The news over the last two weeks that some of Australia’s largest online publishers were at an advanced stage of working together to build a private ad exchange should be looked at as overwhelmingly positive. Reports indicate that mi9, Fairfax, News Limited and Yahoo!7 are working together to establish a private ad exchange to compete head-on with Google.
Currently, Google operates two key businesses in this category, the Doubleclick Ad Exchange and the Doubleclick Bid Manager (formerly known as Invite Media). The Doubleclick Ad Exchange allows agencies to buy across Google’s assembled network of publisher sites and the Doubleclick Bid Manager allows agencies and advertisers to use their own data to carve up inventory across the exchange, meaning they can target users based on their interactions with their brand or via a host of audience selection filters.
This style of trading is becoming increasingly popular for many reasons. For one, it offers the buyer a strong bargaining position which is, from all reports, driving down display inventory costs. Second, the data collected through this method offers appealing targeting filters for agencies (based on interests and activity, as well as demographic and location). Third, it plugs nicely into agency trading desks, which are becoming a significant contributor to media agency (and holding company) revenue. Lastly, it is an efficient way of buying and selling large quantities of inventory as the process is automated – removing the requirement for as much human involvement in media transacted through this form of bidding.
Large, established local publishers feel this approach is driving down what they can charge for their inventory and more importantly, commoditising all display inventories in a similar fashion. They argue that not all inventory is created equal, and inventory that exists within trusted, professionally produced environments should be worth more than say, amateur content produced purely for SEO purposes serving 10 advertisements per page. The local established players argue their inventory is premium, while a large chunk existing on other platforms such as Google’s Doubleclick Exchange are not.
'Premium' is ultimately in the eye of the beholder, so it is hard to make a call either way on the merits of one form of inventory over another. But this move to create a premium private exchange is a very positive development as it indicates that for the first time Australia’s larger publishers have considered a legitimate alliance as the best way of competing within a new market. They will either try and win together or more than likely fail individually.
For a collective like this to work, a few things need to happen. For one, the area of automated bidding and advertising exchanges needs some oxygen at the client level. It is, by design, confusing and intricate. Marketers juggling numerous tasks – advertising being only one of them – do not have the time nor headspace to fully understand the varied intricacies of the often murky world of the ad exchange. A big publisher collective needs to demystify this area and also bring to the attention of client level senior marketers the risks associated with ‘buying blind’ – buying inventory across an undisclosed pool of sites. By better engaging at the client level, a collective will seek to influence the decisions they make regarding their media agencies recommendations. Ultimately a collective is seeking to take share away from other exchanges and networks, and to do this will need to demonstrate how its collective product is safer for brands. Full transparency of topline publisher brands is an excellent first step to create tension with advertisers around associating their brands with anonymous sites.
Second, this collective will need to appropriately categorise inventory based on the content it runs alongside. Above the fold, below the fold, editorial, photo galleries, syndicated content, services, social, comments, video – all of these are generally associated with a level of interaction the advertiser can value. A collective will need to lead the market in terms of transparency and ideally force a new way for automated ad exchanges to work when it comes to rating the quality of inventory. Again, more transparency around placement combined with more transparency around publisher will surely be welcomed by advertisers.
Third, the inventory of the four reported founding partners isn’t enough to allow this idea to really fly. The idea of a ‘big 4’ or ‘big 5’ publisher group in Australia is now redundant. There are numerous premium players in the market and for a private exchange to really fire it needs the majority of them. Which means that Fairfax, News, Yahoo and mi9 will need to eventually be joined by REA, CBS, Telstra Media assets (such as AFL, NRL, V8 Supercars, Bigpond), MCN, Sound Alliance, Bauer, Seek and Carsales, as well as international sites with strong local usage such as The Guardian, BBC, New York Times, AOL and ESPN. The ideal end result is there are two types of ad exchange/ad network – the one with the sites you have heard of, and the others with the sites no one has really heard of. This will also open up more lucrative audience extension products. This will require extreme diplomacy and industry wide acknowledgement that it is better to try and win together than likely lose individually.
Last, it must ensure the inventory is available across devices – desktop, mobile and tablet. A desktop/browser only network will be limited from the start. A collective needs to be device agnostic and it must allow advertisers to utilise their own data.
The focus on ad exchanges has been particularly strong of late within the trade press, with Adweek particularly scathing. “If you spend enough time in the murky world of ad exchanges, ad tech middlemen and real-time bidding software, you might come away wondering why any major brand even bothers with online advertising," it said. "Not only are banners dull and click through rates low, but all the technology flooding the industry promising perfect targeting perfection can't even deliver real human audiences much of the time."
So if the reports are true, timing wise it probably couldn’t be better for a local publisher collective exchange to begin. Why it has taken so long to happen is perhaps a question for another time, but a combined effort from our larger content creators to take charge of their inventory and outcomes is a positive one.