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Are Private Ad Exchanges the Missing Piece for RTB?

There are few examples of private advertising exchanges in the market - that is, a digital marketplace in which one very large publisher connects advertisers to its segmented user base. The Weather Channel has launched such a platform with AdMeld, prompting the industry speculate whether this will be a model that can be repeated in other scenarios - especially as it will be fueled with real-time bidding technology.

The private network, called Category 5, connects advertisers to more than 50 million consumers across TWC’s web and mobile properties. The network also gives the publisher complete control over how each impression is sold. Many of the largest advertising and media holding companies are integrated into Category 5, including Omnicom and Vivaki.(via MediaBuyerPlanner).

In many ways Channel 5 is the end result of long-forming trends in the ad market. Cross-platform, audience-targeted ad buying is gaining momentum. Also sophisticated data management tools that can identify, package and sell a publisher’s most valuable audience segments have come to market. Also, agencies and advertisers have long wanted a more efficient means of executing cross-platform buys with publishers of this caliber.

For their part, publishers such as the Weather Chanel have long resented the low prices set by ad networks. Over the last twelve months, agencies have begun diverting sizable budgets to audience-targeted media buys, according to Michael Barrett, CEO of AdMeld. “This trend is accelerating, and the savviest publishers are moving to capture these spends and embrace ‘audience-selling’ as an integral part of their strategy.”

The RTB Piece

Then there is the real-time bidding element to Channel 5, which has been a core competency of AdMeld. The launch of TWC’s private ad network will be closely watched not just to see if this particular concept takes off but also to see how well its real-time bidding elements will perform. At least half of all targeted ads will be bought using real-time bidding technologies within five years, predicted Neal Mohan, Google's VP of product management at the recent Mixx Conference in New York. That has been Google's experience with DoubleClick, which has seen its real-time advertising triple in the past year.

Particularly hated by privacy advocates, real-time bidding lets advertisers target audiences by individual impressions via auctions. Advertisers get access to consumers based on their web history thus allowing them to show relevant ads based on their history. Right now only a miniscule percentage of ads are sold this way, but that is rapidly changing.

AdSafe recently observed that premium brand advertisers appear to be shifting a larger percentage of their display adverting spending to ad-exchanges, real-time-bidding platforms and demand side platforms - advertisers that had previously acquired media primarily through direct publisher sales.

Also RTB offers an excellent ROI story. Improve Digital co-founder and COO Janneke Niessen cites research by Turn that shows click-through rates improving by up to 135%, conversion rates up 150% and cost per action up 145% when compared to non-real- time inventory. (via New Media Age).

Other data she points to is provided by comScore, which reported a 106% increase in overall CPM over six months by using real-time bidding. And Forrester Consulting found that an insurance company decreased its online cost per lead from $200 to $100.

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