Debunking the Mobile Exchange Myth

eliiportnoyddtData-Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Eli Portnoy, general manager at Thinknear.

Mobile exchange inventory has gotten a bad rap.

The age of programmatic and RTB had brought tremendous improvements and advantages to exchanges. Publishers can monetize a much larger percentage of their inventories. Advertisers can buy only the impressions that perform. The ecosystem as a whole can shed many of the inherent conflicts in the ad network model, where both publishers’ and advertisers’ needs must be satisfied by a single entity.

However, with all of the advantages that came with RTB, many disadvantages appeared in the desktop Web world. This exchange inventory has historically been low-quality, often placed below the fold, and is sometimes not safe for brands. Thus, the bad rap.

Mobile, however, is intrinsically different than desktop. App developers, which often stand in for publishers in mobile, and advertisers are missing out on major opportunities to monetize and reach their target audiences affordably. It’s time to blow up some of the common perceptions about exchanges in the desktop world and look at the differences between desktop and mobile, including why exchanges are so effective and important for the latter.

‘Exchange Is Low-Quality Leftovers’

Many people making mobile purchasing or selling decisions worked first in the desktop Web ecosystem, where publishers with large direct sales forces sold their best inventory straight to brands. The remainder went to ad networks and the leftovers ended up in exchanges. Publishers saw that the bulk of their revenue came from direct sales or ad networks, rather than exchanges, and advertisers saw lower-quality inventory on the exchanges. Given that, I can’t blame them for being skeptical about mobile exchanges.

However, in the mobile ecosystem, supply has grown significantly faster than demand, and so a much larger percentage of total inventory goes unfilled through direct sales efforts. Rather than allowing this space to go unused, it makes perfect sense for developers and publishers to put the unsold, but still premium, inventory on exchanges. And it makes even more sense for advertisers to be there, ready to snatch it up – likely at a lower rate than if they had made a direct buy.

‘Exchange Inventory Is Below-The-Fold’

This is another preconceived notion about exchanges borne in the desktop Web. Online exchanges, often working with pages with multiple ads per page, often sold ads never viewed by users. In mobile, this isn’t an issue, especially in the app ecosystem. App developers and industry standards dictate one ad per page, and it’s always visible. So, in putting their apps on exchanges, app developers are selling the same premium inventory that would ordinarily be managed by a sales team, but with much less needed infrastructure. Advertisers can confidently purchase inventory on exchanges knowing their ads will actually be seen.

‘Exchanges Aren’t Transparent’

In the desktop Web world, advertisers had a not unreasonable fear that inventory purchased through exchanges would wind up on suspect sites. Little wonder that they’re hesitant to jump into the mobile exchange world.

But the important thing to remember is that apps, at least for iOS, are relatively well-policed. Very few suspect apps make it to user devices, even on platforms that don’t require approval. The Android community, for instance, does a good job policing its own. As a result, app inventory is relatively safe to begin with, not to mention abundant.

By purchasing through reputable exchanges or DSPs, advertisers will have the sort of transparency into their purchases that weren’t available through the desktop Web, and much better returns on their purchases. App developers who list inventory on these same exchanges will see more pull on their advertising than push because reputable and often high-profile brands will start advertising on these platforms, and the developers won’t need sales teams to reach them.

Mobile exchanges suffer from the bad reputation of their online cousins. The reality is that exchange inventory is a great way for app developers to boost revenue, and for advertisers to drive scale and performance in the mobile environment.

Follow Eli Portnoy (@eportnoy), Thinknear (@Thinknear) and AdExchanger (@adexchanger) on Twitter.

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1 Comment

  1. Greg McAllister

    Great points, Eli. As I tell our banking clients, mobile app developers are growing up in a programmatic world, not building sales teams, and effectively – and in many cases, exclusively – leveraging exchange monetization. There’s no stigma, no “low quality” attitude. Exchange and DSP features are maturing to accommodate stratification of inventory quality, just in time to support the flood of media dollars into mobile.