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The Future Is Now: Online Ad Platform Predicts Future Prices

Ad Network Takes Risk on Future Display Prices in Bid to Unlock TV Ad Dollars

By Published on . 9

NEW YORK (AdAge.com) -- Despite digital media's virulent growth, it's still TV that drives the billion-dollar advertising budgets for most major corporations, which means planning for those ad dollars is often set well in advance. Online marketing, however, is often up-to-the-minute, steered by vast ad networks and exchanges that broker the buying and selling of page views in a sometimes opaque bidding process.

But one company recently unveiled a new system that claims to predict the future prices of page views, which could allow buyers to lock in prices up to 12 months in advance, more akin to TV buying.

Brand.net is releasing a new buying platform today that would allow advertisers to purchase page views at specific prices ahead of time, a specialized form of hedging. The tool forecasts what prices for online ads will be at a future date within a particular category, such as entertainment or automobiles.

Brand.net will set a price on a per-thousand-impression basis (CPM), which the ad agency can buy ahead of time. In actuality, Brand.net will not own any inventory of pages but will instead log the price and bill clients. The company will only insert the buy order at the intended buy dates across ad networks and exchanges. Should its forecasting technology set a lower price than the actual price on the intended buy dates, Brand.net absorbs the loss. In the reverse case, the company will pocket the difference.

Brand.net has the potential to make the hedge a business itself, but Chief Operating Officer Andy Atherton said that's not the intent."That's not our business," he said. "Our tool is about accuracy."

Digitas has already signed on to use Brand.net's tool, and is using it for a online display buy for Mars Co. "Before, there was no accurate tool that allowed media buyers to understand the supply-demand situation, so we can accurately forecast out what our investments should be in digital media," explained Digitas' exec VP Carl Fremont.

Interestingly, Digitas had already been setting aside a small portion of its budgets to do "pre-buys," by going directly to publishers, not always the most efficient process. "Ideally, that's what we would do, buy all upfront," Mr. Fremont said. "This tool allows us to have more information and a better understanding of the supply and demand."

But some say that unlike TV, the internet has an endless supply of web pages, which means there's less need to lock in online audiences ahead of time. "I can't envision an environment where certain types of inventory are not in abundance," said Bill Todd, general manager for ValueClick Media. "There's a glut of inventory."

Mr. Atherton argues, however, that inventory on high-quality publishers is limited. "In that sense, you will run out of supply," he said.

But in most scenarios, the tool is clearly designed to set aside ad budgets in advance, which may be a boon to online marketers who typically are shaving away portions of TV's advertising dollars.

Mr. Fremont said that the idea of "upfront" buying online is still a nascent strategy, but that it was attractive to a lot of marketers. "Digitas saw there was a need in the market," he explained, "and based on that need, we sought out solutions."

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