Julia Angwin’s recent Wall St. Journal article (about ads purchased through networks showing up alongside racy content) underscores the point that there could be better controls in place around network buys. One observation in particular is a point we bring up a lot around here: in order to gain access to more media, ad networks often buy and sell from each other. So, while an advertiser thinks it’s buying on Network A alone, part of its order may be placed on unknown Network B, and its ads may end up on some objectionable sites as a result.

Loss of control over where ads serve is a very real problem when networks trade inventory. This is why we’re putting so much work into our MediaGuard product. Advertisers, publishers and ad networks using the Yield Manager platform need to feel confident that content and ads within the network are being classified properly.

But while loss of control over content is the most visible problem of inter-trading between ad networks, it’s not the only one.

Why Networks Trade with Each Other
The inter-trading of ads between networks is a means for networks to fill gaps in their supply and demand. Why else would a network sell inventory to a competitor, while another buys inventory from a competitor? This practice is a way for ad networks to create a proxy for liquidity in their closed (and relatively illiquid) markets.

Networks see a compelling reason to remain closed. Think of them like ticket brokers. The great thing about being a ticket broker is that you know how much the buyer is willing to pay for a certain ticket, and you know how much the seller is willing to sell for. Neither the seller nor the buyer has information about the other (otherwise, what would they need the broker for?). The broker can sell the ad to the buyer for maximum price, and from the seller for minimum price, keeping an undisclosed (and often huge) margin.

Now what happens when your friend (who’s also a ticket broker) has the buyer as a client, and you have the seller? Well, you cut a deal and split the margin.

The Resulting Friction
Ad networks operate on different platforms, with different pricing structures, counting methodologies and other disparities. Ask enough network ad operations people and you’ll hear a horror story about an ad being brokered back and forth between two networks, each buying and selling the ad to/from each other several times in a nearly endless loop. In short, when networks sell to each other, complications abound. Controlling content of ads and sites becomes impossible. Buyers and sellers see discrepancies in reporting. Reconciling payments becomes a formidable task. When we talk about these dynamics here at Right Media, we talk about friction.

Solving the Problem in an Open Exchange
This sort of friction is eliminated when networks, publishers and advertisers share a common platform (with a single counting methodology and set of pricing structures). Today there are over 50 ad networks using Yield Manager, interconnected to all other buyers and sellers on the platform, that have open, immediate access to media and trade it seamlessly. If, at a given moment, a network lacks needed inventory, it naturally acquires more in the open media exchange (what we’re currently calling the “Right Media Exchange”). Likewise, if it runs out of paying ads, buyers are available in the exchange.

The point is that networks, like any brokers, will continue to have relationships with each other. But many are realizing that they owe it to their advertiser and publisher constituents to eliminate as much friction and uncertainty from those transactions as possible. With Yield Manager’s community linking capabilities and ever-expanding Media Guard features, we are striving to eliminate as much friction as we can.

As the exchange expands and the benefits of an open, transparent market become more obvious, there should be less reason for any of its participants to look externally to increase scale. With that, problems like ads showing up where they shouldn’t and multi-platform conflict should be greatly diminished.

A few members of the Symple team here at Right Media will be at Ad Tech in San Francisco this week on Wednesday through Friday.  Send pmccarthy@rightmedia.com an email if you’d like to get together and talk more about Symple and let us know more about what you’d like as a publisher.

We’re also having a stealth reception/party.  If you’d like to attend send me an email for details.

Competition. In free market economies, it’s what happens when supply and demand meet in an open marketplace and operate under its rules. In nature, it’s about survival of the fittest among species and among individuals of the same species.

Competition builds up the strong and shakes out the weak. We sometimes may dread it, but nothing improves without it. Are you using competition to make your web publishing business as good as it can be? As profitable as it should be?

Certainly you put your users first, providing them with the best possible content and services your budget will allow, because it’s their attention on your pages that advertisers pay to engage. And, of course, you make it easy to offer your advertisers access to that audience for a fair price. Or do you?

How do you determine ad prices on your site? Do you even determine price at all, or do you let a third party figure it out for you? If you turn over your means to earn fair value for your inventory to a few select providers, how can you ever be certain that you are getting the right price for your inventory?

Fact is, there may be dozens or even hundreds of other players in the market at any moment who are willing to pay more than you just received from an advertiser or network for a given impression. It’s impossible for any publisher, no matter how prominent and large, to know all the players in the market at a given time.

But it is possible in an open media exchange for all participants to make their presence known to each other for the purpose of bidding on available inventory. By opening our businesses up to each other, we create an environment in which we can all succeed as sellers and as buyers. It’s as true in today’s media marketplace as it is on Wall Street or on eBay or in the ancient agoras and modern bazaars throughout the history of mankind.

Competition is a force that drives us all to do better and be better.  Are you using competition as a competitive tool to improve your business? If not, please ask us how.

A large part of our goal with RMX Direct, and at Right Media in general, is to make life better for webmasters. Along that note, we found a list of “15 Things Webmasters Want For Christmas” on PublisherAid.com. Although we’re just getting into spring and that article was probably written before last Christmas, I thought we’d see what we can help out with on the list.

1. Free PR! - We’ll definitely be putting out rMX Direct publisher case studies which is a chance to get some free PR.
2. ActiveX to disappear from the face of the planet. - Unfortunately we can’t control the whole planet, but we definitely give you banning control to make sure ActiveX doesn’t show up on your site.
3. Google to tell publishers what percent cut they keep from AdSense and to increase that cut whatever it may be. - We obviously can’t make Google do such a thing directly, but by providing an open and transparent auction marketplace we are hoping to put pressure on any closed ad network to start sharing information.
4. Every web surfer in the world to use the exact same version of the exact same browser. - That would definitely make development easier, but we can’t help here.
5. Higher placement in the SERPs. - Directly we’re no help here, but indirectly perhaps we can earn you more money through advertising to spend money in other ways to help search engine positioning.
6. Higher eCPMs and CPC rates. - This is one of our major goals.
7. Additional back links, bandwidth, bookmarks, referrals, return visitors, traffic, and unique content. - Okay, we’re getting a big greedy here aren’t we?
8. All forms of ad-blocking software that block non-intrusive ads to be eliminated permanently. - Very few web users out there love advertising, but advertising revenue is a major component to the business models that allow publishers to put out free content, tools, and services for users. Blocking non-intrusive ads makes it extremely hard for publishers to earn enough revenue to keep providing those things for free.
9. To have been the first to come up with the idea of “The Million Dollar Homepage.” - Who hasn’t had that thought?
10. CSS to look the same in every browser without the use of tables. - Tell us about it.
11. A piece of software that automatically logs in and retrieves all of your revenue statistics from all your ad networks and affiliates in real-time and gives you collective stats and detailed graphs of your earnings. - Bingo! This is where we’re headed, and RMXD will allow you to get all your revenue statistics from all your Yield Manager marketplace networks in one place. We’re obviously trying to add as many networks and advertisers to this as possible, but we could achieve this on an even greater scale if other networks would open up APIs or share their data in some way so that it could be all in one application. Once RMXD is up and running, we’d appreciate any “gentle nudgings” you want to give to any networks you’d like to see as part of RMXD.
12. More people in your local community to be able to discuss and understand all that web publishing involves with you. You can’t drink a beer with someone else on a forum. - At least we have forums to connect though right? We hope to add some community features over time with RMXD to help people feel like their part of an even closer community than the general group of web publishers.
13. Fastclick, now Valueclick, to make their referral earnings indefinite again. - No comment.
14. All of those damn click/shoot/punch/kick/score/bowl to get a free (insert product name here) ads to stop being lucrative so we never have to see any of them again! - Unfortunately those ads tend to get great response from users, which earns publishers more money. We believe in choice though, so we allow you to ban those types of ads from showing up on your site.
15. A free copy of every SitePoint book ever written! - Interesting, maybe we can put together a contest with this as a prize.

In the financial markets, there are multiple layers of regulation. Banks have their own compliance departments; the NYSE has its own regulations; and the SEC provides yet another set of rules to protect consumers and financial institutions from fraud and other unsportsmanlike conduct.

Online advertising has yet to evolve a similar set of standards that protect consumers, advertisers, publishers, and networks from each other. Some steps toward this have happened. The government has implemented very specific laws to protect against egregious violations of consumer trust (spam, spyware, etc). More directly applicable to the industry, the IAB, NAI, and other standards bodies have begun the process of standardizing measurement, nomenclature, terms and conditions, and other key principles of industry-wide commerce.

However, these external regulatory bodies aren’t sufficient either in finance or in online media. Often, their rulings lag the market by years, and their arbitration process is too slow to react to the day-to-day issues that companies encounter. So what else is being done? Currently, most ad networks have their own standards and policies. However, these standards are self-imposed, and more importantly, are often subjective. For instance, the Right Media network has a policy that if we make a trafficking error, we don’t spread the cost of the error on to our publishers. Now, that’s a great policy – but how can publishers be sure that we implement it? Obviously, this is a subtle issue, but it’s something that can dramatically affect revenue.

Here’s where our open media exchange comes into play. The exchange (we’re currently considering the name “Right Media Exchange” as a replacement for “Yield Manager Marketplace”) plays the same role as the NYSE does for the financial markets. Not only does it provide the underlying transactional infrastructure for media, it will provide a common, trusted, enforceable set of rules and regulations that all exchange participants adhere to. This doesn’t mean that every member of the exchange has to adopt every policy. However, and this is important, it means that if an exchange member says that they adhere to a certain policy, the exchange will regulate and make sure that they actually do.

Who is this good for? It’s great for advertisers and agencies, because they can be certain that if they ask their exchange-member networks and publishers to run only on particular types of sites, they’ll know for a fact that this is the case. It’s great for publishers, because they know that if they ask for advertiser exclusions or protection against errors and adjustments, they’ll know for a fact that that’s what they’ll get. And it’s great for networks, because they have a partner looking out for them to help them implement their policies.

Another really cool thing about the exchange providing oversight is that we’ll be able to provide audited reach and traffic numbers for all exchange members, with far better accuracy than outside measurement companies like Comscore. I’m not sure why Doubleclick and Atlas don’t provide this functionality for their customers, but it’s something we’ll certainly do (on an opt-in basis).

One crucial part of regulating the exchange is to get our members involved in the process of defining standards, policies, and auditing processes. We’ve started this process already, with our Media Guard program, and we’ll be expanding it as our regulatory efforts continue.

So the bottom line: exchange oversight is necessary to build industry trust, and that trust will translate directly into dollars for the exchange and its members. This is an exciting step for all of us, and we look forward to rolling out our regulatory bodies in the upcoming months.