The Private Exchange Landscape Ripe for RTB

The Weather Channel, CBS, NBC Universal, Forbes and IDG have all launched private ad exchanges in the last six months. The idea behind private exchanges is that they will allay big publisher concerns that putting their inventory on ad exchanges will commoditize it. The private exchange offers more control to publishers, which should lead to more high-quality inventory available for RTB, making it more attractive for brands.

According to Neal Mohan, Google’s vp of product management, as many as half of all targeted ads may be acquired through real-time bids within five years, which means that private exchanges will be moving towards RTB en masse on virtually every platform, including video. Core issues with RTB scalability and quality could be solved with the premium inventory that many private exchanges offer, and RTB’s failure to gain massive chunks of display spend may cease if major publishers and platforms make RTB technologically accessible for advertisers seeking high-quality inventory.
“We’re now seeing more than 60 percent of the trades on the DoubleClick Ad Exchange happen in real time, and I expect that number will grow,” said Mohan,  “especially as we see a rush of new formats move towards this type of buying: video, mobile, even TV.”
“Major, branded print publishers are taking back control of their online inventory, and the tools available today are enabling them to take back control of their audiences too,” QuadrantOne CEO Mario Diez said. That control, according to Diez, is built on the transparency of RTB as well as the quality inherent within private premium exchanges.
Private exchanges also offer more brand safety controls than open networks, which when combined with RTB, remove some of the fear factor from devoting ad spend to a large unsold inventory.
Although regulatory uncertainty around consumer tracking via cookies still looms, recent research from Forrester expects RTB spending to continue to rise in 2011 and predicts that more major brands will launch RTB-enabled private exchanges.
“Just because an inventory is unsold, doesn’t mean it has no value,” said Phillip Smolin, gm of platform solutions at Turn, a demand-side platform. Turn released a study that showed RTB conversion rates up to 150 percent higher than non-RTB inventory.
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