Features

Reach and Persistence: Why Exchanges Work

Written on
Mar 12, 2012 
Author
John Mracek  |

ADOTAS - We’ve been seeing plenty in the ad trades lately about brand advertisers and how quickly their embrace of digital advertising will reach critical mass. Some have even asked whether or not digital would actually wait for brand advertisers to make up their minds and get online in a meaningful way.

Online, as an advertising medium, is not one place or a homogeneous collection of websites with comparable characteristics. Like its offline media counterparts, online media has a wide variety of sites — ranging from major portals and social networks such as Yahoo! and Facebook, which have mass appeal and massive unique users, to niche sites, such as Kelley Blue Book, that cater to a very specific vertical. On the “quality” spectrum, some are considered “’premium,” whereas others are, frankly, crap. Sites with premium content and lots of unique users are must-buys for brand advertisers — and understandably so, because they give advertisers the contextual relevance, unique user reach, and richness of creative execution. Besides, the ability to take your CEO or CMO to a website and show the ad always helps! Conversely, for most buyers, ad exchanges are on the other end of the spectrum, and it’s one place where top brands have been reticent to advertise.

I’m here to prove that with the right tools, ad exchanges can be an inexpensive and highly effective way for brands to get the reach they need to achieve persistent brand messaging.

Let’s take a closer look: Exchanges offer significantly better reach than any single network or site, and at remarkable cost-efficiency. So why are brand advertisers not embracing the exchanges? The main reasons are because of brand safety concerns, and because compared to the plethora of audience targeting tools, there are only a handful of good solutions to find contextually relevant inventory. There are even fewer if one wants to go deeper than the standard IAB taxonomy. A typical brand advertiser makes two types of buys. First, they can do takeovers of front pages, sponsorships, etc., typically used for big-bang awareness and product launches that employ fancy executions with rich media. The second method is to employ persistent brand messaging, with reach and frequency as the main objectives.

Exchanges clearly don’t work well for the big product launches that are usually accompanied by splashy creative execution, and it makes sense for advertisers to work directly with large publishers there. For persistent brand messaging, however, brand advertisers are still making site buys that favor big publishers with wide reach, while quality publishers with relatively low reach have to offload good, unsold inventory at rock-bottom prices. Yield management platforms (SSPs) can help boost the yield to some extent by creating a competitive marketplace through real-time bidding-based auctions, either directly or in conjunction with exchanges. But the full potential still remains untapped, because buyers still tend to value this inventory for audience and not content or quality.

To get the best yield for an advertiser, exchange buying has to be married with tools or capabilities that recognize inventory as “brand safe” and deliver the most relevant match between its content and the advertiser’s marketing objective. Assured of brand safety and contextual relevance, the budget will shift to exchanges. Why? Because exchanges offer more reach and better pricing than any big portal or publisher. If that’s not enough, RTB-based exchange buying allows advertisers to transparently pick inventory one page at a time, making every single impression relevant compared to Run-of-Site orRun-of-Network channel buying, where advertisers get a category or perhaps a sub-category right but, everything below that level is almost always opaque and relevance is often marginal to none.

One client my company, NetSeer, worked with recently — a well-known frozen food manufacturer — experienced the true value of buying on the exchanges. The company’s goal was to drive incremental sales around the Super Bowl. We employed our standard exchange placement process, where we used our patented contextual targeting married with our proven brand safety process to launch a campaign across 3,400 domains and 10,000-plus unique pages. In addition, the campaign was geotargeted across 210 DMAs. And, because the campaign was being run on the exchanges, the average CPMs were approximately 50 percent lower than the advertiser would be have paid doing direct site buys on “premium” sites.

The results were extremely positive, garnering a click-through rate that was nearly 100 percent higher than the average click-through rates that consumer packaged goods typically see on the exchanges.

As these tools and new hyper-contextual targeting capabilities mature, we predict more and more brands will not only take the plunge into the exchanges, but will also see excellent returns from their media buys on them.





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.

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