Opening Up on Private Exchanges: Q&A With Andrew Casale, VP of Strategy, Casale Media

Though thoroughly hyped on their arrival, it’s no secret that private exchanges haven’t proven themselves revenue powerhouses yet – why that is and what behaviors need to change on the buy and sell sides is something we’ll discuss in depth at OPS Markets, April 18 in NYC. Until then, Andrew Casale, VP of Strategy for Casale Media, was kind enough to share Casale’s experience so far in powering a private exchange for GateHouse Media. Below he speaks to the biggest challenges and suggests how pubs can make private exchanges more appealing to buyers.

Why is a publisher like GateHouse Media interested in a private exchange? Can the model work better for certain types of publishers?

For GateHouse, their private exchange is a way to bring more national advertising to the company’s 400+ local media properties without having to leverage a regional sales force or a third-party ad network. In addition, the exchange allows GateHouse to communicate directly with agency trading desks. As with all private exchanges, the goal here is to fill a gap between inventory sold by their direct salesforce and premium, remnant inventory. The model is not for every publisher, though, because you also need scale. Private exchanges work best for publisher brands of a high recognition level with sufficient impressions and sizeable, unique reach in order to gain interest from the agency community.

What are the biggest difficulties in establishing and maintaining a private exchange?

Private exchange success hinges on making the publisher’s brand known to all of the key agency trading desks, independent trading desks and demand side platforms that buy on behalf of their own managed buying services. In addition, publishers must have a compelling way to articulate the value of their private exchange separate from their open marketplace. Depending on the design of the private exchange, a publisher might need to specifically carve out impressions with the highest value and worth in order to bring something differentiated and unique to the table when pitching the demand side. At Casale Media, we’re seeing a huge buy-side desire to enhance real-time bidding supply strategies with publisher direct deals, but it will continue to take time for these deals to unfold.

Grumblings around the ad tech world suggest that private marketplaces haven’t been revenue goldmines yet. What obstacles are keeping ad dollars from flowing through these channels?

The first iteration of private marketplace did not have strong enough technology behind the RTB transactions. In the past two quarters, though, we have developed technology with the sophistication to facilitate granular transactions down to the advertiser brand or campaign and unique pricing models for each transaction. Plus, direct deals allow us to transact down to the most granular level with a DSP – all automated and in real-time – to build out different deal terms and pricing strategies depending on specific products and their unique campaign goals. For example, we can take a major telecom brand that has disparate product offerings with a combination of direct response and brand-focused campaigns and build out individual deal terms and pricing strategies.

What can publishers do to make private exchanges more appealing to media buyers?

I would recommend that publishers focus on helping the agency community understand what they’ll be getting from the private exchange that they’re not already buying in the open market. In addition, there are three other tactics publishers could try. First, carve out blocks on inventory from the open market so they are only available in private deals. Second, offer more transparency in a private environment than in the open market. Lastly, offer up first-party data, if available, to your private buyers to better guide buying.

How do you feel the automated media buying landscape will change this year?

In my mind there will be three changes. Publisher provided data will become a common differentiator because the buy side has expressed interest in buying audience more than content, so publishers who maintain their own data will be uniquely valuable. Next, differentiating between viewable and non-viewable impressions within an environmental context will come together faster than forecasted. Finally, cross-channel private marketplaces will become increasingly common as publishers look to integrate video and mobile into their exchanges in addition to display.

OPS Markets

Up to date on the latest happenings in the automated trading space? OPS Markets will bring digital advertising leaders and ops professionals together to discuss and develop best practices for operational excellence in the evolving automated landscape. Register today for OPS Markets, which will be held April 18, 2012, in New York.