Although the use of ad exchanges by marketers and agencies have been growing rapidly the last year, the one part of the media buying and selling equation to resist the embrace of real-time bidding has been major publishers. The one area that holds some promise in convincing publishers to sell more inventory through RTB has been the emergence of “private marketplaces,” which allow sellers more control about who can bid on their ad placements. In response, Yahoo’s pioneering ad exchange operation Right Media is rolling out some new features designed to keep up with publishers’ demands.
Yahoo (NSDQ: YHOO) has long been the display ad leader, but lately, Google (NSDQ: GOOG) and Facebook have been eating into that dominance. Though Yahoo’s display advertising revenue in total was up 5 percent to $467 million in its Q2 results that were released last week, that was less than analysts anticipated. And CEO Carol Bartz told analysts that she not happy, but was reorganizing the company’s sales force and planning new products that she said would lead to improved gains.
Aside from the changes on the premium ad sales side, with more money coming into ad exchanges — Forrester Research forecasts that U.S. spending on RTB in 2011 will double over the previous year’s spending to $823 million — Yahoo should be able to capitalize on that, since it bought Right Media about three years ago and was way ahead of its rivals.
But Google especially has been catching up. Now, with its pending $400 million acquisition of supply side platform AdMeld — a service aimed at protecting publishers’ prices within an RTB environment — plus, Google’s existing ownership of demand side platform Invite Media, which works with ad agencies on gaining better insight and bidding for inventory in an ad exchange, Yahoo needs to move fast to meet the greater challenge.
In an e-mail Q&A, I asked Ramsey McGrory, VP & Head of Right Media, about the competitive landscape and how its RMX platform is evolving as a result.
paidContent: With the release of these new private marketplace options, does this mean Right Media is evolving into a supply side platform like Rubicon, Pubmatic and Admeld? Or do you see Right Media as a larger entity that crosses the lines of DSPs and DMPs? Is Right Media more of a competitor to AppNexus, which sees itself as above discrete terms like SSP and DSP, and has positioned itself as an ad exchange operator (which is how I’ve generally viewed Right Media)?
Ramsey McGrory: RMX is an exchange and is not deviating from that. The exchange strategy means that we enable buyers, sellers and value-added intermediaries, and provide many of the tools DSPs and SSPs provide. The Publisher Controls released recently are part of ongoing enhancements and features released by Right Media. With each release, our attempt is to make the Exchange more efficient and level the playing field for the bidding and transacting parties.
The Right Media Exchange was created in 2005 as a private marketplace by design where buyers and sellers opt in to relationships with each other. In 2009, we rolled out Marketplace Select, which further extended our Private Marketplace by design philosophy, technically enabling deeper control of where campaigns ran (at an URL level). The most recent innovations extend our capabilities further by giving media sellers the tools to establish price floors for inventory surfaced via RTB and to establish transparency rules that enable a publisher to differentiate the transparency providing to client via the seller’s direct salesforce versus indirect sales via RMX (i.e., URL transparency for buyers coming via direct sales channel who contract for a guarantee of delivery vs. domain-level transparency for buyers via RMX who bid for inventory on a non-guaranteed basis).
Do you see the private marketplace offering as a way to encourage publishers into the general RTB space?
Private marketplace is a fancy way to say that buyers and sellers are creating preferenced relationships with each other, providing advantages such first look for inventory, pricing discount for spend commitments, URL-level transparency. These can be accomplished via normal ad serving or via RTB. So, private marketplaces don’t promote or inhibit RTB adoption. Better pricing and transparency controls such as the ones we are rolling out will promote increased RTB adoption by publishers.
Can you offer any sense of how much Right Media has grown in the past year, either in terms of impressions or the percent of online ad dollars being funneled into that system?
Right Media is a global exchange and we’re seeing continued impression and eCPM growth with some regional differences. In Q4 2010, Right Media was averaging 6-8 billion daily transactions globally. More recently, we’re averaging 10-11 billion daily transactions. In the U.S., where Right Media began in 2003, we have significant reach of the Internet population and we’re experiencing rising CPMs as buyers become more sophisticated. EMEA and APAC are ~30% YoY transaction growth. In Latin America, it’s a nascent market and we are seeing 70% YoY transaction growth. We expect the non-U.S. market to follow the U.S. in terms of transaction and yield growth.