Why Hearst Bet on a Private Exchange

Hearst is the latest major publisher to roll out a private exchange and allow advertisers to access its inventory directly using automated trading technology. To date, many publishers have seen private exchanges as little more than a way to more efficiently monetize their unsold inventory, but Hearst says it’s taking a different approach and hopes to use it to add value to all of the media it sells.

“All of our inventory is available to advertisers through the exchange,” said Orchid Burnside, director of digital operations for Hearst Digital Media. “Most publishers went out to figure out a way to get rid of unsold inventory. Our approach is about finding more value for our advertisers.”

Essentially, Hearst hopes its exchange, teamed with the user data it collects, will help unlock greater spend from advertisers by catering to direct-response and audience-based campaign goals as well as straight-forward branding ones. Advertisers are going to Hearst Digital Media with two separate budgets for those goals, said its chief revenue officer Kristine Welker. The exchange, in addition to its direct sales team efforts, is designed to help the publisher better attract spending from both.

“We started thinking about how we can offer solutions that enable our clients to work with one partner and satisfy all their objectives. They’re already asking, and we’re responding to an opportunity,” Welker said. “It’s about being proactive and really understanding how the marketplace has evolved. This will drive monetization but not just through the lens of remnant.”

Hearst has an unusual position among publishers. It owns a data management platform, the recently renamed Core Audience (formerly Red Aril), which it will use to help power the exchange. Pubmatic is providing the private exchange technology.

Hearst will, of course, monitor and control which clients have access to inventory to avoid channel conflicts with its direct sales teams. But ultimately, it’s hoping that more robust audience data can help it better monetize its brand display ad offerings, too, by demonstrating clearer return on investment and its ability to reach specific audiences. “We wanted to find a way throughout technology to both demonstrate the value of our audience and our brand, but also provide clients with greater efficiencies,” Welker said.

Inventory across Hearst’s portfolio of more than 25 digital brands, including Cosmopolitan, Esquire, Seventeen and Good Housekeeping, will be available via the marketplace. Its rival, Conde Nast, rolled out a private exchange of its own atop Google’s AdMeld technology earlier this year.

Since the focus of the exchange is not about clearing unsold media, Hearst will continue to work with other third-party sales houses and networks, Welker added.

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