Along with its eponymous New York stock exchange, Nasdaq Inc. powers more than 80 transactional markets around the world.
Now, its blockchain technology powers a startup advertising exchange called the New York Interactive Ad Exchange (NYIAX), which plans eventually to create a market where digital media inventory could be bought and sold like stock on an exchange.
“The first step is being able to sell guaranteed media contracts,” said Graham Mosley, NYIAX’s co-founder and chief strategy officer.
Guaranteed media contracts, which reserve inventory weeks or months in advance, can be resold over the NYIAX platform like an investor buying low on futures commodities. NYIAX takes a fee for all transactions on the platform, as is typical with financial exchange operators.
“It potentially changes the conversation we can have with some buyers,” said Mike Hannon, VP of yield and revenue optimization at Purch, a B2B media and marketing company that’s an early partner in the NYIAX exchange.
The flexibility to re-trade media positions could make it more appealing for advertisers to buy future inventory contracts, he said. This ability could let Purch get bigger upfront deals, offer bigger discounts or let its buyers lock up inventory over a longer period.
Since there isn’t deal activity to point to, it remains to be seen how publishers will respond to buyers reselling their inventory to advertisers outside the original transaction.
Bill Wise, the CEO of Mediaocean and an investor and board member with NYIAX, recalled how years ago, as an executive at Right Media, “we wanted to bring Wall Street-like economics to advertising and found out the ad industry doesn’t believe inventory is a commodity.”
Publishers tend to view their own property as loaded with unique value: each piece of inventory a special snowflake, not a grain of salt or corn to be loaded and shipped like some undistinguished commodity. Publishers also like direct deals because they tend to bring known, blue-chip brands, a selling point that disintegrates when the buyer could flip the contract to another marketer.
NYIAX’s media supply includes Purch and nine other publishers that would not speak publicly about the product. NYIAX, which has been in a private pilot and will remain so until later in the year, will make a broader agency and supply-side push when pilot data comes back – presumably showing media companies maintaining CPMs and lowering fees by selling more inventory themselves rather than over open exchanges or ad networks – said CEO Severine.
The Nasdaq partnership gives NYIAX credibility and support in the market, which Wise said can be unforgiving to startup exchanges “since publishers, media companies and advertisers won’t invest in making you a part of their infrastructure if they aren’t confident you’ll be around in a year or two.”
But Nasdaq is a NYIAX partner, not an investor. And since NYIAX is pre-revenue, Nasdaq faces no real risk on its maiden programmatic voyage.
Being built on Nasdaq’s platforms also introduces some technical complications.
For one thing, NYIAX doesn’t deliver ads. When “futures contracts” do eventually matriculate into ads, they’ll be served via unnamed SSPs and “delivery systems” NYIAX is working with on integrations.
NYIAX must work out data transfer agreements with any SSP or media delivery service to confirm that the terms of all contracts are met. Guaranteeing results for ads served through a supply chain NYIAX doesn’t control can be tough, especially in a digital environment where issues like fraud and nonviewable inventory have been incorrigible.
The result is NYIAX’s product is limited for now to a narrow set of buyers, suppliers and intermediaries.
To deliver on industry guarantees like the MRC viewability standard or third-party verification, NYIAX is also working on integrations with Moat and Integral Ad Science, Mosley said. “That’s a built-in part of the contracting and deal-making process in our exchange.”
Offering more commoditized inventory has given a lot of strength to TV upfronts and even to spot market TV deals, Wise said. “When it comes to reaching their target audience with a valuable investment, marketers and their agencies want levels of predictability.”
