NY Times Article

DoubleClick plans to announce they will set up a NASDAQ-like exchange for the buying and selling of digital ads.  Currently this company serves both buyers and sellers of digital ads, monitoring things such as number of clicks on a particular ad and working out marketing strategies.  This new type of exchange for buyers and sellers could revolutionize the way that online advertisements are sold.  Buyers and sellers would have an exchange to directly interact with one another to participate in auctions for ad space.  Sellers could now see who bids on their spaces and the prices, much in the way an auction on eBay works.

Traditionally, advertisements have been sold through some human intermediary, but this new service allows for the buying and selling of online ad space without the middleman.  Obviously someone would not host this service without a fee for using it, but DoubleClick would not directly interact with purchases through their service.  This could allow the ad selling process to vary from that which we discussed in class.  Sellers could organize any sort of auction they want to sell their space.  That alone could change how people think of ad space auctions.  Buyers would no longer be restricted to how a particular company wants to run their auction; buyers could go elsewhere to place their ads.  Also, the location of a company’s ads can be more specifically known because of the direct interaction with certain companies.

This sort of new ad exchange would also have a direct effect on what strategies companies use to buy ad locations.  Depending on the type of auction being run, sellers would prefer different outcomes to maximize their total profit, and buyers would prefer certain bids to minimize their costs.  A new game could evolve from this type of bargaining that the buyers and sellers would need to formulate their best strategies to play.  One further comment to note is how sites would work their keyword-based advertising when selling ads through an exchange such as this.  Would advertisers continue to run a modified second-price auction, or would they prefer some other kind of auction for this?  A lot of these questions will be answered when the exchange goes live in the third-quarter of 2007, and companies begin to offer their advertising space.