Joe Zawadzki's traders spend their days in front of two computer screens, feeding their systems with data and trying to perfect their trading algorithms.
But they are not analyzing stocks. They are analyzing advertising.
In particular, they are analyzing the activity on advertising exchanges, where companies bid to place their online ads on space provided by publishers. As advertising exchanges gain popularity -- Yahoo, Google and Microsoft have all moved into this arena recently -- Madison Avenue is borrowing tactics from Wall Street. It is reminding some people of what happened when technology came to the stock exchange, including the arrival of trading advisers like Zawadzki's firm, MediaMath, that are running numbers and promising to offer sophisticated financial instruments.
"Right now it's more the in-the-moment, taking advantage of the spot market with aggressive bid management," said Zawadzki, whose firm is based in New York. "But we're certainly thinking about where that goes later in terms of secondary markets, derivatives, options, hedges, all the rest."
Big publishers try to sell Web site advertising space through their sales forces at high prices. Most cannot sell all of their inventory, so they send the leftover, or remnant, space to an ad network or to an ad exchange. These deliver an ad, but at lower prices than the publishers' sales forces fetch -- usually around $1 per thousand impressions, as opposed to the $20 and up that the top sites' sales forces ask for.
In 2007, exchanges accounted for about 15 percent of the remnant inventory and about 5 percent of online display advertising over all, according to research from ThinkPanmure. The major appeal of exchanges is that with some analysis, advertisers can buy ads one by one and track the performance of each ad. This contrasts with ad networks, which roll up broad audiences for advertisers, often...

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