There are three main ways an online media buyer can effectively buy media: 1) direct to publisher 2) through a network or 3) through an exchange. Each offer its own drawbacks and benefits.
For example, buying direct to publisher has a higher cost, while previously agreed to placements are guaranteed. Doing a media buy through an ad network offers flexibility and audience targeting, but sometimes lacks transparency. Finally, buying through an exchange offers a low cost, demographic and behavioral targeting, but the threat of appearing in “below the fold” or “remnant” inventory.
The increased availability of behavioral data from data exchanges allows ad exchanges to target much more accurately and compete with direct publishers on quality of media. We often wonder whether buying from exchanges and networks is lower quality, due to the lower price. When you consider the sheer volume of inventory that needs to be liquidated by “premium” sites, it simple isn’t possible that some of it doesn’t find its way onto the exchanges. Selling inventory on an exchange is almost a guarantee that it will be purchased. That’s much better than letting it go to waste. So perhaps the notion of “you get what you pay for” really doesn’t apply to exchanges after all. It seems the odds of getting quality, premium site inventory should be higher when you consider that premium sites must liquidate it on the exchanges.
In other words, you may be buying a Toyota instead of a lexus, but it still has all the same parts and performs all the same functions.
When I meet with representatives of networks and exchanges, I always ask how much inventory they think publishers sell on exchanges. I’ve heard guesstimates that range from 30 to 50% of publisher inventory being sold directly, leaving the rest to be sold on exchanges.
Google has dome research that corroborates the guesstimates of my reps. In 2010, Google asked online media buyers: “what percent of your online advertising was purchased direct from a publisher rather than via an intermediary (network, exchange, DSP or other)?”
The highest number reported was 18%, meaning that online media buyers purchase 56% or more of their online media through networks and exchanges.
It’s also been reported to me by a vendor partner that display inventory on ad exchanges is up 300% from one year ago. On the other hand, total display inventory is only growing by 20-25% per year. The difference must be made up somewhere, and its likely from publishers liquidating inventory on exchanges.
The data shows that the media buying industry is rapidly increasingly its reliance on exchanges. At ionic, my team fervently believes there is a “right brand and right goal” for exchanges, networks, and direct to publisher buys. We keep this in mind when choosing our media partners, and create media plans with a prudent and appropriate blend of networks, exchanges, and direct to publisher placements.
.
.
.
.
