Often, a question doesn't have an easy answer in the digital advertising business. This is a column devoted to an answer to a single question or topic - and providing a bit of space for it.
Today's participant is Jeff Green is Founder and CEO of The Trade Desk, a demand-side platform technology company. He recently answered one question in a conversation with AdExchanger.com.
AdExchanger.com: Using your buy side perspective, how can the concept of house ads and oversupply of display work together effectively?
JG: First, I don't think most players in the space understand the economics, so that's where we should start. We have to explore the oversupply problem first. Then we can address the house ads portion of the question.
At a macro level, there is much more supply than there is demand. And as a matter of economic fact, that creates a buyer's market.
While many publishers don't understand that, some do. Many of those that get it have in the past been worked hard to prevent RTB and exchanges from ever being successful.
More generally, they've been avoiding the enablement of price discovery. They've been avoiding ever becoming open and transparent. There are a lot of publishers that are terrified that the world will find out that there's a massive discrepancy between supply and demand, and that there's a massive discrepancy in terms of CPM clearing prices between premium and remnant inventory (or "discretionary inventory", or whatever they call it next). And of course, the performance divide between premium and remnant may be quite a bit smaller than the CPM prices would indicate.
Admittedly, publishers have been rightly and justifiably concerned about rate cards, data protection, channel conflict, hurting their own sales teams, and most of all hurting revenues and margins that are already tighter and lower than many businesses can tolerate.