Private or Open Exchanges? How about just controls and efficiencies?

There was a lively discussion today at the Performance Display Event presented by Criteo.  Most interesting to me was the conversation around publishers enabling RTB through either “private” or “open” exchanges.  Peter Naylor, EVP of Digital Media Advertising at NBC Universal and Zack Rodgers, Senior Vice President Sales Strategy & Operations at CBS Interactive seemed to agree that they believe a private marketplace is what makes the most sense for them as publishers.  Microsoft’s own Dennis Buchheim, GM Scale Display, shared a slightly different perspective when describing our approach to RTB as a premium publisher. 

Peter and Zack emphasized that they favored a private marketplace because of the control it affords them as their preference is to work directly with the holding companies rather than a bunch of 3rd parties.  At Microsoft, we have an “open auction" in which every buyer is invited to participate.  This does not mean that our publishers lose control or are enabling the cannibalization of the premium direct channel.  Listing in an open marketplace does not prevent a publisher from using such tactics as block lists, selling inventory semi-blind, or having an ad offer that is not guaranteed.  I believe an open marketplace not only creates a more liquid and dense auction (good for yield), but it also empowers the publisher to understand the opportunity cost of a certain business rule (like a block list). 

That said, while I am biased towards an open marketplace, today’s conversation proved that open/closed is just a way to run a marketplace and it is of little importance as long as the publisher has the right controls.  The panel agreed that these controls should work to offer a more direct conversation between buyer and seller – not just more direct but more efficient.  And that - more efficient - is what I believe RTB is really bringing to the table.  Ben Barokas, Chief Revenue Officer at Admeld, elaborated on the power of  automated buying through API connections: “no more sales plans with 300 line items, no need to send those ad tags over email.”  So while the business models around RTB will likely continue to evolve as different publishers try different approaches, it is certain that the efficiencies RTB enables will have a very positive impact on digital media buying and selling.

Diego Panama - Microsoft Advertising