InterActive Agency Inc., a Santa Monica, Calif.-based digital marketing agency, is beta testing an online advertising barter network it expects to launch the first of the year.
Bartering for banner space is not a new idea. In fact, one of the first such barter networks, Link Exchange, was acquired by Microsoft Corp. in 1998 and is still offered as a service for small businesses within Microsoft’s bCentral service.
Swapping links and ad inventory fell out of favor during the go-go dot-com days, when ad inventory on major sites was selling out on a regular basis and impressions were priced at between $35 and $150 CPM.
Slump revives barter
But now, with the ad industry in a slump and CPM rates dropping to as low as $5, publishers with excess inventory are considering bartering. IAgency is one of the first ad agencies to build a new business around this opportunity.
"This is bootstrapping and entrepreneurialism, trying to seize an opportunity," said Tony Winders, president-CEO of iAgency, whose clients include LATimes.com, Coca-Cola Co. and Zappos.com, an online retailer.
The barter network was created as a result of an online campaign iAgency developed for one of its publishing clients, which declined to be named.
The publisher was looking for a way to drive traffic to its site, but it didn’t want to spend a lot of money to do so. It had unsold banner inventory that it was using for house ads, so iAgency came up with a plan to do straight impression swaps with ad partners.
So far, the publisher has signed up 17 partners with which it is swapping links and featuring advertisers’ content on mini-sites. In exchange, iAgency gets banner placement on its partners’ Web sites.
IAgency, working with technology company Snap Ventures, also based in Santa Monica, created ad serving and tracking technology to report on activity generated by the impressions. Now, it plans to roll out the network to attract b-to-b clients.
"Every publisher has unsold ad inventory, and every publisher can benefit from incremental new visitors to its site," Winders said.
Selling excess inventory
Publishers will pay a setup fee, which has not yet been set, to join the network. They will also contribute a percentage of impressions to iAgency. To monetize the network, iAgency will either sell the excess inventory or use it for house ads.
Winders said the agency is considering a three-for-two swap, in which advertisers put in three impressions and take out two.
"For a small shop like iAgency, this could be an opportunity to help them attract b-to-b clients," said Rudy Grahn, an analyst in the online advertising group at Jupiter Media Metrix Inc.
However, Grahn cautioned, "Over the long run, when the ad market turns around, are we just going to be swapping bottom-of-the-barrel inventory that isn’t of any value?"
For now, Winders argues that with so much excess inventory, publishers can use bartering as a way to drive more traffic at a low cost.
"If you have to serve a few million ads to get a few customers, it’s found money," he said.