This Small Business Innovation Research (SBIR) Phase I project seeks to develop and validate a real-time, double-sided auction framework AdEx, for intelligent advertisements. This system significantly increases the likelihood of more relevant matches at a lower cost between consumers and advertisers, buyers and sellers. The key innovation is to directly utilize user-purchasing and interest profiles, culled from aggregated exchange data and social networking information, and use this data to create fungible trading objects. Aggregating groups of these objects with similar interests and profiles will enable real-time bidding for both the producer and consumer of advertising over a multi-variable bidding space. Configured as a dynamic exchange, AdEx facilitates three novel functionalities: 1) double-sided dynamic bidding; 2) allows dual programmable trading agents for optimized marketing; and 3) auctions would be cleared and use linear programming to assess the outcome. Thus allowing synthetic liquidity generation, and interconnection between disparate advertising networks with commission sharing resulting in more efficient markets. This double-sided advertising exchange, a component of MetaNet's vision of efficient interconnected enterprise social extranets, will form the fabric for the next growth phase of the Information Revolution allowing corporations to connect with customers and collaborate with trusted partners in remarkable new ways.
The broader impact/commercial potential of this project will be the facilitation of more efficient automated markets, which will transform advertising and direct marketing. The new revenue models possible, based on knowing more about who will be communicating with and why, are vast. The search engine industry was able to connect any user to any other user on the web. Eventually, both types of connections will combine with impact to marketing ROI. Currently the launch of a new consumer brand could cost between $10-100 million, with most of this spent on advertising. MetaNet?s vision could reduce the cost of launching a new brand disruptively by enabling a revolution in the ease-of-launching new products and businesses. If deployed universally, it could enable a reduction of friction causing a dramatic rise in global productivity. Finally, as spam overtakes our Inboxes and Facebook updates, signal-to-noise ratio for electronic communication is dropping. This innovation is designed to improve the ability to target consumers intelligently, and thus, may be the seed for a new communications eco-system that could someday eliminate spam.
SBIR Phase I: IIP # 1215401 Title: Double-Sided Advertising Exchange Date: January 21, 2013 The objective of the Small Business Innovation Research (SBIR) Phase I project was to build and deploy an experimental prototype of a real-time, double-sided auction framework for intelligent advertisements. The theoretical basis for MetaNet’s proposed AdX system is based on the idea that auctions evolve into double-sided exchanges as they grow in liquidity, and would then provide better price discovery, more relevant matches, and more satisfied buyers and sellers. More importantly, this new concept would squarely address the current issue of the inexorably increasing cost-per-click metric that makes it harder for businesses to launch new products and thus drive overall productivity. Thus, the SBIR Phase I proposed project outlined the completion of the following deliverables and milestones: 1. Completion of a technical specification for building a prototype of this ad exchange system; 2. Demonstration of the ad exchange system in a test bed; 3. Deployment of a pilot and preparation of a report on the efficacy of the model, and presentation of the results of simulations and experiments of technology and model at conferences; 4. Initiation of the process of publishing papers on the technology and model in technical journals. The SBIR Phase I project successfully achieved the key objectives as described above and provided the framework for further dissemination of the research results to the community via publications and discussions at relevant upcoming professional conferences. First, MetaNet developed a complete specification for the AdX framework and successfully implemented a prototype of a third generation ad exchange, and deployed a pilot of the prototype within a live in-vivo test bed with actual users to provide deeper customer insights - see Figure 1 and Figure 2. The pilot was initiated on-schedule in December 2012 and currently continues to be in operation. MetaNet successfully managed to make agile adjustments dynamically to the architecture and implementation, which met the project schedule, and exceeded the proposed feature set. By the end of the SBIR Phase I project, MetaNet incorporated significantly more important features than originally planned such as a more refined user experience, thus allowing it to be marketable as a second-generation ad serving solution. MetaNet’s vision and model for ad server evolution spans three generations: (i) a first- generation ad server that simply publishes a limited number of ad formats based on ad rotation schedules, (ii) a second-generation ad server that publishes an extensible number of ad formats based on contextual information via single-sided auction technology, and (iii) a third-generation ad server that is able to publish radically new types of ad formats and business processes based on a double-sided exchange technology. MetaNe's prototype was expected only to deliver first generation functionality, with a demonstration of new technologies, however AdX incorporates much of the robust functionality required for a second-generation ad server. MetaNet implemented the key functionalities of foundational order management, position management and execution management systems, which provide advertisers with the ability to create, purchase, manage and express advertisements served in a variety of ad formats and methods. Users were able to browse web content and see contextually targeted ads. A functional administrative system was also completed – this system provides control and administration functionality for both the media partner and exchange operators. Additionally, initial functionality in the form of dashboards for advertisers was created, as well as e-commerce and transactional capabilities, and initial contextual and demographic targeting functionality. Most importantly, via this prototype and pilot, we were able to learn more about the real and unarticulated needs of users, advertisers and media partners to inform our design and marketability. Additionally, during the course of development, a new type of advertising was invented – an innovative format that is potentially patentable - and also, we were able to conceptualize an innovative new way to implement viral marketing. However, the limited scope of the SBIR Phase I project precluded the full development of these new functionalities, although we were able to complete the requirements analysis, design, and initial exploratory coding on these two new features for a third-generation ad service. Also, upon completing the prototype, MetaNet immediately launched a continuous pilot program, in which we were able to collect some operational and user impact data. This data has provided us with valuable insights and validations. Additionally, the research performed by our academic collaborative partner, Carnegie Mellon University (CMU), has led to compelling ideas for papers, but further work is required to obtain a comprehensive data collection effort, including additional engineering to implement certain hypotheses for testing. MetaNet proposes to implement and test some of these approaches in the SBIR Phase II project.
