For years now, many big-name publishers have resisted the siren song of digital ad exchanges. True, the exchanges offer companies the possibility that they can move more of their inventory while cutting out the ad networks that traditionally serve as middlemen, but the risk of putting further pressure on their ad rates seem to outweigh the benefits.
Now, several publishers, from NBC Universal to Time Inc. to IDG, are opting for a third way.
They’re setting up private exchanges that allow them to retain a semblance of control over pricing and quality, and avoid channel conflicts with their sales staffs. Only certain buyers are welcome, and there are strict rules about what’s for sale and at what price.
The gambit is due to a realization by publishers that ad sales are inexorably moving toward exchanges, which allow much of the legwork to be handled computer to computer in real time. The controlled environment of a private exchange is thought of by both agencies and publishers as a way to attract higher-priced ads from well-known brands. And if they take off, these new marketplaces could speed a huge shift in the ad-buying world. Say goodbye to the stereotypical dinner-and-cocktails sales life as teams are made redundant by data-driven buys.
In general, ad exchanges are “so much more efficient than any [other] kind of buying,” said Zach Coelius, CEO of Triggit, a demand-side platform used by advertisers to buy from exchanges. Savings in staff costs, especially, really “put pressure on your other ways of buying,” Coelius said.
Last week, Computer World parent IDG became the latest large publisher to move into exchanges. It’s following in the footsteps of companies including NBC Universal, whose six-month-old private exchange hooks in with trading desks at the major ad holding companies.
These moves come as more dollars are flowing through ad exchanges. At Publicis Groupe, for instance, its Audience on Demand trading desk unit ran over 6,000 campaigns for 150 clients in the past year. Meanwhile, according to new figures released by Google, publishers on its DoubleClick Ad Exchange now see 188 percent more revenue than they would from fixed upfront sales of nonguaranteed display advertising, and CPMs on exchanges that use Triggit have risen to the point where they now average $3. All told, according to Forrester Research, exchanges accounted for about $600 million worth of business last year.
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