Why Publishers Should Implement An Ad Trading Strategy

Some UK agencies are now setting up specialist ad trading divisions to leverage the buying potential of the growing exchange marketplace. Most are working with outside specialists to maximise the return on their clients’ online media buys.
Using data and ad exchanges, they are returning better results for brands and marketers. But still the publisher, the source of online ad inventory, fails to embrace the model. They seem to be backing off for fear of cannibalising their premium inventory.
Publishers view the exchanges as a convenient dumping ground for remnant ad space. This could be damaging their bottom line, as figures from a recent report show they could be missing out on opportunities to increase their ad revenue.
Research firm ThinkEquity estimates that advertising around Web publishers’ extra space totalled $4.1 billion dollars last year. The majority of this inventory sale was facilitated by the growing exchange marketplace. Platforms like Right Media Exchange, Adsdaq and OpenX Market are all contributing to the fastest growing segment of online advertising. And with Google’s “super exchange” rumored to be on its way, performance- based display advertising is set to even overtake search.
But still not enough publishers consider the exchange marketplace a strong area for revenue generation – with most having little appetite to investigate the real potential of these new platforms.
For this reason buyers have been dictating the price of inventory – prices that have been well below the publisher’s CPM asking price. Why? Is it because of an excess of inventory? I don’t think so. Good sites with an in-depth knowledge of their audience are in a position to demand a higher price. The new exchange model is about audience, not individual sites. Data is becoming paramount when buying online media space.
Publishers need to get smart about their audience and data, and try to package both to advertisers and agencies. A more competitive price for unsold inventory on publishers’ sites will be achieved when they start bundling data and impressions for specific audiences.
Hiring “ad traders” to trade in real time with media buyers and sellers on the exchange could help them realise the financial potential of their online users. An ad trader for a large financial publisher like the FT, for instance, could specialise in buying and selling business audiences.
The ad trader would have access to the FT’s impressions and data. But there’s no reason why the trader couldn’t buy impressions on other financial specific sites, bundle them with FT’s inventory and arbitrage them on the various exchanges. Or, more importantly, provide advertisers with a bigger reach and better targeting capabilities for online ad campaigns.
Let’s say a mobile phone manufacturer would like to reach a specific business audience about a new smart phone product line in the UK and Europe. The financial publisher can target the UK audience, but is lacking traffic from Europe. It has strong data on UK business audiences, but again has little European specifics.
Enter the “ad trader”. Using the exchanges, such as Right Media, OpenX Market, Bluekai or Exelate, the additional cookie data and page impressions for that European business audience can be purchased, allowing the publisher to get a bigger share of the media buy.
This is only one scenario where an “ad trader” could increase revenue. As the exchange marketplace becomes more sophisticated, more opportunities will emerge for “ad traders” – especially when real-time bidding becomes available. This is probably why the large publishers should now consider implementing an “ad exchange strategy”.