By Bill Mickey

By now you’re well aware of programmatic advertising and its effect on the market place. Publishers have also been setting up private exchanges that utilize many of the same elements of an open programmatic exchange, but allow them to offer one-to-one ad opportunities in a more exclusive setting. Here’s what a private exchange looks like and what’s involved in setting one up.

Private ad exchanges are still sold programmatically, but publishers have more control over pricing and who’s doing the buying. Brand marketers also know more about what they’re getting and that the inventory they’re buying is premium quality and appearing in a safe and trusted context.

“A private exchange is the ability to transact a digital spend in a one-to-one relationship with an advertiser,” says Mike Hannon, chief revenue officer at Purch. “You’re still doing it programmatically, but setting up a specific opportunity—size, audience and the part of the site. It’s a defined piece of inventory that you are negotiating with the agency or advertiser.”

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By Michael Hannon

For digital publishers today, the benefits of programmatic are clearer than ever. Not only does it provide the chance to monetize all inventory, it also provides the insight necessary to understand what kind of yield the open market can produce. In turn, this informs pricing strategies for all ad products sold.

That’s why the overwhelming majority of publishers have embraced programmatic. But they’re still struggling with programmatic’s basics. Here are the three areas where challenges are most common.

1. Strategy. Having an immediately defined programmatic strategy is a must for all publishers. However, this is easier said than done, given the complexity involved. Publishers must consider factors like how the ad tech landscape works, the motivations of the various players in that ecosystem — and ultimately what they, themselves, want to accomplish. This can be both convoluted and eye-opening, with  many pieces obscuring how to proceed best. Programmatic is still only a few years young, and publishers are only now moving beyond the education period.

The capabilities of ad tech providers who enable programmatic functionally are constantly shifting, so it’s necessary to have a strategy in place that is flexible enough to adapt. Strategy must be tweaked on an ongoing basis, like software or code.

2. Execution.  Staffing and establishing roles requires ongoing evolution. There is no short list of needs. For example, vetting and striking deals with ad tech vendors is obviously key to executing your strategy. But who will lead the day-to-day oversight and optimization of those platforms? This often requires a technical skill set that many — if not most — publishers don’t inherently have in their organizations. And once new talent is brought in, understanding how that ultimately impacts a go-to-market strategy and overlaps with your existing direct sales force can be difficult to navigate.

Staffing is also influenced by what you decide to do with your inventory. Many publishers think programmatic and RTB require putting everything into an open exchange. There are other options, however, from direct sold to building a private exchange to managing your own inventory. Whatever the approach, it needs to clarified internally to sales teams or else it can confuse and alienate.

3.  Accountability. Accountability and transparency have always been challenges in our industry — the result of our tedious ecosystem, with multiple players at every stage of a buy. And as we provision this programmatically, understanding and controlling traffic quality is becoming even more complicated.

In automated environments, transactions go up, but there’s less visibility in the process. It becomes a black box. As a result, publishers need to protect themselves and defend traffic quality from potential bad actors. This means installing analytics to measure traffic from partners, in-page mechanics, and third parties to verify your audiences and enable bot protection. You also need to factor in viewability verification and brand safety measures.

With programmatic, boosting your ability to manage fraud and viewability are more important than they’ve ever been. At the end of the day, you have to be accountable for your traffic as buying and selling mechanizes. This is why publishers with owned and operated sites or those in direct sold relationships are doing so well — bad actors are less likely to erode traffic quality and price.

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TechMedia Network has this week named Michael Hannon VP of yield and revenue optimization. Hannon joins the company from PulsePoint, where he served as General Manager of their RTB exchange and advertising operations.

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