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Clearing Up Lingering Questions About the Ad Exchanges

Written on
Feb 23, 2012 
Author
John Mracek  |

ADOTAS – Ad exchanges often get a bad rap — they have a reputation for handling less-desirable inventory, and for using less-than-ideal targeting methods. But NetSeer CEO John Mracek says there’s a lot of potential in the exchanges — that they’re more legitimate and effective than you might think. Below is his perspective on the current state of the exchanges and how they’re changing.

Q: What are the biggest myths about advertising on the exchanges?

A: The biggest myth is that there is no good quality inventory on the exchanges. Sure, there are all the suspect things you hear about – hidden impressions, porn and other brand-unsafe content. But, if you employ the right strategies and use the right technology for buying media, you can find plenty of good quality inventory through the exchanges – at an amazing value. We find it for our clients all the time. I would even go so far as to say that a secondary premium market exists on the exchanges – you just have to use to right tools to get to it.

Q: From your perspective, what do you see as the prevailing sentiment around the exchanges these days? Increasing in terms of legitimacy, or do advertisers/agencies still think they are a waste of ad space and dollars?

A: To date, I think the exchanges have been viewed in a couple of ways. First, it’s where you put your ad dollars dedicated to direct response efforts. Second, it’s where people did “prospecting.” Prospecting is a nice way of saying you’re going “cookie hunting,” using a spray and pray model. This means that you go after as many people as possible, not always in the most contextually relevant settings. You hope to drop as many cookies as you can, so you can pool these people and retarget them at the appropriate time. But why would smart marketers bother doing this when they can find a contextually relevant audience the first time around? The other way exchanges have been used is to “chase” cookies, hoping to find a responsive audience.

I do think that as more well-known advertisers start using the exchanges for legitimate awareness and brand-building campaigns, the reputation of the exchanges will improve. We’ve seen this with our clients over the last several months, where they tell us that they are buying display exclusively on the exchanges because the ROI ends up being stronger than through other display channels. We
have found that running campaigns where contextually relevant content is matched specifically to advertising objectives allows our clients to realize the best returns for their ad dollars. As more and more advertisers realize that this secondary premium market exists on the exchanges, this should become a more widely-accepted channel through which to run big display campaigns.

Q: What are the challenges for today’s media buyer in working with the exchanges? Where are the opportunities?

A: Buying straight through the exchanges doesn’t currently provide the contextual relevance necessary to provide the brand safety assurances that most advertisers demand. Often advertisers aren’t paying attention to context because they are just going after cookies. In addition, most ad technology companies don’t have the capability to detect and avoid, in real time, pages with sensitive content on them. This results in brand safety headaches for the advertisers. But there are a handful of targeting technologies out there, including NetSeer’s contextual advertising platform, that make it easier for advertisers to get brand safety guarantees. The problem is that not all of these companies can live up to their claims. With some, the transparency comes after the fact, where the advertiser is given a list of sites where their ads ran. That’s not very helpful when you need to protect your brand in real time.

Q: What are some of the different strategies you have seen employed in buying media via the exchanges?

A: I’ve seen a wide variety of strategies used. There is the cookie targeting strategy, where advertisers work off of an existing cookie pool. This works pretty well if you have a good list and you do it in a relevant way. There are also the “optimizers” who are following more of the “spray and pray” model. They buy cheap inventory and try to optimize against one specific metric. Then there are those trying to game the system. These advertisers buy cheap, often hidden or below-the-fold inventory just to capture the view-through from the attribution model. But, what I’m seeing more and more of are brands using the exchanges to run awareness campaigns. We just had one packaged goods company complete a campaign with us where the campaign performed almost 100 percent better than publicly-stated packaged goods campaigns.

Q: From your perspective, who/what brands or companies are using the exchanges strategically? Can you give an example?

A: A great example is a client we’ve had for a long time through an agency called eBrains. They work with the New Orleans Travel Marketing Corporation (NOMTC). Initially, the NOMTC was pretty wary of buying media on exchanges because they assumed what everyone else did – that the inventory was poor quality and a waste of money. They were also worried about what might happen to their brand image. But, after several successful campaigns, they’ve realized that this secondary premium market exists on the exchanges, and we’ve worked with them to execute several successful subsequent campaigns.

Q: What, if anything, has changed over the exchanges in the past year or so, technologically or otherwise, that people who have had their attention elsewhere might not be aware of?

A: The space is growing increasingly complex. Not only are the original exchanges getting bigger, but private exchanges are coming onto the landscape. In terms of growth, we’re seeing big increases in impression volumes, being driven by more brand name publishers who are becoming more comfortable with putting their inventory on the exchanges. Add to this mobile-specific, as well as video-specific, exchanges and you’ve got a recipe for increased chaos in the market. It serves to make the job of a media buyer that much harder, and I applaud those buyers who can get their heads around all of it.

Q: How does a company stand to benefit in the long run – many months or even years into the future – from advertising over the exchanges?

A: Over time, advertisers are going to realize that there are not very many display channels where you can get everything in one place. If you buy through premium channels, you pay a lot, and there are no guarantees as to which pages you will appear on. Nor will you get scale. If you buy through the networks, you’re going to get little to no transparency. If executed correctly, buying on the exchanges provides not only the brand safety assurances advertisers demand, but also results in campaigns that can be run at scale, providing, ultimately, the best value for the ad spend.





John Mracek is Chief Executive Officer of NetSeer. Most recently, John was Vice President and General Manager of Distributed Commerce at Shopping.com where he ran the company's advertising network and was responsible for merchant sales and service, product management, business development as well as partner account management. Prior to Shopping.com, John was Vice President of Advertising Products at Yahoo where he managed both graphical and display ad products and oversaw the introduction of Yahoo's SmartAds. Previous roles included: President of AdKnowledge, a pioneer in the early days of online advertising management and measurement, as well as CEO of Covia, an Enterprise Software company. John earned a Bachelor's of Science Degree in Computer Science from MIT.

Reader Comments.

John – good post and I completely agree with most of the points. The quality of the sites and content on the exchanges is improving as the sophistication of the audience targeting (read: performance) has improved. This increase in performance, albeit still below what the highest quality sites want, is starting to get their attention. We’re seeing more desire for brand advertisers to leverage the advantages of the exchange procurement model – the trick as you point out is the context, safety, and I think ability to prioritize and/or reserve those segments of exchange inventory.

Posted by Walter Knapp | 12:17 pm on February 24, 2012.

We’re seeing more desire for brand advertisers to leverage the advantages of the exchange procurement model – the trick as you point out is the context, safety, and I think ability to prioritize and/or reserve those segments of exchange inventory.

Posted by Viagra | 12:05 pm on March 6, 2012.

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