Ad Network & Exchange Guide 2009

A Closer Look at What Agencies Have in Store for Demand-Side Projects

Behind the Scenes From Adnetik to Vivaki

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PUBLICIS' VIVAKI/AUDIENCE ON DEMAND

Curt Hecht

Curt Hecht

VivaKi is building its private digital trading platform on top of Google's DoubleClick ad platform, with an initial focus on working directly with premium publishers to flow their impressions directly into this private environment, according to Curt Hecht, president of VivaKi Nerve Center. The goals is to allow VivaKi clients to "access premium inventory not in the ad networks or sold through indirect channels," Mr. Hecht said. "We're working with premium publishers to flow that inventory into our private exchange and being very transparent with it. We're making an offer to publishers for that inventory an impression at a time, and publishers are releasing that inventory at prices that are attractive to them."

For now VivaKi is focused on premium publisher inventory, but it is working on integrations to flow in additional network and exchange inventory as well, Mr. Hecht said. In the end, it's all about smarter use of data and ultimately moving from buying page views to buying audiences. "In our first phase, we are moving clients into the audience space at scale and around inventory where they will feel comfortable with their brands," he continued. "In the second phase, we'll start to grow our reach. Other than for acquisition marketers, this is a fairly new concept. We want to move at an acceptable pace for our clients."

For now, VivaKi is only spot buying to fulfill specific client needs. "We have not taken any positions," Mr. Hecht said. However, he said that ultimately, "for this to scale, we need to move into a reservations-based marketplace."


WPP'S GROUP B3 NETWORK

Brian Lesser

Brian Lesser

WPP certainly made a splash by buying the 24/7 Real Media Exchange in 2007, but its private trading network -- dubbed B3 -- has not been much written about or discussed. "We've been under the radar, but word is getting out," said Brian Lesser, VP-general manager of WPP's Media Innovation Group, which runs B3 on behalf of WPP agencies. B3 sits to the side of 24/7 rather than running over it. "B3 acts as an aggregator of other ad networks, a sort of network of networks. In the process, we create more data and enable better optimization and targeting and increase the transparency with the networks we are buying. We can basically create custom audience networks for advertisers."

B3 went live in the middle of last year, and today 45 clients are running campaigns through B3, Mr. Lesser said. Once a client media plan is in place, the private trading network lets the agency and its clients apply targeting data across all the impressions purchased. It also lets clients cap ads by frequency and watch its performance across the entire buy, which allows them to optimize and reallocate spend toward what's working, Mr. Lesser said. On behalf of its agencies, B3 buys from more than 60 networks and publishers. B3 itself "is a neutral party; we don't make decisions on where the dollars go; that's up to our agencies. We just look at the data and optimize," Mr. Lesser said, adding that B3 isn't focused on "creating a pool of inventory we can tap into. [Instead], we look at what inventory is right for a particular customer and go out and source that inventory."

That's not to say WPP's moves have been without controversy. Its recent declaration that it would no longer share data from its campaigns with publishers or networks was cited by some as proof that it sees for itself a more dominant, rather than complementary, role in the display ecosystem.


OMNICOM'S TRADING PLATFORM

Matt Spiegel

Matt Spiegel

Omnicom has yet to announce a demand-side play, though people familiar with plans say a trading platform, probably with a significant service element, is likely to come soon. Omnicom Digital CEO Matt Spiegel declined to commit one way or another, but he did spend some time talking about the potential for agencies to assert more influence on the display market.

"If you say the goal [of agency networks] is to buy bulk and drive down prices, that's not my goal, it might be for others," Mr. Spiegel said. Instead, the ultimate goal "for agencies and clients is to have greater control over the types of inventory we buy, do a better job of knowing the audience we're buying and be able to improve and optimize against those buys. The list of ways to do that is long. Whether you do that through a private exchange, private listed inventory or more upfront buying through a [third-party] exchange, you start to change how inventory is bought and sold."

For agencies and their clients, transparency remains a huge issue, Mr. Spiegel said. "If you look at what we get from an ad buying perspective on broad, horizontal ad networks, we pay a fixed CPM and have some control over allocating that budget," he said. "We can do some optimization, but we have no transparency into what sites or targets or frequencies work. We get some of that data and report back, but we get it in aggregate. We don't really know what happens. That level of control is beginning to happen on the exchange landscape, but there's a lot of evolution left."


MDC PARTNERS' VARICK MEDIA MANAGEMENT

Darren Herman

Darren Herman

Varick Media Management formally calls itself a media- and audience-management platform, but unit president Darren Herman isn't shy about dropping the term "advertising hedge fund" or talking about disintermediating ad networks and "their insanely high margins." The unit, which went live last September, proposes to optimize buys not only for MDC agencies but also for clients outside its holding company. Mr. Herman said smarter buying has improved performance for clients two to three times vs. straight ad network purchases.

"The big question for us is how do we get around the ad networks from a holding company perspective?" Mr. Herman said. The answer, he said, is to focus on buying from public exchanges, overlaying those buys with data that results in buying audience. Mr. Herman is fond of a "trail mix" analogy. Buy from an ad network, and it will give you a mix of cashews, almonds, raisins and M&Ms, as they need to get all that inventory off their books. In that model, your buy gets results, but a lot of waste too.

By comparison, VMM's traders use its platform and data tools to make display buys more targeted and efficient: You get just the cashews you want. Because impressions today are anything but scarce, VMM buys only in the spot market. While Mr. Herman could foresee creating a pool of media on the platform some day, essentially creating his own demand-side exchange, he's more interested in buying third-party data than media.

While ad exchanges have been looming over the industry for several years now, "the demand side is where it really gets interesting," Mr. Herman said. "Every agency has a different flavor, and we all sort of know each other. The agency shift that is happening is essentially this: if ad exchanges get us closer to the media, then why do we need middlemen?"


HAVAS' ADNETIK

Nathan Woodman

Nathan Woodman

Adnetik, the demand-side platform from Havas, is still in "coming soon" mode on its public site. But that doesn't stop Nathan Woodman, Adnetik's managing director, from touting the promise of Adnetik and other demand-side platforms. Mr. Woodman describes Adnetik as "a buying service," noting that when buying display ads, you are really buying three things: media, the data behind it, and the optimization of that media and data -- often in a bundle. "Adnetik takes that data and optimization and owns it from the buy side and then uses that to more intelligently and effectively bid on and procure media," he said.

Initially, buying on Adnetik is likely to be spot-based and focused on fulfilling individual campaign needs. The question agencies need to ask themselves, however, is whether they are willing to take on the risk -- and potential reward -- of buying impressions in bulk and holding dedicated inventory. "It depends on how much risk the agency is willing to take vs. how much risk the advertiser will take. Whoever puts up the principle bears the risk. But they also have the potential of receiving the highest return," Mr. Woodman said. effectively bid on and procure media," he said.

For now, Adnetik has run transactions in Asia and European markets. It isn't up and running yet in the U.S. but has proposals out to U.S.-based advertisers and hopes to be operational very soon, Mr. Woodman said.

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