Will Video Go the Exchange Route?

By Carla Rover • July 7, 2011 •

The rise of ad exchanges and machine-based ad buying has been fueled by the oversupply of ad inventory in the display world. Now, despite different dynamics, the same appears set to happen to video.

Tubemogul, a video ad platform, is launching a private exchange that uses real-time bidding for pre-roll and in-stream video inventory. The private exchange would allow publishers some manner of control over pricing and buyers that would be unavailable in a broader exchange. Video exchanges include Adap.tv and SpotXchange.

“We saw an opportunity to unlock inventory that was being held back because they feared commoditization,” said Amy Richards, CMO of Tubemogul. “Most of the automated technologies today really favor buyers and drive down the price of inventory. These technologies can’t unlock truly premium or truly scarce inventory — they will always seek the lowest price, even if the company is claiming it is offering premium inventory.”

Better inventory will mean better prices for publishers and a better ROI for advertisers, Richards believes.

“We are giving publishers all of the control so that they can understand demand and offer specific inventory to advertisers with whom they have existing relationships or with whom they want to develop a relationship,” Richards stated. “For example, publishers would be able to hold back, say 10 percent of their inventory that would normally be 100 percent of the market and set a CPM floor to create a bidding war.”

According to Richards, the pent-up demand for premium video will bring advertisers into the exchange, while the ability to set pricing will draw in major publishers. The risk of the model is that with publishers in control, advertisers may be priced out of the private exchange and end up back at the ad networks and exchanges with more competitive pricing, unless the marjority of leading publishers come aboard.

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