"The driving motivation for this has been demand from agency and
advertiser partners telling us they want to buy YouTube inventory
the same way they buy display," said Google VP-Product Neal Mohan.
About 60% of Google's display exchange inventory is transacted in
real time. "We expect the ramp-up of video to be just as rapid," he
For Google, feeding YouTube inventory into its exchange is just
the first step. The next is signing up other publishers to do the
same -- much as it's successfully done in display, where so much ad
inventory moves through its DoubleClick platform. Real-time bidding
may help YouTube bring in more revenue, but the bigger game lies in
owning the platform on which video is bought and sold.
But premium video on the web -- TV shows and other
professionally produced content -- has not joined the real-time
revolution. So it's not clear whether major brand marketers, which
want the safety of professional content and often fear
user-generated clips, will be able to buy in either.
A few small video exchanges have been operating since last year,
including BrightRoll and Adap.tv. The exchanges launched in part as
a hedge on the standard ad-network business, which is quickly
consolidating into a few big players.
Other than that, however, premium video sales are stuck in an
analog world, with deals conducted over the phone and over lunch --
not exactly the high-tech frontier that display ads have reached
over the past few years.
Why? Premium TV and professionally created video -- the kind of
video that brand advertisers want -- is mostly sold out at any
given moment. TV networks, studios and third parties like Hulu keep
tight control over that kind of inventory. That contrasts with the
display marketplace, where even premium publishers have lots of ad
inventory they can't sell, and feeding that into exchanges makes
more sense. "In online video today, the primary challenge is simply
access to inventory at scale," said BrightRoll CEO Tod
The shortage of premium inventory might accrue to YouTube's
benefit as it floods the exchange market with impressions. Since
exchanges interconnect and plug into agency trading desks like
Publicis' Vivaki, Interpublic's Cadreon and WPP's B3, YouTube
videos will be exposed to quite a few deep-pocketed bidders.
"Premium content providers are not going to deliver on the needs
that we have," said Chris Allen, VP at Starcom USA, adding that categories
like insurance, quick-serve restaurants and entertainment -- which
generally look to expose as many people as possible to a video --
will be buyers. "That bodes well for mid- and long-tail content,"
Long-tail video, of course, isn't every marketer's cup of tea.
Yahoo's Right Media, the world's largest display exchange, sees
mobile as a better business than video going forward. "Our premium
publishers [including Yahoo] tend to have high sell-through on
their professionally-curated video, while video on exchanges tends
to be far lower quality," said Right Media head Ramsey McGrory.
Publishers selling premium video directly to advertisers can
command CPMs -- the cost per thousand impressions -- as high as
$40, while video that's sold through exchanges can move for as
little as $2.
Agency trading desks will look to layer data onto impressions to
find gold amid the straw, much as they do in display advertising.
What's more difficult is assuring that the video is appropriate for
the advertiser. That's the main proposition for ad networks, which
usually make some sort of claim about the quality of the inventory
they represent. If they sell shoddy video to an advertiser once,
that advertiser won't be coming back. Exchanges, which don't make
such promises, won't have the same incentive to vet for