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Why Private Exchanges Need to Happen Within an Ad Serving Platform

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Posted by Andrew Gilligan on May 6, 2015
Private Exchanges Within an Ad Serving Platform

Every time I talk to a publisher about their experiences with Private Exchanges and DealID they have said the same thing: Not enough demand. I found that hard to imagine given the recent attention the industry is paying towards programmatic buys and moving away from IO based transactions. As I dug into the various options, I realized what they were saying: Not enough fill to make it worth the trip to an SSP and back.

Most of these publishers were using an Ad Server that was built to facilitate IO based campaigns and only engage an Ad Exchange when the impression went unfilled. SSPs and Ad Exchanges popped up to take advantage of some of these inefficiencies by monetizing this “mid-tier” between premium and remnant. But if you want a $2 CPM from a 3rd party SSP, you probably won’t sell more impressions than you lost on the round trip between your primary ad server and your SSP:

Private Exchanges Within an Ad Serving Platform

In an ideal world, you would want your ad exchange to be configurable, like a line item, so you can tell it where it can compete and at what price. This would open up opportunities to force competition between some of your direct campaigns and the open market or private exchange. If a DSP wants to buy a specific user for a $5 eCPM and you were going to give it to a $3 direct campaign (that was in no jeopardy of missing its goals), you would probably choose to take the higher eCPM.

As buyers continue to seek engagement, retargeting, and audience penetration, they will increase their spends on programmatic platforms that can support those deal types and work in a “First Look” fashion. Publishers who need to balance the revenue potential and the impression loss by working with SSPs should demand a programmatic solution that is native to their ad serving environment that can support Private Auctions, Deal ID, and Open Auctions. With Smaato's free Publisher Platform (SPX), publishers take full advantage of per-impression competition among all these types of buying models to maximize eCPM on every single impression.

Written by Andrew Gilligan

Smaato's Senior Director, Product Strategy Andrew Gilligan brings more than 10 years of advertising technology experience to Smaato's product strategy team. He has extensive knowledge in desktop and mobile ad serving as well as deep expertise in yield optimization and the SSP space.

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