Exchange Online’s Pay-for-Performance Promise

Last week, ClickZ covered the launch of Datran Media’s Exchange Online (EO), the first real-time market exchange that enables advertisers to bid for CPA (define) media distribution. In the article, Matt Nelson wrote: “Datran Media is taking a page from Google’s playbook and the new crop of ad exchanges.” He described how EO is disrupting the marketplace by increasing the transparency of e-mail campaign performance.

This is another example of how e-mail continues to evolve and become more relevant.

Industry leaders commented on the record in support of Datran Media’s EO, including IAC Advertising Solutions president Richard Stalzer and Webclients VP of new business solutions Tanya Brown (both of whom are Datran Media clients); DoubleClick cofounder and Datran Media board member David Carlick; and Avenue A/Razorfish VP of e-mail solutions David Baker.

I asked Sean O’Neal, Datran Media’s CMO and a founding member of the Email Experience Council, to fill in more details.

Jeanniey Mullen: The launch of EO has certainly attracted a great deal of attention. Before we dig in, could you give a layman’s description of what it is?

Sean O’Neal: In short, EO is an auction place that allows marketers to bid for e-mail inventory placement, calculate performance, and compete for media much like they do when managing paid search campaigns.

JM: That seems clear, but why is there so much interest in EO? Isn’t its functionality very similar to Google and other auction environments?

SO: What makes EO unique is that, unlike Google, it offers marketers the purest forms of pay-for-performance marketing, including cost per acquisition, cost per lead, and cost per click. And in the e-mail space EO is clearly first to market. While it is true that — outside of e-mail — advertising auctions have already become very popular, this popularity actually increases interest in EO because advertisers and publishers have been waiting for auction efficiencies to arrive in e-mail. In short, an open exchange drives business. Exchange Online is an exchange of media inventory only, where the marketer bids for their desired action (i.e., acquisition, lead, or click). Additionally, publishers can host private auctions where media inventory is made available to select marketing partners.

JM: It sounds like your clients are already drinking the Kool-Aid, so to speak. How do you expect the rest of the marketplace to react?

SO: We’ve been building EO for quite some time. Banner exchanges like Right Media and DoubleClick had validated the media exchange model, and with Google recently announcing their planned entry into the cost-per-acquisition business, we knew that the time was right to launch the first exchange online for CPA media. We officially unveiled EO at ad:tech and have been meeting with a large number of interested advertisers and publishers. The response has been overwhelmingly positive, and I am losing my voice from giving all of the presentations!

JM: Several times throughout the interview, you’ve referred to EO as an open or free exchange. What do you mean by that?

SO: In short, EO is a real-time, bid-driven marketplace that provides advertisers the same type of tool set to manage their campaigns through the e-mail channel that they now enjoy in search. Ultimately, as in paid search, the most relevant offers rise to the top and get the most media distribution, with the least relevant offers falling to the bottom and getting the least distribution.

JM: Thanks, Sean. The launch of EO along with other changes to the e-mail industry is reinvigorating the way we leverage this medium. It’s going to be very interesting to watch EO and see how it’s accepted and integrated into the way we do business.

Meet Jeanniey at the ClickZ Specifics: E-mail Marketing seminar on May 14 at the Marriott, San Francisco.

Want more e-mail marketing information? ClickZ E-Mail Reference is an archive of all our e-mail columns, organized by topic.

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