SpotXchange Entering Real-Time Bidding Space For Online Video Ads Says CEO Shehan

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SpotXchangeMike Shehan is CEO of SpotXchange, an online video advertising network.  The company is announcing a new real-time bidding-enabled service for online video ads today. Read the release.

AdExchanger.com: First, can you provide some background on SpotXchange?

MS: SpotXchange is an online video advertising network that offers brand advertisers a scalable, efficient and measurable way to attract new customers with high-quality online video ads on premium websites.  Focused on performance, SpotXchange is a one-stop shop for advertisers and publishers, offering a simple, automated way to deliver targeted, effective and efficient video ad campaigns.

Serving highly interactive in-stream and in-banner video ads in the US, Canada, Mexico, the UK, Ireland, Spain, Portugal, Italy, Belgium, China, New Zealand and Australia, among other countries, SpotXchange is the #3 online video ad network in the United States, and #1 in the UK and Australia for potential reach, according to comScore.  SpotXchange is a privately-held company based in Denver and has offices in New York City, Los Angeles, Atlanta, Chicago and London.

What problem is SpotXchange solving?

To put it simply, the lack of widely adopted standards and the difficulty involved with integrating dynamic in-stream video into video player environments has made it terribly difficult for advertisers to access large quantities of high-quality premium video ad inventory.  Consequently, those advertisers that don’t currently use SpotXchange have not been able to operate highly targeted audience-based buys on a transparent basis that is typical of display buys.  Instead, advertisers have often relied on direct sponsorship models, which limit reach and effectiveness.

SpotXchange’s SpotMarket RTB dramatically simplifies both buying and selling video advertising by enabling DSPs, trading desks and ad networks to achieve scale while operating in completely transparent brand-safe environments.  RTB participants can now control their video ad campaigns on an individual impression basis.  These advertisers can use the full spectrum of SpotXchange’s advanced targeting capabilities such as retargeting, and behavioral targeting using third-party data.  DSPs, trading desks and ad networks can also take advantage of SpotXchange’s user syncing ability, which allows the SpotMarket RTB participant to see if they have any historic behavioral data on a particular user, and then lets them value the impression opportunity more highly and serve a more targeted ad.

SpotMarket RTB is a win for all involved -- advertisers eliminate waste, maximize reach and increase the performance of their campaigns in a safe and private way, while publishers benefit from the increased competition resulting in higher CPMs.

Do you see SpotXchange fitting within the recent mergers and acquisitions wave occurring in the online video advertising space? What type of company might SpotXchange make sense for?

Our belief is that the companies that have sold recently did not have confidence in their long-term strategy or prospects.  We’re very confident in SpotXchange’s current market position as a top-ranked video ad network, our internally developed technology assets in which we’ve invested significantly, and our growth prospects both in the US and internationally.  SpotXchange is profitable, growing rapidly, and we believe the video ad industry is still in its infancy.  We’re also having a lot of fun in a space that is white hot, so we want to remain independent.

That said, SpotXchange’s assets may ultimately be considered valuable by a wide range of companies who desire a large integrated footprint of in-stream video ad inventory, cutting edge targeting and optimization technologies and a large active marketplace of advertising campaigns.   Those may include display networks, exchanges, major agency holding companies, and, even media companies as digital and traditional media collide.  But these same companies can currently leverage SpotXchange through services like SpotMarket RTB.

Regarding your real-time bidding enabled video exchange, what variables are being sent to the RTB bidder about the impression?

As outlined in our SpotMarket RTB API, SpotXchange passes along a number of parameters to RTB participants.  Most notably, SpotXchange can pass IP address, user agent, referral URL, content taxonomy and reserve price.  RTB participants can set up when SpotXchange should present an opportunity to bid on an ad impression by using any of SpotXchange’s targeting capabilities (behavior, demo, context, site specific, retargeting, geo, keyword, etc.), use their own  third party data, or leverage user syncing.  Those that respond within the timeout period and with the highest bid for any particular ad impression opportunity wins.  Also noted in the SpotMarket RTB API, SpotXchange offers a number of bidding options to RTB participants.

What video formats will your RTB offering include?

Currently, SpotMarket RTB supports a variety of in-stream ad types, including pre-roll, in-game, and interactive pre-roll. RTB advertisers can use any number of third party video ad servers including Telemetry, DART, Atlas, Innovid, and any other ad server that supports VAST 2.0 and VPAID.  SpotMarket RTB also supports 300x250 in-banner video ads.

How does this differ from non-RTB inventory? And what's the bottleneck in video for RTB, if any?

There is no difference between RTB and non-RTB inventory in the SpotXchange marketplace.  As opposed to several of our competitors, SpotXchange has focused on integrating premium publishers into the marketplace since the company was started as opposed to ‘repping’ inventory where creative assets and tracking tags are turned over to the publisher.

There are no bottlenecks currently in video for RTB from a technological aspect.  From a market aspect, advertisers and agencies have yet to fully adopt DSP and trading desk strategies en masse for video.  The transition to these types of strategies will take time to move from experimental budgets to large budgets.  We believe our service will accelerate this transition as SpotXchange offers significant volumes of inventory available in the market.

Where will SpotXchange source its RTB inventory?

SpotXchange has been integrating publishers into its marketplace for more than five years, and consequently offers the broadest reach of integrated in-stream video ad inventory in the industry.  The SpotXchange video ad marketplace has more than 700 publishers and currently receives requests for advertisements from approximately 50,000 unique websites each month from 60 countries.

This is not a new exchange.  SpotXchange has always operated an auction-based marketplace because transparency, reach and competition will ultimately prevail in the market.  In this way, SpotXchange is differentiated among other competitors in the market.

How does SpotXchange differ from other RTB video marketplaces such as Adap.tv?

SpotXchange has a long-standing relationship with Adap.tv, and we have a great deal of respect for them and their platform.  SpotXchange does not participate in their RTB marketplace; but does work with several of their OneSource customers.

However, the SpotXchange strategy for building the world’s largest video ad marketplace is different.  We have been selling to agencies and brand advertisers for more than five years.  That has allowed us to support a growing, and very active marketplace that features many Fortune 500 brands.  We have also been very responsive to the creative, targeting and optimization needs of these customers.  That translates into a wider variety of targeting options, flexible bidding options, and a very large marketplace available to our RTB customers.

What about other inventory such as PC-based display and mobile? Any plans to expand to other video formats?

Yes, we are currently working on launching several video ad units for a variety of IP-based devices, including mobile.  Stay tuned.

A year from now, what milestones would you like the company to have accomplished in the RTB space?

Our goal is to operate the largest and most vibrant video ad marketplace in the world.  RTB was a crucial step to increase competition in our marketplace, and more than 30 companies are currently working towards integration of the SpotMarket RTB API.  SpotXchange will be announcing several new initiatives over the next 12 months concerning RTB but we also have a number of new service offerings planned for our publishers and agency customers.

If you asked me a year ago that SpotXchange would have the kind of success it’s had in 2010, I’d think you were kidding.  I’ll probably be saying the same thing this time next year.

Follow SpotXchange (@spotxchange) and AdExchanger.com (@adexchanger) on Twitter.

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