How Publishers Can Leverage Private Exchanges to Solve Ad Problems
The constant emergence of new online advertising technology often creates an adoption gap, where skepticism and marketplace confusion prevent many key stakeholders on both the buy and sell sides from implementing new technologies into their plans. We’re seeing it right now with real-time bidding (RTB), a technology that is experiencing buy-in from the buy side, but hesitation from publishers.
Publishers see RTB as another mechanism that commoditizes inventory and forces them to surrender control of sales. They’re failing to see that proper implementation of RTB actually gives them greater control, and that it can be used creatively to shape direct-sales strategy.
One common way publishers are doing this is through the private exchange model, which helps publishers set up RTB marketplaces for selling impressions in real-time, while tightly controlling who has access to that inventory.
Publishers have partly been reluctant to adopt RTB technology because it adds additional layers of technology between them and the buyers, giving the publisher less and less control over the ads appearing on their site. Private exchanges solve this problem by building a closer connection between buyer and seller. Because a publisher determines who has access, the publisher has a direct connection to the buyer. Think of the private exchange as a VIP poker room at a casino, where the publisher works the velvet rope and controls the minimum bid at the table by imposing pricing floors on the impressions.
These controls eliminate the fear of real-time buying cannibalizing direct-sold inventory. Private exchanges allow publishers to set aside certain kinds of inventory for pre-selected buying partners, and also assign each advertiser a weight, giving preferred partners an improved chance at buying an impression.
But beyond these basic controls, we’re seeing creative publishers use the technology in new ways to shape their direct-sales strategy, raise CPMs across the board, and combat some common ad-serving issues, especially in video.
One way is through the use of branded publisher networks that aggregate inventory from several sites under the same umbrella. A major video entity with multiple URLs, like a television network, can bucket inventory from multiple sites into one branded exchange, driving higher CPMs. Giving buyers access to premium third-party inventory in this way can lead them to invest even more into RTB because they can achieve greater scale.
Of course, publishers need to maintain a level of transparency with buyers to protect their relationships. This means outlining potential URLs ahead of time, and providing as much information as possible about where the ads ran. Branded publisher networks help advertisers by exposing them to a similar audience across closely related sites. Advertisers make direct buys because they get the peace of mind of knowing those ads will appear in brand-safe environments. It’s crucial for publishers to recreate this assurance within a private exchange model through transparency and by using tools that promise brand safety.
Publishers can further tweak this tactic for distribution deals with third party sites, increasing inventory and offering greater scale within the private exchange without impacting the user experience. This is particularly helpful in video, where publishers are hesitant to add more ad impressions within the video content.
Still, one of the best uses of a private exchange is when smart publishers use their insights to influence their direct-sales strategy. When an advertiser like Ford uses a private exchange to target a very specific demographic, like 25 to 35 year old men, the publisher gains insight into Ford’s campaign. Their in-house sales team can then approach Ford, armed with detailed audience information, and present a plan for helping Ford find its target audience through a direct buy.
RTB shouldn’t be seen as a dramatic, detrimental change to the way publishers sell ads. Rather, each RTB sale should serve as bellwether for publishers looking across the landscape. When publishers employ the right kinds of tools to enable real-time ad sales, they’re not only helping advertisers, but also helping themselves.
LiveRail CEO Mark Trefgarne is one of numerous digital advertising leaders speaking OPS TV, which will bring together the future architects of digital monetization to discuss the intersection of digital video and TV advertising. Register today for OPS TV, which will be held July 11, 2012, in New York.
Mark Trefgarne is co-founder and CEO of LiveRail, one of the leading providers of technology for online video advertising. Mark is a business graduate of University College London and has worked in the internet sector for over 10 years; first at the UK's largest independent ISP and later as Managing Director of leading internet consultancy Cleartide, where he helped client companies devise and execute their internet strategies. Mark co-founded LiveRail in 2007 and is recognized as one of the foremost authorities on next-generation video advertising on the web and IPTV. Follow Mark @trefgarne.