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Advertising - Tuesday, May 1, 2007

More Ad Exchange Hubbub: ContextWeb's Adsdaq

It doesn't take much to start an online ad exchange it seems. Today ContextWeb announced Adsdaq. We think they might have rushed this as we signed up with our email address and were told to sit tight.

ContextWeb is a force to be reckoned with. It says it serves more than 350 advertisers, has 1,000 publishers, and reaches more 54M unique visitors every month. They seem to have partnerships with a number of other ad networks to serve backfill, as we have seen ContextWeb ads serve on our own site through Federated Media.

We do like how ContextWeb is positioning ADSDAQ as an exchange for premium inventory, not remnant. Since the publishers will set their CPM . "In other exchange and network businesses, publishers are not permitted to set an "Ask" price but receive a revenue share of the "Bid" price from the advertiser. This model only allows for a remnant inventory pool and inhibits market volume and liquidity."

As Fred Wilson recently commented: "I think there is a lot more that can and will be done around exchanges. To date, Right Media has operated at the low end (remnant inventory) of the market. That's because the low end of the market benefits most from the efficiencies that come from an exchange. But over time I believe the entire online ad market will become exchange driven and everyone will benefit from that."

The challenge for ContextWeb is that many premium sites have contractual agreements with ad networks. The a:c has a contract with FM for our premium placements. So whereas we are free to sell off our remnant inventory, it would be challenging to offer our premium slots on Adsdaq. The a:c and others would have to break our contracts with our networks to do so. This may happen over time but its not a quick-start.

ContextWeb was founded in 2000 and has raised $27M from Draper Fisher Jurvetson Gotham, DFJ New England, Draper Fisher Jurvetson and Updata Partners.

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