MarketingVOX pointed me to a an article at The Wall Street Journal today that talks about ways in which online advertising is slowly becoming more and more like the stock market. Ad exchanges and marketplaces are hot. Look at recent acquisitions from the big players in search advertising. Almost every search engine now owns some sort of ad exchange/marketplace.

It got me thinking about online advertising as a stock exchange. I’m not sure the principles line up the same. But it’s an interesting idea none the less.

The basic idea behind the stock market is to buy low and sell high. A lot of factors can determine whether a company’s stock price drops, flatlines, or goes up. One of the main Generally speaking… you want the price of the stock to go up after you’ve bought it and once it reaches a certain level… you get rid of it.

Ad costs work the same way… to an extent. A website’s performance affect how much advertising on that site costs. Sites with few visitors are generally cheaper options for advertising. As a site grows in popularity, so too does the cost of an ad on the site. But in stark contrast to a rising stock price, a rising ad cost doesn’t usually signal a time to drop the ad.

But that’s also why it’s so important to monitor the ROI of any online ad. You may think it sounds great to get a big ad on the front page of a website for $10 a month. But if that site is sending you no traffic and no conversions… that’s $10 wasted. On the other hand, an ad that costs $1000 on the front page of a wildly popular website might send you tens of thousands of dollars in conversions. That’s a good ROI and, unlike a high-priced stock, you wouldn’t want to drop that ad.

So while I can see some similarities in the ways ads might be purchased, there’s a big difference in the actual dynamics of the stock market and online advertising. The bidding reminds me more of eBay than anything else. But I can see the connection being drawn between ad exchanges/marketplaces and the selling of commodities.

Just remember: when it comes to online advertising… it’s not always wise to sell high.