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43

  • 64.

    The notifying party also submitted that currently, "if a publisher is using both the DoubleClick Advertising Exchange and DFP, the Ad Exchange can dynamically choose the highest revenue ad as between a direct sale by the publisher's website and sale through the Ad Exchange". DoubleClick could also develop the same functionality between Ad Exchange and another third party's ad serving technology. The fact that the arbitration performed by DoubleClick’s Exchange allows a dynamic choice between the best yielding ads does not imply that other intermediaries apply a similar technology. However, a conclusion regarding the structure of a relevant market cannot be drawn on the basis of a single firm's practice.

  • 65.

    Several respondents to the Commission's market investigation, both on the customers' and on the competitors' side, supported the distinction: direct sales through a publisher's own sales forces involve high fixed costs that would be difficult to sustain for small publishers43.

  • 66.

    On the other hand, the majority of the replies from intermediaries indicate that direct sales and intermediated sales are perceived as competing with each other. It has been observed that, in both channels, the economic purpose is the same, that is, to sell advertising space in order to gain revenues, the presence of an intermediary being irrelevant in this respect.

  • 67.

    The Commission's investigation also highlighted that, when a web publisher has to decide how to sell his/her inventory, he/she makes a choice based on profit maximizing purposes. It is an uncontested reality in the market that the best yielding inventory ("premium") is more attractive for advertisers and is generally sold directly. Publishers invest in their sales forces in order to gain better revenues, and consequently, try to sell as much ad space as possible through this channel. With regard to remnant inventory, which has a less prominent position on the web pages and therefore has a lesser value, publishers in general choose to sell through the intermediation channel, which involves lower costs. Selling additional inventory, in particular less valuable space, through direct negotiations implies additional costs (as would result from the need for more sales personnel) hence reducing the profitability of the space sold whereas the costs of selling that space through intermediaries is lower. This does not exclude the fact that publishers can “pre-empt” some of their advertising space for direct sales and that, in case the negotiation is not concluded or does not yield sufficient revenues, they can “steer” the sale to an intermediary. Therefore, for larger publishers which use both the direct and the indirect channel, direct sales are not necessarily an alternative for their remnant inventory or, at least, for part of it.

See, on the customers' side, AT&T's reply to questions 20 and 21 of the "customer questionnaire 1" and WPP's submission of 8 October 2007, at para 2.21. On the competitor' side, see Microsoft's reply to question 23 of competitors questionnaire; Yahoo!'s reply to question 24 of the competitors questionnaire; True effect's reply to question 23 of the competitors' questionnaire; Linkshare's reply to question 24 of the competitors' questionnaire. This would suggest that “remnant” inventory is not a matter of quality of the publisher but just a matter of its scale, not justifying direct sales because of the cost of having its own sales force.

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