Why the private RTB marketplace is the future of publisher monetization

Posted by Gregory Kennedy on June 9th, 2014 at 7:00 am

In spite of its obvious efficiencies, RTB or Real-Time Bidding of ad placements on the PC web continues to be dominated by direct response advertisers buying remnant inventory. While many attempts have been made, premium publishers remain reluctant to put their inventory on public exchanges. They fear a “race to the bottom” in CPMs, as they compete against the sheer volume of impressions thrown off by social media, email and other utility type sites.

In mobile, the RTB ecosystem is evolving differently. New approaches, better technology and smarter implementation methods are emerging that promise to overcome many of the hurdles that RTB still faces on the PC Web. It’s the private marketplace model in particular that’s gaining traction and helping lead the way forward for premium RTB. This set up allows premium publishers to control their inventory and overcome the public RTB exchange pitfalls.

Avoiding the “Race to the Bottom” for Prices Seen on Public Exchanges

On the public exchange, it’s hard for premium publishers to differentiate. On these exchanges, buyers see their inventory as a small portion of very large pool of low quality impressions. There is little information available to help buyers make decisions. Most RTB exchanges only provide a source URL to define the inventory. This favors the mega providers who have literally billions of impressions they want to offload. Because it’s all happening in real-time, in many cases RTB ends up reducing the value of premium inventory. Conversely, RTB should be increasing inventory value by increasing the competition between buyers.

Premium publishers, particularly in mobile, have found that deploying a private exchange can help mitigate the CPM drop they experience on a public exchange. There are four major reasons for this. A private exchange allows for 1) the ability to set CPM floor minimums 2) the creation of an approved list of buyer tiers or whitelists 3) making actionable unique first party data to buyers and 4) the ability to market a private exchange separately from the public exchange.

Making First Party Data Actionable to Trusted Buyers is Key

Making first party data actionable is the core component that significantly increases the value of premium inventory. Most premium publishers have lots of great data about their users. The private exchange allows them to easily to capitalize on that data and get a premium for it. On a public exchange, if a premium publisher makes their data available to buyers, they face a host of issues, such as data scraping. This is where unscrupulous buyers, ad networks and other third parties scrape the public data from the exchange. They then cross reference it with other data and resell it, all without the publisher’s knowledge or control. This hurts the publisher’s brand, as unknown third parties sell targeting that’s of poor quality due to limited data access.

A private exchange easily solves this problem, because buyers can only access a premium publisher’s inventory through their private exchange. Also, the buyer must adhere to the rules and policies that the publisher puts in place. The data, targeting and impressions are all protected inside a walled garden that’s within the publisher’s controls.

Worries About RTB Cannibalizing Direct Sales are Unfounded

Most large media companies and their digital divisions worry that RTB and automation will cannibalize their direct sales, that in turn will reduce CPMs across the board. This “horror story” scenario is just not true. Any high quality private exchange technology provider should have the systems in place to manage a publisher’s direct-sold campaigns. In fact, they can give preference to direct-sold campaigns over all the other buyers on the exchange. This ensures delivery of direct sold campaigns in full. In this scenario, automated buying is used to fill the gap of unsold impressions. Blinded

Private RTB Exchanges Maximize Revenue

With RTB in place, large publishers can actually earn more money by easily monetizing their international traffic. Most publishers are leaving money on the table, and not effectively maximizing international sales. Why? Because publishers don’t have the impression volume in those regions required to sell the inventory directly. The RTB exchange model allows publishers to sell this traffic to demand side platforms that specialize in repackaging and selling of global traffic. These specific inventory pools can be blinded to prevent data scraping issue through international sales.
The same technique, repackaging excess inventory, can be applied in reverse. Most media companies own a number of small niche sites. Offering them on the RTB exchange as one single buying source is an easy way to maximize sales. With a private exchange in place, it’s also possible to apply unique first-party targeting data to the inventory, which vastly improves its value. As the industry evolves, the hurdles to getting RTB right for publishers are significant. Those who make the investment will be well positioned to reap the benefits.

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