Yahoo Finally Allows Real-Time Bidding on Network and Exchange

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Yahoo's plans to make a huge amount of online ad inventory accessible to advertisers on a real-time basis - something its competitors have already allowed. By aligning with demand side platform (DSP) firms including Data Xu, Invite Media, Mediamath, Turn, and X+1, Yahoo hopes to better understand audience buying and other processes for creating online ad buying efficiencies at greater scale - including real time bidding (RTB).

Yahoo will allow the DSPs to access inventory in its ad network and Right Media Exchange in real time, meaning they can match users to targeted ads based on the attributes of each ad impression.

The DSP relationships will help Yahoo better compete with Microsoft and Google, both of which already allow DSPs to bid for inventory in their ad exchanges based on real-time data. Google has been rumored to be in the market to acquire its own DSP.

Yahoo hopes to form tighter relationships with the DSPs, and in turn, their large agency clientele. "The collaborative and additional capabilities we have will benefit the agencies...and will justify them spending more with Yahoo," Ramsey McGrory, VP North American marketplaces at Yahoo.

Yahoo announced today it has begun a pilot program aimed at determining best practices for audience buying by DSP clients - mainly's Right Media, and Google's ad exchange.

"Many of these DSPs have been members of the Right Media Exchange for years, and through this pilot, they will gain access to Right Media's RTB capabilities," said Yahoo in a company blog post about the partnerships.

"What happens now is for the first time we gain access to Yahoo Right Media Exchange and network inventory in real-time," said Turn CEO Bill Demas, who explained that Yahoo evaluated several DSPs before selecting Turn and the others. "What's important in our case is to be able to reach a custom audience at scale," he said. "Up to today we haven't been granted access to [real time bidding in the Right Media Exchange]."

"Beyond a commitment to RTB...we think it potentially opens up new inventory and a closer collaboration in terms of making more Yahoo assets available," said Joe Zawadzki, CEO of MediaMath. He would not elaborate on what those other Yahoo assets might be. According to Zawadzki, Yahoo will work with his firm and the other DSPs to "roll out the pilot over a couple of months, and get the learnings and make it more global in the second half of 2010."

"For Yahoo this makes a lot of sense considering the size of their audience and the technology they already have," said Rob Beeler, VP of content and media at AdMonsters and former executive director of ad operations at local media firm Advance Internet. "If you think about how much reach Yahoo has, if I'm on the DSP side, I'm going to be able to cherry pick through Yahoo's inventory to get to people who I'd love to reach elsewhere, but now I can get it through Yahoo."

However, while some argue RTB can help place a higher value on inventory associated with in-market audiences, others suggest it could create a more hostile environment for publishers. Advertisers will continue going direct to site publishers to buy premium inventory or custom opportunities; yet they will be even less apt to buy audiences defined using behavioral and other data that exist across several publishers, ad networks, and exchanges - particularly as greater efficiencies are created through partnerships like these.

"If I were a publisher, this is very concerning because the opportunity to come together with the portals and come up with an overall strategy is probably slipping away," said Beeler. "The big problem is from a publisher perspective, they're not necessarily armed with the same level of tools as the DSPs and advertisers."

You can follow Kate Kaye on Twitter at @LowbrowKate.