The president of Datran Media lays out the evolution of exchange-style media markets and explains why email has been added to the mix.

Much has been made in recent months about exchange-style media markets and what a valuable niche they fill. I agree that the email segment needs a true marketplace. After all, Datran Media developed one for email. Let's add to this discussion by defining how we got to this point.

Since the dawn of the internet, and in fact, since the first time someone sold a print advertisement, publishers have always tried to get the most value for their available ad inventory. Likewise, advertisers have always been adamant that they receive the best deal on said inventory.

Throughout the last decade, this has gradually become a reality on the web through the creation of auction-style media exchanges. With better technology and more competition for valuable inventory, these virtual marketplaces have helped publishers better monetize inventory and helped advertisers get the most value for their dollar. 

Recently, performance-based marketing company Datran Media introduced Exchange Online (EO), the first and only marketplace for cost-per-acquisition media and a destination for publishers and advertisers to earn revenue from the email channel. Looking back at the evolution of the media exchange, having a dedicated media exchange for email was a natural progression, perhaps even one that was overdue. 

1996: The birth of ad serving
Still in its infancy, online advertising was slowly capturing ad dollars. However, advertisers were cautious where they invested their budgets. With the first introduction of the ad server, the internal sales department of a website managed to sell high-value chunks of inventory but little else. Most inventory eventually went unsold, but the ad server was a promising new technology.

In the email world, inventory was sold on a list-based marketing initiative.

1998: The network effect
By 1998, the arrival of the ad networks started to change the face of online advertising. The internal sales department still used ad serving to sell its high-value inventory, but ad networks like Ad.com and Real Media offered to buy inventory in advance that the internal sales team was unable to sell at the premium rate. Through demand aggregation (the network effect), this allowed the ad networks to generate higher CPMS for this non-premium inventory. Through arbitrage, these networks bought huge chunks of inventory and sometimes made a lot of money, especially in the late 1990s when online advertising spewed hundreds of new companies with big budgets.

Through 2001, list-based marketing remained the norm. Around this time, progressive marketers began to experiment with demographics and response activity.

2002: Behavioral targeting
By 2002, technology had helped marketers understand their consumers and their patterns online. Behavioral networks like Revenue Science and TACODA would buy small bits of inventory that they could match to behavior for targeting. Additionally, more and more networks began popping up to compete with Ad.com and Real Media. Networks like ValueClick, Tribal Fusion and Specific Media reached critical mass by buying chunks of inventory through arbitrage. 

Email remained the same and despite the effectiveness and cost-efficient nature of the channel, it kind of got lost in the hype over behavioral targeting and ad networks. At the same time, regulatory matters including CAN-SPAM set the stage for stratification of email businesses based on best practices and served to separate good players from bad, making the channels safe for marketers who would work exclusively with vendors who focused on best practices. Email as a channel was poised to take off, growing steadily in the next three years until doubling in 2006. Email had arrived.

2006-2007: The birth of the exchange
With the ad exchange model firmly in place, both publishers and advertisers stand to gain from this friction-free marketplace. Inventory is broken up into several pieces and auctioned off to the highest bidder. Advertisers are able to bid for media they feel is most valuable to them. This, along with the intelligent targeting of hundreds of offers to thousands of branded media inventory opportunities, helps publishers monetize their inventory.

The first of these was Datran Media's Exchange Online (EO.com), which pairs advertisers with email inventory that offers the highest value and yield while better monetizing inventory for publishers. This open marketplace has enabled literally millions of transactions to occur every day, further fueling the email channel's growth and driving more transactions.

What's next for email? With such exchanges available to marketers and publishers, the sky is the limit.

Matt Keiser is founder and president of Datran Media. Read full bio.