If you are in the internet advertising business, you need to understand how NexTag works. Simply put: they buy low and sell high. Except instead of stocks, NexTag buys leads. Then they auction them to the highest bidder. Great business model.

So what? WIIFM* you ask? NexTag can do this because they have great metrics on markets, how much leads cost no matter how they acquire them (from TV, radio, Google, banner ads, anywhere). Since they know all that, they can move quickly to buy and sell leads.

So if you advertise on the internet in any high volume space (travel, education, autos, consumer electronics), you are competing against several companies like NexTag that have a real good feedback system. Do you know your up to the minute conversion rate and profit margin on the current ad campaign you are running? If not, you better think about how long you can afford to play against companies like NexTag.

PS. A quick interview with NexTag's CEO on a shopping blog.

* WIFM = "What's in it for me?"

¶ 3/28/2005