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Peeking Inside The Black Box Of Demand-Side Platforms And Exchanges

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Ad Agents“Ad Agents” is a column written by the agency-side of the digital media community.

Adam Cahill is SVP, Director of Digital Media at Hill Holliday, a full-service communications agency.

Last week I gave the presentation embedded below on DSPs and exchanges at ad:tech in NY.

The premise of the presentation was that information is hard to come by in the category, because:

  1. Publishers obviously don’t want to talk about how much inventory makes its way into the secondary market
  2. Google has become the most important exchange, and they aren’t discussing the progress Adx is making
  3. Agencies are making announcements that make it sound like they have more going on than is probably the case

To try to get toward some real data I spoke to a handful of very smart, connected people who know what’s going on, and where things are headed including Turn’s Bill Demas, Zach Coelius of Triggit, DataXu’s Mike Baker, Tony Katsur of MediaMath, Sarah Fay from x+1 and Iggy Fanlo of Adrite.

I made four observations based on those discussions, as well as my own experience.

  • This is a really big deal – DSPs already account for 10% of US display spend, and RTB impressions represent about 35% of total US impressions. And all of this has happened essentially in a year’s time, without much interest from the client-side.
  • It’s not that complicated – If you’re an agency or a brand that wants to wade into this directly, you can get the vast majority of the value of the entire ecosystem by partnering with one of the six DSPs that is built for the future (ie, RTB). I didn’t include Appnexus on the list, because my understanding is that I as an agency can’t really call them up and have them become my DSP. If that’s wrong, apologies to Appnexus, a company that is always mentioned as an important player in RTB.
  • It’s not really about technology – The big change that’s going on is that what it means to plan and buy a big portion of digital advertising is changing. We’re moving from a world where the value the buyers create existed in the pre-launch phase of a campaign timeline to one where the value exists after the launch of the campaign. That means we need to re-train people, and bring new types of people into the industry.
  • Predictions – I closed with some short term and long term predictions.In the short term the composition of exchange inventory will expand beyond display, with video and mobile becoming easily accessible. Also, the quality of inventory will improve as premium publishers realize the economics are more favorable in the exchanges than they are when they allow networks to sell their excess inventory. In the longer term, I shared some of the specific predictions I heard about how big the exchange space gets in the next few years. For what it’s worth, the assumption I’m working with and building toward is the one that about half of display will be bought through a platform in the next two or three years.

Again, the whole point of the presentation was that it’s hard to get data, and this was my attempt to get some specifics on the table. If you have other data or a different point of view, would love to hear it.

Follow Hill Holliday (@hillholliday) and AdExchanger.com (@adexchanger) on Twitter.

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