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Web Publishers Fear Agencies' Demand-Side Platforms

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Top tier Web publishers–already wary of ad networks and exchanges–are growing increasingly squeamish about the potential impact of demand-side buying platforms created by the top agency holding companies.

According to sources, several publishers have discussed banding together to establish their own publisher-centric ad platform, designed to protect pricing and data for premium sites.

Some sites are advocating for the creation of some sort of top publisher ad network; a handful are even said to be mulling whether they should just say no to selling inventory to demand-side platforms such as Publicis’ VivaKi and Havas’ Adnetik.

At issue is the industry’s overarching fear of being further commoditized and disintermediated. In the last 18 months, the online publishing business has been rocked by a brutal recession and an ever-worsening overabundance of inventory, making business conditions bad enough already for sellers.

Adding to the mix has been the emergence of ad exchanges shepherded by the Web’s biggest companies—Google, Yahoo and soon Microsoft—along with new companies introduced by agency holding companies focused on purchasing avails for clients at scale.

Both these platforms are built on the premise of buying Web audiences using data and technology rather than selling ad placements alongside specified editorial.

All this has put some publishers into panic mode. “Everyone is in the process of evaluating these platforms,” said Pam Horan, president of the Online Publishers Association. “Some are really considering embracing it. Others, based on their experience with ad networks, feel that it is not something that makes sense for their business.”

Some sales execs (most commented only on condition of anonymity) have already made their mind up about exchanges: They are a place for bottom-of-the-barrel avails. Media heavyweights like ESPN, Weather Channel, Turner and Martha Stewart Living Omnimedia continue to eschew both ad networks and exchanges. “We did experiment with ad networks and exchanges,” said MSLO’s Christine Cook, senior vp, digital sales. “But they weren’t serving us or our business as well as we could serve it directly.”

But if exchanges have some publishers worried, demand-side buying platforms are causing sites to be downright fearful. Often viewed as agencies’ versions of ad networks, these platforms are designed around the concept of real-time bidding. Either via exchanges or their own technology, companies such as Adnetik can automatically buy online media from publishers at the last second based on various preset parameters (target audience, performance history, etc).

Each company’s model is different, but some worry agencies will buy tons of cheap inventory upfront from publishers, and then resell it to individual clients at a marked up price. “They scare me more than networks,” said one publishing exec. As another seller explained it, agencies present their own demand-side platforms as coming from trusted partners—but they act just like ad nets looking for the cheapest possible inventory.

Not everyone in the publishing world is looking to pick a fight with agencies. Kyoo Kim, vp sales, MSNBC.com, points the finger at Web publishers for not embracing technology fast enough over the past few years when the ad market was strong.

That said, though Kim would prefer to partner with the VivaKis of the world, he is deeply concerned about the prospect of them buying his inventory once, then leveraging that user data on other sites. Demand-side platforms, he said, “can see our audience across the Web and don’t have to come back to a publisher’s site again. That’s scary.”

Kim has proposed a data exchange on which demand-side platforms could access such information—but at a premium. Per sources, about a dozen of the Web’s biggest publishers met last week with the Rubicon Project (which helps them manage inventory and pricing) about creating a selling platform through which sites could set rules on pricing, transparency and data.

Agencies don’t appear worried their platforms are in danger. “Publishers should be having these conversations,” said Nathan Woodman, managing director of Havas’ Adnetik.

Woodman said he continues to hear publishers’ concerns about being commoditized by demand -side platforms and believes that sites would benefit from getting more organized and tech-savvy for the inevitable changes in online media buying. “I talk to a lot of publishers, and I haven’t found one that has said, ‘This is not going to be the way that the majority of inventory will be sold.’ They all have anxiety about when.”

But others have serious doubts about that perceived inevitability. Former Forbes.com CEO Jim Spanfeller, who manages his own consultancy, sees a place for exchanges, but believes that the drive behind demand-side platforms is more about agencies’ need for self-preservation than actually addressing an industry need. “I don’t see it working,” he said.

Brian Lesser, general manager, WPP’s Media Innovation Group, sees things moving a lot slower. He predicted that maybe 5 percent of online media might end up being sold via demand-side platforms over the next year or so. But already, WPP’s own B3 division has executed buys for 70 clients on 1,100 sites. “I don’t think it’s going to evolve as quickly as the industry is talking about,” he said. “It will never be how all media is bought.”