The fast-crowding field of online media buying has just gotten a lot more crowded.
   AdExchange.com opens for business next month, and it has a number of top media names behind it, from founder Paul Grand, who founded NetCount, one of the early web tracking services, and Dennis Holt, founder of what is now Initiative Media, the nation's largest media buying service.
    Financing comes from Idealab Capital Partners, Palomar Ventures and TD Capital.
     AdExchange joins such established players as OneMediaPlace, formerly Adauction.com, which has been around since February 1999. The company began offering the ability to plan and buy most traditional media last April.
    Others include AdOutlet and Broadcastspots.com.
    Internet advertising expenditures are expected to reach $33 billion in the next four years, according to Forrester Research. 
    Online services -- which allow media planners and buyers to develop internet campaigns from the initial research and planning stage through buying and trafficking – are expected to capture a significant percentage of those ad dollars.
    The most common model has been the auction site, where buyers bid on inventory, not unlike eBay.com, and are either accepted or rejected.
    By contrast, Grand says his system will offer an exchange model that mirrors the process used by buyers of traditional media. Buyers have direct access to inventory that is posted by the media companies.  He says no existing service operates on the exchange model.
   "The thing that makes us different from the competition is we are allowing people to literally access backend inventory systems at the participating sites," says Grand.
   "Most people buying online don’t complain about the prices, they complain about the inefficiency in the process. We don’t change the way people do business, we’re trying to make it more efficient."
    AdExchange.com will go live in June as a beta test and the company is now in the process of signing up media companies that will provide the inventory. 
   Grand says the participating media companies will be announced in the next few weeks.
    Within one year, AdExchange.com expects to expand beyond internet ad space and offer inventory for all traditional media.
  The company is entering a field soon to be crowded by online services, whether using the auction or exchange model.
    The first company to take internet planning and buying online was Adbot, a company that bowed in early 1997 and folded by the end of that year.
      Many of these companies grew out of Procter & Gamble’s FAST (Future Advertising Stakeholders) summit in 1998.   At that summit, one problem identified as preventing the industry from getting more ad dollars is simply the time it takes advertisers to manually do the research, planning, buying and trafficking of internet advertising.
    "The goal of that committee was to develop a system where all the disconnected products could talk to each other and build a communications network that would streamline the process and integrate all the different systems," says Grand.
   "Every time someone wanted to make an internet buy they had to go through a ridiculous number of steps and talk to all these different people and it was all manual. They said it doesn’t make any sense as a media buyer for us to buy online advertising because it takes us too long and it’s too difficult," he says.
   Still, many in the ad business question whether systems like AdExchange.com and OneMediaPlace may be placing the cart before the horse.
   "A good solution is sorely needed because interactive advertising is so new and hard to manage," says Denise Siedner, interactive marketing consultant at DBS Marketing.
   "But there are deeper industry issues that need to be tackled, like standardization of things like insertion orders and definitions that need to be decided upon before a system can actually be invented," she says.
    "Until those simplest things are settled, there is not going to be a system that works for everybody."

-Kevin Downey is a staff writer for Media Life.

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