Commentary

Private Exchanges And 'Velvet Rope' Access To Inventory

An audience member at Tuesday’s Programmatic Insider Summit in Scottsdale, AZ, told the private exchange panel that he has been told from some “open market exchange people” to look into private marketplaces because his company isn’t winning enough bids on the open exchanges.

How common is this, the ad buyer wondered, and is it a legitimate suggestion?

Brian Brownie, director of advertising operations at eBay, noted that a common misconception is that supply is limited in private marketplaces; that if an ad-buyer is worried about entering a private marketplace because it will limit their scope, that isn’t necessarily true. (Obviously, it depends on which private marketplaces are joined.)

“The supply is not necessarily limited by the fact that the priority has now changed,” said Brownie. “[On the open exchange], there are 10,000 buyers, and everybody is level,” he exclaimed. “Then you step into the private world, and you have 100 buyers. The inventory is the same -- it just means they get to go in through the velvet rope.”

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Brian Nadres, director of programmatic media buying at The Media Kitchen, said marketers can look for cues to inquire about private marketplaces based on how their open exchange campaigns are performing.

If a single publisher keeps popping up on open exchanges -- indicating that it's a site that attracts the same audience you are looking for -- Nadres remarked, “that’s worth looking into potentially having a private deal for.”

“Chances are that publisher’s waterfall isn’t flexible enough to handle an open exchange outbidding someone with a direct deal [or private marketplace deal],” Nadres added.

Inflexible waterfalls are, in fact, an issue. Last summer, OpenX said it saw a publisher miss out on a $1,300 bid from an open exchange buyer because the publisher had a direct deal in place, and the direct deal trumped all open exchange asks. The impression went for $10.

“It’s worth having that conversation directly with that seller, saying, ‘I’m hitting you a lot,’” Nadres said. “[At the very least], you could ask them to learn more about what you have been buying.”

So not only do marketers move up the “waterfall” by joining private exchanges -- getting “velvet rope” access to inventory in the process, as Brownie puts it -- but it also gives marketers the potential of prying open the proverbial black box to learn more about the inventory they are purchasing.

This article initially appeared as a "Show Daily" post during day two -- Tuesday, March 24 -- of the 2015 Programmatic Insider Summit in Scottsdale, AZ. The event continues through March 25 and can be followed live here.

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