IQ news: AdExchange Seeks to Simplify Ad Buying, Selling

Seeking to establish an electronic business-to-business platform whereby buyers and sellers of online media can conduct business more efficiently in real time, AdExchange.com is expected to launch next month. The Beverly Hills, Calif.-based site, which was founded last June, will attempt to streamline the buying, negotiating and selling of media space on the Internet by linking together the inventory management systems of the players involved, according to Paul Grand, founder and CEO of AdExchange. "We're basically a conduit," said Grand, whose site employs 50 people and was funded in part by idealab! Capital Partners, Pasadena, Calif.; Palomar Ventures, Irvine, Calif.; and Toronto-based TD Capital. "We want to make ad buying a lot like buying a plane ticket from a travel agent." Currently, most media buying companies charge clients up to 5 percent on the cost of the media placed, according to Grand. That percentage can quadruple in cyberspace due to the increased costs associated with acquiring that space. "You can buy TV time with a single phone call," he said. "Online, the problem is that you've got this incredibly powerful medium that is difficult to buy, which is exactly the opposite of what the Net is supposed to be about." Grand said his transaction fee-based exchange will eliminate the typical buyer of online ad space from incorporating numerous research tools, making phone calls, sending out requests for proposals, and dealing with third-party ad servers, insertion orders and billing discrepancies. "What used to take weeks now takes a few hours," he said. In addition, Grand said the exchange will return market value to online advertising while eliminating the garage sale attitude among some buyers. "Traditionally, many media buyers devalued online advertising buying by [heralding] the space as an opportunistic buying environment," he said. "It was a place to buy and sell excess space." AdExchange's proprietary technology was developed in partnership with Computer Sciences Corp., a Waltham, Mass.-based developer of more than 40 Internet-based trading exchanges, including New York-based E-Steel and VerticalNet, Horsham, Pa. "We've integrated our system with the [ad] sellers' inventories so we know exactly what they have to sell," he said. "We also know their [negotiated] pricing, not just their rate card." For security purposes, Grand said only qualified buyers are allowed onto the site via selected passwords. "We're not building a site with a database where you simply post your inventory," he said. "We extract the necessary data and synchronize it with all of the systems involved." Grand hatched his exchange concept following a 1998 special summit hosted by Procter & Gamble, which had been leery of advertising on the Internet. "[The summit] was a reaction to criticism [P&G] had been receiving for not doing much advertising online," said Grand. "I was part of a group assembled to discuss making online media buying easier." Initially intended as a collaborative effort within the advertising community, Grand said he took over the EDI-based model when it became a volunteer effort with few participants.

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IQ news: AdExchange Seeks to Simplify Ad Buying, Selling

Erik Gruenwedel

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