The Right Media Exchange was launched in 2005 and acts a a stock exchange for advertisers and publishers. It was acquired by Yahoo in 2007 for $680m. It now claims to have over 240 Exchange members, with 8bn transactions a day going through the Exchange.
I've been talking to Roger Williams, the company's director of international marketing, about the workings of the Exchange, the impact of the Yahoo acquisition, and how online ad exchanges may develop in future.
Can you provide a brief summary of how The Exchange works?
The Exchange is a technology platform that is designed to bring buyers and seller of online advertising inventory together (publishers, advertisers, networks and agencies) in order to trade inventory more efficiently via a real time auction.
Sellers place their non-guaranteed inventory on the exchange while buyers establish their targeting criteria and then bid to purchase relevant inventory, impression by impression, through a single platform interface.
It offers a common global online, auction-based trading platform, where buyers and sellers of digital advertising can all be inter-connected. Price is driven by market forces, making the whole process faster, easier and more transparent, eliminating many barriers to business and removing traditional inefficiencies.
What spending trends are you seeing from advertisers on The Exchange?
I suppose the key trend is greater volumes of business going through the Exchange month on month. This is an obvious sign of the growing importance of trading inventory via online platforms and the confidence companies now have in them. Currently the Right Media Exchange is trading around 200bn impressions monthly.
How can The Exchange be used to gain information about users and user behaviour?
As well as members being able to pass their own data into the Exchange, they can use the platform to develop user segments and track activity across sites and creatives over the whole Exchange.
Members can also link with third party behavioural targeting platforms that are on the Exchange to help them with their behavioural targeting strategies.
A challenge for some behavioural networks is they can be quite restricted in terms of scale. The Exchange can help overcome this thanks to its unprecedented global reach and scale.
How much control do advertisers have over placement of their ads? How transparent is this process?
Advertisers have a wealth of controls over the placement of their advertising across the Exchange. They actively define which partners on the Exchange they will or won’t work with, based on what is best for their brand and business; they define the types of sites they are happy for their creatives to appear on and those they wish avoid, banning specific content, inventory types and sites; and our Marketplace Select tool allows brand advertisers to view an ad network’s or publisher’s site list so they have greater visibility and control as to where their ads will appear. These are all designed to help an advertiser target its key audience while maintaining its brand integrity.
What are the effects of increased automation for advertisers and publishers?
Controlling multiple business relationships on a single platform and removing many of the traditional, repetitive and time consuming manual processes associated with trading online advertising obviously brings major efficiencies to a business, whether a buyer or seller. For example, the ability to quickly tap into demand and supply when required helps drive campaign success.
For an advertiser, the platform’s auto-optimisation capability means their campaigns quickly achieve their ROI goals, as the system learns which creatives work best on what sites and sections, starving poorly performing creatives of the campaign budget and focusing it on the performing ones.
How do you ensure quality of ad inventory?
We obviously have stringent rules about what we will and will not accept on the Exchange and who we bring on board but ‘quality’ itself is a very subjective word and what the Exchange provides is an environment that helps advertisers target their appropriate audience. For example, direct response advertisers will be happy to appear on a much broader range of sites than a branded advertiser, which will be much more selective, based on brand sensibilities.
Inventory itself can also be segmented out to a very granular level, allowing quality inventory to be defined. At the same time, we are finding that as more and more major organisations embrace the exchange concept they naturally bring with them a much higher quality of inventory.
How much activity on the exchange is US based? How much in the UK / Europe?
International is the fastest growing part of the Exchange. Currently, international represents 63% of impressions traded across the Exchange (the US representing the remaining 37%) and we are trading impressions across more than 80 countries. The first quarter of this year was a record for the international team in terms of new members signed to join the Exchange.
Has Yahoo!’s investment made big publishers more willing to add their inventory to the exchange?
Yahoo gives us great credibility but when a publisher decides an exchange is right for them is very much their own business decision. Exchanges represent a totally different way of operating which is very new to many organisations. As a result, it is only when an organisation feels comfortable internally with the concept that they will look to come on. Our ongoing challenge is much centred around educating the market and getting all relevant players to understand what an exchange can bring to their business.
How has the company grown since the takeover?
The Exchange has seen immense growth since the business was acquired. In particular it has helped us drive our rapid international expansion by giving us access to resources, investment and infrastructure to greatly accelerate our development.
How has the economic downturn affected advertisers’ spending habits?
We continue to see month on month growth across the Exchange at a worldwide level. The Exchange is very much a performance marketing tool and in an economic environment where measurability and accountability for marketing spend is key, there is even greater interest in exchanges.
In the 1980’s we saw the rise of offline direct marketing during the economic downturn as companies turned to targeting and measurability. The last recession heralded the rise of search for the same reasons (targeting and measurability) and today I see the same happening with online display.
How do you see online ad networks and exchanges developing in the future?
I see the continued growth of exchanges and other platforms which can help drive much more efficient buying and selling. I also see exchanges eventually trading a wide range of media and not purely online display advertising.
In the network environment I think there will be shake out, with the networks that add real client value benefiting, while those that are simply acting as pure resellers without adding any additional value will be squeezed out. Above all, technology will be key driver and networks need to embrace this in order to compete in the future.