Traffiq's CEO explains how the control and transparency available on open ad trading platforms can benefit all participants, including long tail and niche publishers.

Ask yourself this: What if every time your stock broker purchased a stock on your behalf, he was neither able nor willing to tell you which security was bought with your money, nor at what price? Or how would you react if your CFO, upon selling your company's stock, had no way of knowing who bought it or how much the buyer paid?

Welcome to a day in the life of today's typical online advertising buyers and sellers. Online ad spend has grown by double-digit percentages for the past three years, according to eMarketer, yet only a small minority of buyers and sellers have managed to profit significantly. The vast majority continues to flounder; instead of reaping rewards, most buyers and sellers are barely covering costs.

(Source: eMarketer August 2007)

If you're a seller, there's no guarantee your inventory will be sold at the highest possible rates, to non-competing brands, in the appropriate context. You're forced to hand your inventory over to an intermediary, typically a blind ad network, which in turn sells it to whomever it wants, at whatever price it chooses. You're paid whatever revenue share this third party sees fit, with no way of knowing in advance what that share will be.

If you're a buyer, you're forced to navigate these same networks with no idea of where your ads will appear. Nor will you know how much you'll actually pay for these unknown placements, until after the ad runs. True, there's a price ceiling, but is that control, or the illusion of control?

Fortunately, there's a better way to do it. We have it within our power to liberate the natural market forces already present. We can create buying and selling environments for online advertising that exhibit the choice, transparency and efficiency we take for granted in stock exchanges and in any genuine marketplace.

What would such platforms look like? Let's start by talking about what buyers and sellers of online media really want; what they need in order to do smart business now, not in some distant, idealized future.  

Sellers need to be able to secure fair market prices for their inventory. They must be able to reduce the amount of unsold inventory, and at retail prices. They need an efficient sales channel for their premium and long-tail inventory. They need to be able to predict sales and their share of the revenue. They need the natural market forces of an open market, where buyers can compete for inventory to create the highest and fairest possible price. And they want to optimize CPM and manage their site's ad yield.

Buyers, meanwhile, need access to premium inventory; in other words, quality segmented inventory that converts to their needs. They need to be able to secure traffic, at known rates, for both current and future campaigns. They need to be able to protect their brands by knowing where their ads are running, and be able to ensure their ads don't run next to a competitor's spot, or next to offensive content. Simply put, buyers require more control, more predictability.

The future is now
Marketplaces built from the ground up to enable this kind of choice and control already are underway.

So if you're a buyer or a seller, I encourage you to start applying marketplace criteria today in considering which exchanges or networks represent your best opportunity going forward. Consider at a minimum:

• The platform should be efficient, with a structure capable of delivering maximum yield for web traffic on both sides of the transaction.
• It should make sound business sense not only to you, but to your counterparts on the other side of the buy/sell line as well. The logic that attracts buyers should attract sellers, and vice versa. 
• The barriers to entry must be nonexistent; that is, large participation fees must have been eliminated. Such fees have made online advertising prohibitively expensive for the great majority of publishers today, including those niche publishers who comprise the internet's long tail. These are the very publishers who can provide the segmented inventory advertisers need in order to forge high performance campaigns.

If I come across as a cheerleader for openness in the marketplace, that's because I am one. It's the way forward to market innovation, growth and the power for all buyers and sellers, large and small, to maximize their inventory sales, media management and business success. Open exchanges can realize the inherent freedom of choice of the internet, and push the benefits of that freedom outward to the edges. It's the right way to do business for everyone.

Mark Kahn is the CEO of Traffiq -- The Internet Traffic Exchange. Read full bio.