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McGrory’s and Right Media’s Evolution: Part II

Written on
Jul 8, 2010 
Author
Gavin Dunaway  |
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McGrory’s and Right Media’s Evolution: Part II

yahoo_smallADOTAS – The most straightforward analogy is NASDAQ versus Goldman Sachs. The former is simply the platform where the buying and selling takes place; the latter serves as a brokerage, an intermediary between buyer and seller.

No, an ad exchange is not the same as an ad network — while a network is a principal in the actual media transaction, with a variety of relationships with buyers and sellers, an exchange is the underlying technology that enables the transaction but is not a principal in the transaction.

Still, that’s not always the easiest misperception to clear up, says Ramsey McGrory, head of Yahoo’s Right Media Exchange and vice president of North American Marketplaces, particularly when many ad networks try to pass themselves off as exchanges.

“They talk about that being an open market, but that ain’t it,” he says. “If the market is OK with having one big ad network, then that means everyone deals with the intermediary — the network — rather than dealing with each other. That provides marketing leverage for network to dictate price.”

The broader struggle is between open and closed, he says, machine versus network. The open market is a direct relationship between the buyer and seller simply facilitated by underlying technology, but there remains great confusion surrounding the meaning of being a party versus being an underlying technology

In what McGrory calls a natural transition or evolution, Right Media rebranded as a premium exchange in late 2009. The exchange grew up in the non-premium space and the crew felt like it was time to prune some of the undifferentiated demand and supply from the marketplace.

In a separate move, the division shut down the Direct Media Exchange, a move McGrory called a matter of focus. Right Media is aiming for the segment of the market best for building a most liquid marketplace, and the majority of the display space is in the head — 70% of display comes from the top 100 websites, he notes.

“If the game is won by having the most liquidity, than the head and torso should be the focus,” he says. “But as an industry, we have to get to a standard of what it means to be premium.”

It’s a multifaceted concept, starting with inventory valued over and above what a bid marketplace would say. However, there are numerous other factors: a contractual guarantee of delivery; transparency in where impression runs; since content too can be a form of premium, actual integration into content; and the last thing — the squishier thing that pubs hang their hats on, says McGrory — advertiser/user affinity to the site. Of course, he’s open to more facets if others would care to point them out.

Content integration is not something the exchange is set up to do, but brands on an exchange running ads in a brand-consistent environment, so achieving that goal may simply rely on getting good publishers on the exchange and setting up ad verification, which itself is a hot topic at the moment.

While he salutes the combination of seeking advertiser appropriate content with ensuring contractual agreements in terms of placement, it’s still early in the ad verification game and there are elements McGrory feels need work. Most notable, ad verifiers deal in pixels, forcing them to report after the fact instead of being proactive.

As for the welfare of smaller publishers, third parties have built capabilities on Right Media’s platform aimed at that segment, allowing Right Media to focus on others.

McGrory says this was part of the intent with the open platform: “We were always thinking about what do we have to do as a first party and what can we allow as a third party.”

Hence Yahoo’s foray into the DSP world with its DSP pilot program. It was partially Right Media and Yahoo’s desire to engage with the subsegment to better facilitate buyers and sellers working together. MediaMath, Turn, Data X, Invite Media and [X+1] have all been given access to inventory in Yahoo’s ad network on a real-time basis as well as the Right Media Exchange’s RTB capabilities.

“It ain’t the sexiest thing to talk about,” he admits. “I think there’s lot to be done that’s collaborative, I don’t think it’s an either/or. A lot of publishers need to get comfortable with the world being buyer, seller and third-party enabled.”

So far the pilot program has gone well. McGrory believes demand side platforms are an innovative subsegment of the market that gives buyers the ability to engage audiences and measure impact. They have the potential to provide a lot of value and Right Media aims to work with them to see how their roles evolve — but that’s still a great unknown. Buyers and sellers will issue concern when companies introduce a new service or alter their service in such a way that their role in the transaction changes.

“Right now DSPs are acting as agents, as technologies like an exchange,” McGrory says. “If their roles evolve and they change their orientation… to be intermediaries like ad network, publishers will have to re-evaluate their relationships.”

However, while DSPs get a lot of attention, there are nuts and bolts issues within the industry that need addressing. Though they aren’t the flashiest initiatives, billing and reconciliation should be higher priorities as high transaction costs and friction are a hurdle for delivering media. The market has become far more complex, and many agencies are trying to retrofit digital media into systems designed for traditional media. McGrory that first step to grease the wheels is increased automation and fewer faces involved in transactions.

But there are also issues involving the value of data. Because there’s so much out there, many players don’t have a framework for evaluating what data is worth. However, McGrory feels many in the field are forgoing the essential steps of seeking the source of and the rights associated with the data.

Overall there needs to be more clarity in the marketplace, something that can be lead by agencies such as the Interactive Advertising Bureau National Advertising Initiative. Since Yahoo puts a lot of weight into its relationship with consumers, it performs a great deal of due diligence on not only internal data processes but also what advertisers are allowed to do.

Order From Chaos

McGrory enlisted in the Army straight after high school, following in the military footsteps of his father — although his father took to the Air Force. After service in Germany, he was connected to a reserve hospital based out of Chattanooga, Tenn., while he studied as an undergraduate.

Hospitals are typically the first reserve units to be summoned for duty because they need to be in place before the fighting, McGrory explains, so he found himself running logistics for a combat hospital during the first Gulf War. It’s quite different from heading up the Right Media Exchange, but the experience taught him a lot about himself, particularly his love for all-encompassing challenges.

“There’s a certain profile of a job I like,” he says. “I want to be passionate, engaged, overwhelmed and be in a position to do something about it.

“It turns out, the kind of stuff I like is building order out of chaos. And Right Media was us trying to build order out of a very chaotic marketplace.”

Read Part I here.





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