Real-Time Bidding Coming To AdECN Exchange This Fall Says Microsoft’s Nahum

Microsoft and AdECNJed Nahum is Director of Business Integration for AdECN and led Microsoft’s acquisition of AdECN. Can you provide insight on current momentum and scale at AdECN? And, how is the Federated platform performing? What’s next?

JN: Our federated platform is a real-time bidded exchange that allows massively scaled ad networks, ad brokers, and publisher brokers to connect to each other while preserving their ability to utilize their own proprietary ad serving and targeting technologies.

When the exchange is called on for an ad, the system takes the call and replicates it to all members – hence the name “federated.” The ad call from the federated system looks just like any ad call our participants normally get using their own ad servers, and it passes user information to the them in exactly the form that they’re used to seeing it. The member then uses their normal valuation process for the impression and returns an ad and a bid for the exact impression. If the participant has real time bidding, the bid passed back to us will have been dynamically determined at the moment of the impression. AdECN takes that bid along with all other bids and shows the ad with the highest valuation for that specific impression.

Your question, however, is about momentum and scale. Six months ago we did some testing on an initial version of the federated system and, while pleased with the results, we went back to ensure the architecture was ready to scale. The system that came out of that process was recently launched only within Microsoft on a small but growing percentage of ad calls within the Microsoft Media Network. We are pleased and excited about the results and intend to bring external participants on board in the Fall.

Is real-time bidding (RTB) an important development in online advertising? Why or why not?

We’re strong believers in the power of real-time bidding and are grateful to you for your particular passion for it. We see real-time bidding as an inevitable outcome for interconnected networks, because real-time networks apply a fine grain instantaneous evaluation of the user, placement, context and other factors to truly understand the value of an impression. Real-time networks have an inherent advantage in that their knowledge is fresher, more discrete, and, we believe, more accurate – each impression is, after all, completely unique.

Is RTB a solution for all online display inventory?

RTB is a fantastic evolution in the world of online advertising. How that will work with guaranteed, reserved, takeovers, and even a futures type of market remains to be seen. There will always be a need for guaranteed blocks of inventory to be sold, though that very well may and can come into the world of auctions for additional price discovery.

Will AdECN incorporate RTB in the near future?

We already do with our Federated system, which is running with only Microsoft today. As mentioned above, we will be launching the product to a broader group of online leaders and innovators in the Fall. RTB has always been the objective for AdECN, but when we started 5 years ago the industry was not yet ready for exchanges, much less RTB. AdECN has always run an auction for every single impression on the Exchange, and now with the Federated system, the bids into the auction can be made dynamically.

Is AdECN strictly a solution for the buying and selling of online media between ad networks?

Maintaining the neutrality of the AdECN Exchange is important for our model, and as such, AdECN never wants to compete with its members. Members of the Exchange can be ad networks, ad brokers, pub brokers, and some agencies. Individual advertisers or publishers are not allowed to trade directly on the exchange, they must come through a member broker.

How can each of these online advertising space participants benefit from AdECN’s services whether directly or indirectly: direct advertisers, agencies and publishers?

Buyers and sellers greatly benefit from more granular control over what they are buying and selling – down to the individual impression – and they can do it all in a single, efficient marketplace. AdECN puts the control in their hands: buyers are able to buy only those impressions that are valuable to them and sellers are able to segment and control their inventory however they choose.

By bringing together the aggregators of supply and demand in a central marketplace, we will give buyers more reach and scale than before. They are better able to access the highly-targeted audiences they want and achieve their ROI goals. As buyers are able to buy more efficiently and with more sophisticated targeting, publisher inventory becomes more valuable. Sellers also benefit from a large marketplace because of increased demand and a per impression auction. Advertisers, agencies, and publishers do all of this through their existing ad networks or member brokers without the burden of building or managing the technology to best leverage the Exchange, instead they can focus on their own goals.

Yahoo!’s Right Media and Google Doubleclick’s AdX appear to have a huge lead on Microsoft and AdECN in the exchange space. Putting aside any discussion about a Yahoo/Microsoft combination, can Yahoo or Google be caught?

Absolutely. We believe there is no leader yet, in particular in the RTB exchange world. Neither Right Media nor Google has RTB yet. With AdECN’s Fall public beta – which, along with the Microsoft Media Network, includes the top companies in display – we are confident the AdECN Exchange will be the leading Exchange in online advertising.

What can publishers do to prepare for an increasingly automated environment for the buying and selling of online media?

Automation represents opportunity for publishers. The number of ways to monetize their inventory will continue to increase dramatically for the next few years. The growth of data and targeting not only will increase advertiser ROI but publisher yield as well. In that vein, publishers should think about what kinds of information about their users they would like to share in order to enable better targeted ads to be served, yielding higher returns for their inventory. They should develop ways (through exchanges in particular) to enable intelligent buyers who bring their own targets.

New, demand-focused, media trading platforms are popping up such as MediaMath and Invite Media. Does AdECN plan to develop its own interface or continue to provide access to inventory for these buying platforms as it does today?

We think of the media trading platforms as “Ad Brokers,” basically demand side aggregators and optimizers. But, whatever you call them, they’re a critical part of the exchange ecosystem, and are perfectly positioned to trade through our Federated system. X+1, Invite Media, and MediaMath (agency-centric enablers of RTB into the various pools of inventory) provide leading edge buy-side tools, and AdECN is thrilled to let them focus on their areas of expertise. AdECN’s focus is on creating an open and efficient exchange that best serves the market.

In regards to search retargeting, is this an opportunity that could open up display advertising? Any plans for search retargeting through AdECN – perhaps using Bing and the network of Microsoft properties with display advertising?

We agree that retargeting is a big deal in display. All kinds of retargeting and data are enabled within the AdECN Exchange, well beyond just retargeting Search. AdECN is a very extensible framework into which even more data can be brought into the per-impression, RTB auction, but that’s a big topic for another time at a later date.

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