AdECN brings more liquidity to online display advertising market with real-time exchange

AdECN, Inc, a new VC funded play in the nascent online display advertising auction space, aims to merge New York Stock Exchange style trading liquidity with “Las Vegas” style action in its AdECN Exchange. I spoke with William Urschel, AdECN CEO, about how he aims to make the buying and selling of online display advertising more efficient, more targeted and more profitable.

Urschel describes the AdECN Exchange as a neutral, central marketplace for the buying and selling of online display advertising:

The Exchange structure--The AdECN Exchange serves its members, or “seat-holders”, who in turn serve their advertisers and publishers. The seat-holder is the advertising network or advertising broker that holds a seat on the exchange and acts on behalf of the advertiser or publisher in executing transactions.

The Exchange transaction flow (see diagram below)--Publishers place their ad spot inventory in the exchange and advertisers specify in advance the targeting they want and how much they are willing to pay. A viewer lands on a Website page owned by a publisher represented by a seat-holder, triggering a single-pass auction among all of the interested advertisers. The real-time auction is completed in under 100 milliseconds and the advertiser who placed the winning bid, represented by a seat-holder, purchases the ad spot offered by the publisher.

The Exchange monetization--If an advertiser pays $1 CPM for an impression, the seat holder representing the advertiser and the seat holder representing the buyer split the industry standard 35% commission; the seat holders each receive $0.175 and the publisher receives $0.65. AdECN charges seat-holders a transaction fee for every auction it runs, from $0.05 CPM to $0.15 CPM. If one seat-holder provides the buyer and another seat-holder provides the seller, the fee is split between the two seat-holders. If a single seat-holder provides both the buyer and the seller, that seat-holder pays the entire fee.

In addition to its robust real-time auction platform, the AdECN Exchange optimizes all transactions through significant targeting, pricing and tracking tools:

• Advanced Targeting: 12 contextual, behavioral and profile-based methods for matching ads to viewers.
• Value-Based Pricing: Single impression pricing, matched to the person or the specific content or circumstance of that impression.
• SpotBot Protection: Guarantee that an advertiser will not overpay for under-performing inventory.
• Risk Elimination: Flexibility in advertising budget formats; CPC, CPL or CPA.
• Metering: Budget delivery per specifications.

AdECN is currently operating in a testing “stealth mode” and holding about 800 auctions every second. By the end of the year, however, Urschel aims to ramp up to 10 billion auctions a day, representing 10 billion display ad impressions daily. Towards that end, AdECN recently closed on a Series A round financing, following its initial $2.5 million angel round last Fall.