If you're like most marketers, you're still spending the bulk of your ad dollars on portals even though your customers are at niche sites. Here's how to find them.

Seth Godin said it best: "Small is the new big." He might not have been talking exclusively about the online ad industry, but he very well could've been.

Over the past four years, the internet has seen a decline in users on large websites and portals and an increase in traffic to niche content sites and blogs. This, you know. But what you might not realize is the problem that this change has posed for advertisers. How can they buy the reach and exercise control over exactly where their brand appears when they aren't sure where (or how) to target their audience?

Five years ago, portals were the dominant sources of news and information and among the most highly trafficked sites on the web. Then search took off, enabling people to easily find sites with content more closely aligned with their interests. This caused page views on the top three portals to decline 18 percent between 2004 and 2007, while the internet experienced an overall 21 percent growth in total page views, according to comScore and JP Morgan. Internet users started spending time on niche content sites and blogs, fattening up the long tail. It appears that making a big portal spend in a quick call or email is not the most efficient way to reach your audiences anymore. The user base has flocked to the long tail, and eventually they will bring the ad dollars with them.

In spite of the statistics that clearly indicate continuous growth of the long tail, more than 50 percent of last year's online ad budgets still went to the top 10 internet properties. This had many of us scratching our heads. As David Card of Jupiter stated, "For a long-tail market, the internet is pretty concentrated at the head."

Knowing that this is the current state of the market, what are advertisers to do? That's a tough question to answer, especially considering the fact that it's almost impossible for them to buy packages of targeted impressions due to media fragmentation. Face it; there is abundant inventory on an almost infinite number of websites.

If they had the resources, a media agency could buy site by individual site. But that is no guarantee of success since an advertiser seeking adjacency to finance content, for example, through a run-of-site buy on a finance site can't always target the appropriate audience with a contextually relevant ad. Even on a finance site, individual pages may be about travel or cuisine, not exclusively about finance.

The problem facing large publishers today is that their content category is growing faster than their own site and as a result advertisers are demanding to reach the category more and more than just sites. Therefore, a site-specific buy can be contextually inefficient. As Quantcast's Adam Gerber states in a recent eMarketer trend report, the future of online media will consist of "the re-aggregation of a fragmented audience that's actually watching different things." I couldn't agree more, and exchanges like the one I work for can help with this.

User fragmentation isn't going to go away. In fact, it may get worse since the web will continue to evolve with the next generation accessing online information much differently than now. Advertisers need to become more interested in the technology that can help them find their customers and prospects no matter where they are online and so that the advertiser's message adds value, not just images and words, to the page. Hence the recent media coverage of ad exchanges and contextual targeting, technologies capable of offering advertisers more precise packaging outside of Run of Network or channel buys.

Google's AdSense attempted to be a solution to media fragmentation but doesn't do what an exchange does, which is offer control to both buyers and sellers of ad inventory. Control is one of the main features that distinguish a true exchange from other media properties and solutions that came before it.

How does an exchange do it? Think about eBay as an example. When first created, the site had so few products that they were listed on the same page. As the number of buyers and sellers grew, eBay reorganized its product listings by categories. This mirrors the current state of the online ad industry. Today, there are a lot more sellers and buyers than ever before, and exchanges offer them a platform where they can buy and sell with each other.   

Exchanges using contextual technology provide advertisers with a way to buy categories using automated technology, which can serve ads to relevant content pages after assessing the value of that site's inventory compared to other sites. Automatic contextualization offers advertisers packaged pages, not sites, of relevant, targeted ad inventory. It provides them with control, reach and, if done correctly, a brand-safe environment, while re-packaging content in a way that better meets an advertiser's needs and adds value to a media buy.

As happened with behavioral targeting, lots of companies are jumping on the ad exchange band wagon. So there are lots of flavors to pick from. Yes, some of them are full of remnant, low-value inventory, but to be sure not all are. I urge you to try them all and see which one(s) works best for you. It is a new world online. Let the ad exchange help you tame it.

Anand Subramanian is CEO, ContextWeb, Inc.