Purgatory for Ad Exchanges

Thoughtful MediaPost article from Cory Treffiletti of Catalyst while I was out.

His basic point is that Ad Exchanges in their current incarnations have failed to live up to the promise of “ad exchange” as a concept.  I agree.  As Cory points out, current exchanges require too much effort and involve too many compromises for both advertiser and publisher for them to become a critical piece of the advertising technology “stack”.  Current exchanges can be effective for some direct marketers where CPA is essentially their only requirement, but they fall far short of many advertisers’ – particularly brand advertisers’ – requirements.  Without some changes for all parties in the value chain, unfortunately I think Cory may be right; the pendulum may swing back towards more custom solutions.  I think that would be lost opportunity so I’d like to make some suggestions about how to improve from the status quo.

Here’s what needs to change:

Exchanges: Embrace the reality that brand marketers are essential to the health of the online ecosystem.  Many, most campaigns cannot be reduced to a CPA – an issue I have discussed at length.  In order to become critical infrastructure, exchanges must build for brand requirements as well.  This means content quality filtering, R/F management, composition management and smooth guaranteed delivery.

Publishers: Open inventory to competition from multiple sales channels.  Remove barriers to revenue and efficiency in the form of advertiser block lists.  Manage channel conflict using other tools.

Advertisers: (yes, you’re part of the problem) Embrace efficiency for some portion of your buy.  Consider that a streamlined, scalable operational process for a more standardized buy may deliver better results when considering all costs (media, headcount, serving fees, etc) than a less efficient process for a more customized buy.  For example, consider whether non-standard creative (integrations, expandable units etc), fine flighting, custom targeting with limited scale are delivering results in-line with the significant operational friction they create.

These steps are not easy, but they are essential to building a long-term scalable advertising ecosystem.  Let us know how we can help.

About Andy Atherton
I am currently an SVP at AppNexus. I previously spent four years as COO and cofounder of Brand.net, a pioneer in programmatic reserve technology and leading digital media buying solution for top brands. Prior to Brand.net, I was Vice President of Pricing and Yield Management for Yahoo!, responsible for maximizing monetization of a global portfolio of display inventory worth $2B annually. Beginning in 2002, I created, developed and globalized Yahoo’s PYM function over a period of five years. Prior to Yahoo!, I was president and cofounder of Optivo, a venture-backed start-up that developed price optimization software for e-commerce retailers. More on LinkedIn...

One Response to Purgatory for Ad Exchanges

  1. Pingback: New OPA Study Featured In WSJ; Rubicon Project Partners With Katz; Yahoo!’s Zinman on Exchanges; Quantcast Responds

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