a good tracking system and pay attention to the performance of their ads will escape this problem.
  • Publishers have the ability to sell their ad space via private sales. This can bar certain advertisers from purchasing premium ad spots. Advertisers either have to make sure they are in these exclusive private groups or they will miss out on the best ad spaces.
  • The bidding system that online display advertising exchanges use can spark bidding wars. This competition can drive up the price for ad spaces, making it so that only a few advertisers can afford them.

Online display advertising exchanges have some drawbacks, but they are a great addition to a well-rounded marketing strategy. Avoid using exchanges as your only marketing technique, and you should do just fine. The low cost and simplicity of the online display advertising exchange system more than makes up for the minor issues associated with them.

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