The Growth of Ad Auctions

The idea of an online auction has been around for a good, long time. The idea makes a lot of sense: a ton of ad space is either undervalued or unsold, simply because it too frequently, the process of selling involves people, and people are focusing on buys that are bigger and more interesting than just a bunch of banners scattered across a network.

Or...we realize that ad space has a temporal element to it: if someone doesn't buy the home page at 4:00 on a Saturday, that impression is gone, along with any potential value, just like a hotel room.

But we've got two big stories this week around auctions: Google is doing it with TV and DoubleClick is doing it online. It's a pretty amazing step forward, and one that could potentially change much of the dynamic of buying ad space. The planning portion is going to be a challenge, of course. That is, where CPMs were previously some combination of rate card times relationship, we'll now just get pure market-based pricing.

The big thing to see, of course, is the quality of the inventory that is posted up. That will determine much about whether buyers will see auctions as a way to backfill buys to hit reach and frequency goals, or if they will actively engage as a method of getting high-value placements.