What’s Next For Private Exchanges?

Maximizing the CPM is a difficult task when there are unsold ad impressions every month. Emerging technologies, like real-time bidding-powered private exchanges, are gaining traction to help publishers sell through their remnant inventory to the highest bidder to maximize yield. Some publishers, like Hearst Digital Media, for example, recently launched their own private exchange. But something is missing.

Private media exchanges need to evolve beyond simply selling remnant ad impressions. Publishers are building these exchanges to offer remnant media, and they can benefit from including first-party audience data in this offering. When they
don’t infuse their data into private-exchange offerings, ad dollars go to third-party data providers to validate the remnant impressions from the publishers. But this doesn’t need to happen.

RTB, and by extension private exchanges, is gaining momentum because it gives advertisers the access they need to efficiently target their own specific segments across vast sources of inventory. The greatest influence on their spend is the overlap
of this data. Publishers need to grant visibility into the overlap of advertiser segments on the media in private exchanges.

First-party data is valuable for targeting beyond a publisher’s own site. Bringing data into a private exchange is not unlike basic audience extension, but very few private-exchange publishers are doing it. By making its first-party data available in a private exchange, a publisher can do audience extension inside its own trusted, private partner inventory. In a real-life example, we have two major publishers, each with more than 20 million monthly uniques, that have made their data available to each other. Both benefit greatly from the arrangement, as they now have nearly twice the visibility into their own audiences than they had before.

Publishers that currently utilize DMPs can enter into such partnerships in no time. DMPs help a publisher understand its audience through careful analysis and segmentation, giving it a real-time view of its audience and the impressions that are
available to it. Publishers then use this information to appeal to advertisers looking to hit certain segments. With little effort, the publisher can make these same audience segments available with media in a private exchange. Publishers win twice when
they package their first-party data with the assistance of a DMP that can collect and activate its data for easy consumption via direct sales and its private exchanges.

We are seeing a change. Both advertisers and publishers are offering more open platforms on which their partners can buy and sell media around data portability. The key elements of audience buying, like overlap, analytics and inventory availability,
validate bigger budgets for publishers — and better targeting for advertisers.

Andy Monfried is CEO and founder of Lotame, a data management platform.


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