Yahoo Takes Stake in Nasdaq-Like Ad-Exchange System

Will Begin to Sell Nonpremium Ads Through Right Media Exchange

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NEW YORK (AdAge.com) -- With all eyes on Google as the ad-auction pioneer, Yahoo has quietly taken a 20% share in Right Media Exchange, an online auction-based system for selling ad space. Long a place for brand advertisers interested in reaching people on the web, the stake will help Yahoo better sell its less-premium advertising.
With Right Media, publishers and ad networks may put their inventory up for trade, and advertisers and agencies can bid for some of the 2 billion daily impressions available on the exchange. | ALSO: Comment on this article in the 'Your Opinion' box below.
With Right Media, publishers and ad networks may put their inventory up for trade, and advertisers and agencies can bid for some of the 2 billion daily impressions available on the exchange. | ALSO: Comment on this article in the 'Your Opinion' box below.

Popular pages not included
Indeed, Yahoo was careful to note that it believes an open exchange is perfect for nonpremium inventory, so the company has no plans to offer its most desirable and highest-trafficked pages, such as its home page or the Yahoo Autos page. Additionally, Yahoo will continue to sell both premium and nonpremium ad space directly to advertisers. It has completed a test with Right Media Exchange and will begin to sell nonpremium inventory through it now that this financial deal is in place.

With Right Media, publishers and ad networks may put their inventory up for trade, and advertisers and agencies can bid for some of the 2 billion daily impressions available on the exchange, according to the company. Right Media then acts as the platform that facilitates the trade. All the bidding and selling happens in real time and transactions are transparent, so the bidder and seller know each other. Right Media is currently only devoted to online advertising but it hasn't ruled out working in other media someday.

Eric Obeck, president of SendTec, a direct-response marketing firm, believes the ad exchanges can be valuable for direct marketers but isn't convinced brand marketers will be interested in the proposition. "The exchange concept hasn't gained a lot of traction yet, but I think it will," he said. "It's going to be a great way to monetize a very bottom tier of media that largely goes unsold." He added Yahoo's contributions to the network will probably be a lot of ad space that was previously unsold and, thus, was probably home to house ads.

Competitive landscape
The competitive landscape in the online ad-exchange space also includes AdECN, a real-time, automated auction exchange built to help ad networks and brokers buy and sell ads instantly. Microsoft, which offers a system devoted to direct-response advertising, is said to be working on becoming an ad exchange. Google, by contrast, has a more closed model -- it is essentially a network composed of many publishers. And in the TV space, a group of major brand advertisers led by Wal-Mart have collectively ponied up $50 million to test a trading system to buy TV time. They are using eBay to service their auction-based system.

This latest round of funding for Right Media totals $45 million from both Yahoo and Redpoint Ventures. Right Media was launched by Michael Walrath, a Doubleclick veteran, in 2003. The company raised $12 million from Redpoint in April 2005.
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