BY aarrieta
Many times, because of intuition, common sense or simply good luck, you apply concepts that later you find, clearly defined or rationalized in a strategic and tangible logic, in a book or an article.
A year ago I discovered a concept that together with Damian Voltes, we had been applying for many years at Digital Ventures, the company that we founded together and that today is .FOX Networks.
The concept is pretty simple, but not less striking. Its author Pankaj Ghemawat calls it AAA that stands for Adaptation, Aggregation and Arbitrage.
These three concepts are one of the bases that add value to the business of an adnetwork and one that allowed us to grow and to escalate in the business:
– Adaptation: to each local market, to way of selling the product on each market and the most important finding the way in which each market and kind of player sends the inventory. For example MSN need big transaction because they have a lot of inventory and few employees to handle it. MySpace monetize very well USA traffic but it gets complicated on the market that they have no presence. Furthermore, the way of negotiating and closing deals is very different from Brazil to Mexico.
– Aggregation: Nobody would be willing to shop, to manage them and optimize them with campaigns of $20 per site, but adding all the sites of a network and adding all the clients of the same network, make advertisers to run campaigns in hundred of sites with $3,000 and that the sites receive hundred of clients with only 500,000 impressions. Technology makes it possible to handle this volume, but the concept of aggregating gives the network its own entity.
– Arbitrage: This is the concept that allows you to add more value, where it allows Claring or Reforma or el Mercurio to sell their impressions from Spain in a lower value than the one in the Spanish market and vice versa; in Spain sell Latam impression as it wouldn’t have any value. Adding them generate a value that is more competitive for an advertiser to run campaigns in media with a high reputation at the third of the value that they would have in their local market.
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