I always promise to seek out and find solutions that make a difference and I encourage us all to demand technology to push us to improve how we manage our online advertising initiatives. Sometimes I find them and sometimes they find me!
This past week I touched on Right Media and the concept of online auctions as a mediated exchange between buyer and seller. I also presented the argument that there are too many hands in the pot with this model. Right Media’s new “Direct” product elevates the inventory quality potential by only bringing in publishers as opposed to it’s traditional exchange which is largely comprised of networks and non-premium inventory.
I had the delightful opportunity to speak with Bennett Zucker from Right Media yesterday. He called me the “mad man in the mountains.” LOL. We actually had a great conversation and spent a lot of time sharing ideas. But one thing that Bennett shared with me I am bringing back to you. Right Media will private label their exchange technology. My challenge has been met.
In my Disintermediating Ad Exchanges, Publisher Ad Auctions (http://arikaufman.com/2007/02/07/disintermediating-ad-exchanges-publisher-ad-auctions.aspx) I asked you to find a technology or develop a technology that would empower publishers to cut out the middle men so that they could run their own inventory auctions. Right Media is doing just that. I did not ask how much penetration they have or how many clients they have, but I was really pleased to learn that this exists.
Let’s look at the publisher technologies.
Ad servers are pretty well covered, however meekly. None of them are that great, as we all know, since every trade show floor is full of publishers wandering around looking for “that” platform, which can actually forecast inventory with a degree of accuracy and to save them lost monthly revenue.
Publishers have whittled together DFP and Omniture and perhaps some additional Business Intelligence tools to create some insight into what is available to sell. That’s the closest I have seen. But the inventory insight is never more than a week or two out. Yahoo has a room full of people calculating forecast models and they only get about a month out before their accuracy rates drop sharply.
Basically you just sell an approximation of what you think is safe to sell, and make-good on what you over-sell the following month. Publishers frankly have to rely heavily on networks to backfill the inventory that develops last minute, because they have no way of predicting what will be there in advance.
So we rely on networks to take on the excess inventory and they sell it cheap. We have no way of knowing monthly over month exactly how much inventory we will give to them, and we tend to turn the dials up towards the end of the month as our direct-sell customer’s campaign commitments are being properly met.
Enter the auction. The Right Media Direct auction is a legitimate alternative to a network and, it seems, may be offering higher returns for publishers than networks (in some cases).
Direct offers publishers the opportunity to push higher value inventory into an auction than they might otherwise have done with the exchange service. They can do this last minute, with what they haven’t sold. The result is that less inventory will flow into the networks, which offer low returns, and whatever the network doesn’t sell will probably end up back at auction again in the traditional exchange anyway! That’s a nice model. But not what I was hoping for.
What I like is that Right Media will enable a publisher to run their own auctions in-house. They will private label the technology. So a publisher can sell their own advertising directly and then run excess inventory through their own auctions. Quality inventory that doesn’t sell can go to the private auction rather than a network who returns less for it. This is not the top-level inventory that they sell directly, but it’s better than that which should be getting farmed out to networks or to Right Media’s exchange auction.
Publishers will retain a higher yield for their inventory while simultaneously moving more of their inventory directly. This I like.
This self-directed publisher auction model will enable a site to increase sales without having to increase their team or the costs associated with growing the operation. In fact, they may even find that they can move more inventory with less people! From my publisher days, there was always that juggling act. How much inventory can a sales person sell. A top-performer vs. and average performer. What is the ramp-time of a new hire. A direct-selling auction tool offers a publisher the opportunity to have their own clearing house with a much higher return value than their current network clearing house options. I really like this.
Right Media has a solid set of models here. They are a destination for remnant inventory that a network can’t sell or for publishers that would prefer to work with the auctions directly as a clearing house for non premium inventory. Advertiser’s like it because it is an easy way to buy advertising and is increasingly familiar due to the commonality of search advertising auction-style buy models. With regard to publishers who participate directly, advertisers know exactly where their ads will run, which they prefer to networks. And the private label model offers publishers the opportunity to auction-off more premium inventory to advertisers directly. This will help them retain a greater share of their own advertising revenue and will offer advertisers the opportunity to get access to more premium inventory at a lower rate because the auction model will offer access to better rates.
So in the end, I really appreciate the call Bennett. We found something that we were looking for. Now I know that there are solutions for publishers to manage auctions both for Search and Banner advertising directly. Superb. Great talking to you.
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