Questions for Microsoft Advertising’s Jed Nahum on the Future of AdECN

Microsoft plans to launch a new and improved version of its AdECN exchange early next year. So, what can advertisers expect from the new system? ClickZ News asked Microsoft some detailed questions, and the firm agreed to respond via e-mail. Here’s ClickZ’s e-mail exchange with Jed Nahum, director of network strategy and planning for Microsoft Advertising:

Q: Correct me if I’m wrong, but wasn’t AdECN already in operation before Microsoft acquired it? What will launch in 2010? What’s different/new?

The AdECN Exchange officially launched in the spring of 2007 and has been operating ever since then. Excluding a Microsoft only test, until now buyers in the Exchange have not been able to bid in real time; they have specified their bids in advance through AdECN’s Hosted system leveraging that UI. The upcoming launch in early 2010 of AdECN’s Federated system is the introduction of real-time bidding into the AdECN Exchange. Networks and ad brokers now have the ability to make individual impression valuations in real-time leveraging their own proprietary technology and data to determine their bid. The launch of AdECN’s Federated system will include a select group of real-time bidding participants.

Q: Can you provide more detail on AdECN’s pilot of its Federated, real-time bidding technology?

Microsoft has been piloting its Federated real time bidding system since May using only Microsoft participants so far. We’re using AdECN’s Federated Exchange to combine demand from separate ad systems within the company and run an auction between them. The great thing about this is that we’ve been increasing both our publisher yield and advertiser ROI by letting the systems bid against each other and figuring out who values each impression more on a case by case basis. This is the effect of real-time bidding — the right impression is matched with the right advertiser. In addition, Federated real time bidding allows each advertiser to see the impression and user characteristics in advance and make a bid based on that knowledge, and that just means more control and transparency as to where their ads will appear.

Q: Is AdECN integrating its exchange bidding technology in a new way with Microsoft’s ad system?

When [AdECN’s Federated real time bidding system] trial extends outwards to our partners, they’ll be able to leverage their real-time bidding infrastructure against the inventory running through the Exchange. As participants on the AdECN Exchange, those partners will be able to bid in exactly the same way that Microsoft does.

Q: Will this new real-time system include inventory that isn’t currently available in the AdECN exchange? If so, what?

With the launch of AdECN’s Federated system, Microsoft will be able to bring potentially any of its discretionary inventory to the Exchange. Regarding what inventory specifically, we anticipate it will be a mix of both owned and operated inventory as well as some of its syndicated partnerships.

Q: How is the “real-time” system different from the exchange as it is available today?

Simply put, AdECN’s original hosted exchange system allowed for predetermined bidding; the Federated system enables real time bidding where the buyer is able to make a valuation and price an impression at the exact instant it is happening. Real time bidding enables more expressive pricing determination and leverages any and all of the different pieces of information that go into that impression, as well as the proprietary algorithms our partners bring to the system.

UPDATE: The original story noted Microsoft expects to launch its new exchange offering in January; however, the company plans the launch for sometime in early 2010.

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