MediaCrossing Assumes Inventory Risk For Ad Sales

Bill Lederer, CEO MediacrossingMediaCrossing launched last summer as the latest ad sales automator and data manager looking to apply investment banking tools and philosophies to online advertising.

But unlike its peers, the Stamford, Conn.-based startup says it also plans to offer to purchase publishers’ unsold inventory and then sell it on its own.

“I would think exchanges will wind up loving what we are – and what we aren’t,” said founder Bill Lederer (the former CEO of WPP Group analytics unit Kantar Video). “To put it simply, we are a liquidity provider for exchanges. If you start with the premise that roughly half of all digital ad inventory is unsold, there is a fundamental liquidity problem in the industry that doesn’t get discussed very much.”

Lederer sees marketplace inefficiencies in the way dollars get divvied up between advertisers and publishers among different buy-side, sell-side and marketplace services. David Prose, managing director of advertising barter and media planning company Ionic Trading – a MediaCrossing client – said MediaCrossing’s in-market intelligence and reporting has allowed Ionic to reduce headcount, better manage digital media budgets and deliver measurable results to its own clients.

In most cases, Lederer said, MediaCrossing will also bear the risk of buying and selling inventory, a seemingly contradictory notion.

“Bearing risk can mean one of two different things,” Lederer said. “To an advertiser, it would be in our willingness to convert what would normally be considered a CPM placement to a cost-per-click model based on how the client defines success. Risk-bearing as it relates to a publisher means that we are taking principal ownership of that ad inventory. It then becomes our problem to move it somewhere else. In some cases, publishers prefer to work with us as a percentage of revenue or profit basis. Other times, they just sell us the inventory and say, ‘It’s your problem now, good luck.’ We accept that.”

At the moment, MediaCrossing is focusing on display ad sales along with video and social media placements. Lederer eventually wants MediaCrossing to reach into addressable TV, radio, streaming and digital out-of-home.

“Liquidity is still a supply-side problem, obviously, because it’s a challenge for all publishers to sell all of their available inventory,” Lederer said. “As for us, this issue can be addressed either via just-in-time, spot-buying RTB side or on a forward basis, as most traditional branding campaigns are done. The problem is so large in the RTB market, we’re pretty absorbed on solving that at the moment. The systems that we’ve built will be both for RTB/spot buying and for forward buys [are] aimed at later dates.”

By and large, MediaCrossing gets most of its business from agencies, followed by marketers and publishers directly. In addition to raising more investment cash this year, it’s expecting to increase its staff to over 40 while expanding its client list to more than 100.

So far, it’s raised $6 million – and is planning more before the end of 2014 – from financial tech providers that don’t typically back online advertising companies, including Investment Technology Group’s Minder Cheng and Global Electronic Trading Company directors Daniel Tierney and Steve Schuler. MediaCrossing has roughly 30 clients across the buy and sell sides, including independent media planner Innovative Travel Marketing and OutsideTelevision, the digital broadcast arm of Outside magazine.

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