The View From The UK: Looking At Exchanges And Display Advertising

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

Martin Kelly is co-Founder and Managing Partner of UK-based agency, Infectious Media Ltd.

Ad Agents: Martin Kelly of Infectious MediaOn a recent trip to New York, Infectious Media met with amongst others to chat about the exchange space. The sector is growing rapidly in the UK at the moment, with advertisers, agencies and publishers all showing a real appetite to grow their involvement. One of the biggest differences that surprised everyone we spoke with in the US was to hear that exchange liquidity and, more specifically, inventory quality was a problem in the UK. To illustrate this, I’ll give you a tale of two premium publishers that we’ve been dealing with.

The first has gone in to the exchange space head first. They are not someone who we would have expected to be trading on exchange, and if they weren’t, I doubt we would be trading with them. They have dedicated time and resource to understanding how it works. They have made some mistakes – undoubtedly sold some of their inventory for a much lower price than it’s probably worth and I’m guessing it’s been a real headache for them. But over time, something magical has happened for them – the volume we buy from them has increased steadily as have the CPM’s that they are receiving for their inventory. From our perspective they have proven through a strong ROI that their inventory is good quality, and in a depressed and over-supplied market, this is a great story.

The second publisher has taken a different approach to exchanges. They constantly flirt with the idea, but channel conflict and a fear of low CPM’s have dominated their thinking and hamstrung their entrance into the space. In a same depressed market, they publicly maintain their site is fully sold-out every month at an astronomical CPM. We’ve yet to do any business with this publisher and I’m not sure when we will.

So as the first publisher gains learnings and future proofs about their business, the second is watching the market change around them and doing little about it to protect their (extremely) short-term yield. When you examine things more closely, there have been a number of recurring themes that emerge from publishers we have talked to that have held them back, these are in no particular order:

1 – High entry costs. Many publishers have been put off by monthly minimum charges and long contracts

2 – Low CPM’s. There’s a perception that CPM’s on exchanges are very low, our experience is that good inventory still elicits good CPM’s

3 – Skillset. Some publishers put their toe in the water but couldn’t make it work for them as they didn’t have the right skills in-house to build a platform trading business.

4 – Physical distance from the companies and people making this happen, predominantly the US. Even the UK sales teams of large corporates that own exchange platforms have barely heard of them or have any awareness of the tidal wave of change that is coming.

5 – The economy. No one wants to make a costly error for their company that could make them look bad so everyone sticks with what they know.

6 – Education, lack of. Exchanges are creating a real buzz in the UK at the moment but there’s a chronic lack of education amongst publishers about how best to engage with them.

7 – Channel conflict. Publishers are scared to sell their remnant direct for fear of cannibalising their premium sales. Ironically, one of the principle roles networks are fulfilling in the UK is one of anonymity for publisher inventory.

And finally…

8 – Rumours and misinformation circulating about all of the above.

However, two big developments should change this over the coming months , accelerating adoption. Firstly, the easy integration of DFP (DART For Publishers) customers into the Google Exchange and secondly the aggressive arrival in the UK of the publisher yield optimisers. Both of these should help bridge the education and technology infrastructure challenges, bringing many more premium UK publishers up to speed. More than this however, it is adopting a mindset of innovation and embracing change that will differentiate the winners from the losers as the new landscape emerges.

Follow Infectious Media (@infectiousmedia) and (@adexchanger) on Twitter.

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