By the end of 2010, Forrester Research anticipates that 30 percent of online advertising will go through advertising exchanges.  Simply put, ad exchanges are technology platforms for buying and selling online ad impressions.  This is good news for the advertiser, because it will enable the opportunity to target banners to specific online audiences.

For over a decade, display-advertising units have fallen short of allowing marketers to put their ads consistently in front of the right consumer.  Now, exchanges such as Google’s Doubleclick and Yahoo’s Right Media are working to increase their share of publishers unused ad space by offering a real-time display bidding.  Advertisers will need to put a bid on how much they would be willing to pay for a certain audience (i.e. Women 25-45 who are interested in a Honda).  The exchange would then search through the data system comprised of information about the site’s user and would serve the most compatible ad.

While I don’t see this as the end of buying through publishers directly, it does give the advertiser control over placements that are typically selected by the publisher.  With the advertiser’s ability to cherry-pick a site’s best users comes higher costs and potentially tighter inventory.  This is why it will be essential for advertisers to be smart with which impressions they find most valuable. That being said, with the growth of ad exchanges, how do you think display and ROI reporting will align with that of search campaigns?

Tags: Display advertising