From the notes on the call with Morrison and Coolbrith, Addante provided insight on current CPMs in remnant display and, happily, the news was good with caveats - and in the face of negative online advertising analyst predictions.
Addante said that Q2 eCPMs increased 7% year over year and added that Advertising.com and ValueClick continue to perform well. In particular, ValueClick, which ThinkPanmure covers, has apparently become creative in its offerings to advertisers and consquently publishers are seeing the benefits - i.e. behavioral targeting, vertical networks, new technology, etc. Given the flood of remnant display out there, the eCPM increase sounds good to us.
On the exchange front, the opinion from Addante was that advertising exchanges (Right Media and DoubleClick AdX were mentioned) are not having a significant impact yet on the "yield management paradigm." Addante offered two primary challenges for the ad exchange model:
1) failure as a pricing mechanism due to sizable demand/supply mismatch in current exchange incarnations, and 2) established ad networks continue to balk at the radical changes to their business models and operating procedures that would be required to work with ad exchanges, thus, limiting the pool of demand available to the exchanges (and contributing to the demand/supply mismatch).
We take #1 as a liquidity issue that will be overcome in time. We're curious about how the auction-based, dynamic model of exchanges works with yield management tools of companies like Rubicon Project - especially given the dynamic nature of the exchanges where bid/offer pricing is constantly changing.
Also of note was Addante saying that RightMedia was having latency issues as has been reported.
And finally, we enjoyed this summary from Addante: what do publishers want from their ad network and exchange relationships? Addante says:
- 1. Ad quality
2. Latency/network performance