Is 'Public Vs. Private Exchange' The Wrong Question?

The digital ad industry is on the cusp of a seismic shift.

We need look no further than the interview of GroupM's Ari Bluman posted recently.  Joe Mandese asked tough, thoughtful questions and Bluman came back with tough, thoughtful answers. He made a lot of excellent points about fraud, waste, and the fact that today’s often out-of-control ad tech ecosystem is getting in the way of advertisers getting the return they deserve on their digital investments.

Exchanges have embraced the use of data-driven programmatic technologies that originated in the RTB space to automate deals for premium inventory. And this is certainly an improvement over the traditional manual processes that continue to bog down overworked media planners and buyers.

But the Holy Grail for the industry will be when advertisers have broad, automated access to premium inventory as they do for the “long-tail” content offered through auctions. Premium publishers are now looking at programmatic to better manage their selling process.

But it shouldn’t be an either/or proposition between RTB or buying premium inventory programmatically. There is a need and room for both. What works for GroupM and its clients may not necessarily work for other agencies and advertisers. The common thread, though, is that technology is needed and is being used to make smarter business decisions today in media.

The fact is broadcast has had more than 60 years to mature in that regard, and it’s still trying to figure itself out with the advent of fragmentation. On the digital side, there have been and will continue to be challenges and ongoing debates about what works and what doesn’t. And there are still plenty of innovations to come in the fast-paced, nascent world of advertising technology that will cause strategies to be revisited, yet again, down the road.

The same is happening on the fraud front, where software to combat bots and ensure viewability and safe ad environments is constantly being challenged by international criminals. Innovations in ad safety will be necessary regardless of the transaction type an advertiser or agency prefers -- direct deal, PMP, open exchange, programmatic direct, etc. -- so it’s important for the industry to continue to stay vigilant and develop multilateral approaches to deal with these issues.

At the end of the day, while the manner in which data-driven technology is being applied is clearly shifting, the efficiencies it brings are certainly here to stay. So, while the industry debate today is centered on open exchanges vs. private exchanges, the underlying questions are really about whether business outcomes are being met -- and, most importantly, that engaging with viewers is as efficient and transparent as possible.

The way that happens is up to buyers to decide for themselves.

1 comment about "Is 'Public Vs. Private Exchange' The Wrong Question?".
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  1. Henry Blaufox from Dragon360, July 15, 2014 at 1:19 p.m.

    Gabriner notes "The fact is broadcast has had more than 60 years to mature in that regard, and it’s still trying to figure itself out..." keep in mind the vastly different economics of broadcast and digital. Broadcast ad time inventory is limited, creating scarcity, which helps drive high prices (especially compared to online) and comfortable margins. That has allowed the personalized seller/buyer relationship to thrive, and limited the need for technological change. Business critical technology adoption entails dramatic change, and organizations rarely change unless the pain of not doing so is greater than staying in place.

    Digital advertising economics is completely different, so changing to achieve profitability is essential. This is particularly the case where online has supplanted much more lucrative models, notably print. Since no one has found a satisfactory automation process yet, changes will continue.

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