Avoiding the Sophomore Slump

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

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

Ad exchanges were undoubtedly the digital world’s Rookie of the Year in 2009, but in terms of buzz, the industry has moved on (it’s all “mobile, mobile, mobile” these days).

In order to avoid a sophomore slump, we’ll have to grow this space the old-fashioned way: proving it out, campaign by campaign.

Here are three suggestions that strike me as solid ways to make sure that exchanges don’t stall out in 2010.

One: Deliver on the Promise of Real-time Bidding

The benefit of exchanges is not to get marginally cheaper inventory than is possible through networks, but today too many of the impressions flowing through exchanges are just “cheap reach.” The longer we play the cheap reach game, the more exchanges look just like networks, and the easier they’ll be to dismiss.

I understand that Real-time Bidding still represents only a small percentage of the total exchange inventory, but we need to start seeing how that inventory can lead to tangibly different approaches and results. Instead of buying a ton of fifty-cent impressions, I look forward to paying a huge premium for one perfectly targeted impression, and removing waste altogether.

Here’s one simple, tangible suggestion: separate the RTB impressions on separate line items of a report. Work with agencies to develop separate, more sophisticated strategies for whatever RTB impressions are available. Presumably those impressions should deliver stronger results, and then at least we can help clients understand the value of exchanges over the long term.

Two: Make Exchanges Work for Publishers

If the ad exchange story were a book, the subtitle would be “separating audiences from content.”

Now, if you were a businessperson that spent significant time and money developing content and attracting an audience for it, you probably wouldn’t be too psyched about “separating” the two.

Without content, there is no advertising. And if publishers don’t choose to participate fully in exchanges, the space can’t grow. I honestly think publishers should be able to do quite well selling in exchanges, but today it seems the benefits of the system are heavily slanted toward buyers.

I’m not sure exactly how to go about making exchanges more attractive to publishers (perhaps something about using exchanges as a way to deliver perfectly addressable advertising?) but do believe that needs to happen if the space is going to grow.

AdExchanger is the closest thing we have to an industry trade group, so John… I nominate you to sort this out!

Three: Help Agencies Transform

Exchange planning represents a big shift for online media teams, both in terms of mindset and skillset.

“Traditional” digital planning is about making the best choices in a world of endless – but pre-existing – possibilities. It’s sort of like picking the best restaurant in town, and knowing just what to order when you get there.

Exchange planning is about crafting a custom solution using the building blocks of available data, and is more like being a chef, whipping a meal together from scratch.

They are two completely different ways to approach a “meal,” and it isn’t as simple as asking someone who’s been trained in the former to flip a switch and become the latter.

So while much of the industry is rightly focused on technology and platforms, in order to build scale we need to help the buyers adopt those tools. In that sense, the exchange space is as much a service business as it is a product/technology business.

I’d love to know what others think about the best way to keep the momentum going. What are your suggestions?

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

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1 Comment

  1. >So while much of the industry is rightly focused on technology and >platforms, in order to build scale we need to help the buyers adopt >those tools. In that sense, the exchange space is as much a service >business as it is a product/technology business.

    Great point. 2009 was a great year for educating marketers (or at least media clients) on the potential benefits of these new approaches. But, as you point out, its not just technology that makes this work, people matter to. Exchange buying revenue is not as scalable as say, the software business. You need to scale up hiring and train. Internal education may be a taller order than client education.

    Right now exchange buying is centered in specialist groups, often terms centers of excellence by the agency themselves. I’m not sure that this concentration of knowledge is sustainable as client demand ramps up.

    The tools need to “reach down” and become easier to use. The users need to “reach up” through training. It will be really interesting to see how this dynamic resolves itself…..not that it necessarily will, its totally possible that platform vendors and agencies will get this wrong.