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How Display-Services Firms Are Trying To Leverage Rise Of Real-Time Bidding

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As real-time bidding volume has grown substantially since the major ad agencies began experimenting with it in a big way over the past two years, display-ad services firms such as The Rubicon Project, PubMatic have looked to build out sell-side platforms to make it easier for wary publishers to protect their CPMs on ad exchanges.

Last week during Ad:tech, display services firm Collective became the latest entrant in the space. But rather than acquiring or building a system in-house, it decided to go after bid ad dollars by partnering with RTB platform AppNexus. I spoke with Collective CEO Joe Apprendi after his presentation about how he sees the business evolving in the U.S. and in Europe, where Collective has been looking to expand its presence.

paidContent: So with all the attention RTB is getting, does that mean that Collective will start focusing less on powering its ad network business?

Joe Apprendi: No, that’s still an important business. Our AMP platform, that we built for our own display business, is now licensed to over 26 media companies, including IDG and quadrantONE, who use it to target audiences based on data as well as where they are on a given website or page or section. That business has grown and has been a key strategic asset for the company to maximize share of media spend on the buy side as well as access to inventory on the sell side. It’s not really a big change from what we’ve always done, in fact.

How so?

Everybody has a different definition of an exchange. For Collective, we see this really simply as a complement to how we’ve been selling audiences to brand advertisers. Over the last year, the agencies have been building their own media buying platforms. In some capacities, they’ve been replicating the things that Collective and other audience-driven networks have done well in the past.

The agencies have built up very strong media planning and buying teams to buy content, sponsorships and site integrations, etc… But they haven’t developed a lot of expertise in buying audiences. That’s what we’ve done well and we recognized quickly that as we’ve started expanding how we access inventory from the sell side, we’ve added RTB as part of our capabilities. We started real-time buying across a high quality system of publishers. But it’s just new technology, ways to acquire audiences that our advertisers want.

So the agencies are pretty active on using RTB, primarily to get better prices, transparency and placement. How do publishers feel about participating in exchanges. Have Collective’s clients on the sell-side embraced it?

About 70 percent of our direct-to-publisher networks that we have literally built, grown over the last five years, aren’t on exchanges. The very ripe, opportunistic, unduplicated system of high quality inventory made us realize that we already offer this up on a CPM basis to these brands. They want to start real-time bidding, actually bid on their own publisher data. They want to bidding on their high quality inventory. This is a very much a sell-side solution.

Publishers’ priorities are to sell their site first, preferably at a high premium. That’s 80-, 90 percent of their revenue. If audience buying becomes a much bigger component, that might go down to 70-, or even 60 percent. Our proposition is that we can help bridge that gap, so they don’t have to say, ‘I can’t compete for that market.’

Why are you getting into this now?

We think it’s going to be a big component of how display, video, mobile and even TV gets bought and sold in the future. So we want to get ahead of it.

Since Collective has invested so much in its own technology and analytics, raising $20 million in a second round over a year ago, why partner with an outside firm like AppNexus?

Collective has core tech capabilities, including, audience analytics, display audience data, display media management. But AppNexus is the leader in RTB. If you wanted to create a market for unsold inventory through RTB based on the wealth of audience data we have, the individual attributes, they enable us to bring the inventory to market with the most flexibility from a pricing standpoint. They’ve already integrated with every buy-side platform. They’re already integrated with all the ad agency platforms. So, it makes sense to partner with them, use what we already have built, rather than try to catch up to them. It makes the most sense.

One Response to “How Display-Services Firms Are Trying To Leverage Rise Of Real-Time Bidding”

  1. I built out a real-time bidding exchange like this back in 2007 (not for sale – re purposing for DOOH) but didn’t think there was any demand for it and the learning/adoption curve would be too high. The risk I see is competing in a high-demand sector of short-tail wavelength of available ad space.

    Real-time bidding does not address the long tail space out there that can provide more depth and market penetration and probably a lot cheaper than the overinflated bidding by a few buyers for a few spots.