Smart Auctions vs. Not-So-Smart Auctions

If you have read my last few posts, it seems like I may be approaching the difference between one-sided and two-sided auctions with a bit too much passion. I've frequently heard statements like "the best technology doesn't always win" and "good enough is good enough." If that were true, we'd all still be riding around in horse buggies. The real question is whether the incremental increase in value is greater than the cost of adoption. When thinking about auction structures for advertising, I believe that there are two types of auctions, smart auctions and not-so-smart auctions. Single-sided and double-sided auctions can be either. This is the next layer of market structure.

A not-so-smart auction is like a stop light, it doesn't think, it just executes. In a not-so-smart auction a seller provides a description of the good, the auction is set up, and a bid request is issued without regard to what it represents. In other words, the auctions does not care what you are selling, it is up to the buyers to make all the determinations. A great example of a not-so-smart auction is eBay.

In a smart auction, the description influences how, and where the auction facilitates the transaction. Furthermore, buyers and seller have multiple of order types to choose from. Buy and sell is just not enough.

So why does all of this matter? Well, if you want to ask a seller to replace a smart sales team with a not-so-smart auction, participation will be driven as a  'sales channel of last resort.' If you provide a smart auction, you can really start to have a serious conversation with publishers.

Not-so-smart auctions solved a speed problem, smart auctions solve a quality problem. I'd rather be the tortoise than the hare.

Smart Auctions
Smart Auctions