Private Exchange – When Should I Use it?


By Mike Siems, Business Development Manager

DataXu recently released an exciting new digital marketing tool available to advertisers: private exchanges!

Private exchanges provide an opportunity for publishers and advertisers to leverage the best of direct and programmatic relationships. High quality media is bought and sold in a commitment free environment. The one-to-one, direct relationship is expanded to encompass a select number of buyers approved by the seller. Price minimums are set by the publisher, and buyers pay what they feel the inventory is worth.

Like any new technology, private exchanges have led to frustration in the market.
Like any new technology, private exchanges have led to frustration in the market.

A win-win scenario, right? Well…sometimes.

Like any new technology, private exchanges have led to frustration in the market. Naming designations associated with these exchanges alone – Deal ID, Private Marketplace, Preferred Placement, First Look – have sown confusion. More importantly, some buyers and sellers have become their own worst enemies, adding complexity to deals from their respective sides of the fence and leaving the other side with low fill rates, and unmet expectations.

Which brings me to the key message I hope you take away from reading this: there are places in the programmatic world to apply granular targeting, retarget super-qualified users and apply picky algorithms, but private exchanges are not the place.

One thing people seem to forget about private exchange inventory, is that it’s limited. This depends on the publisher of course, but a site’s private exchange typically falls somewhere south of direct sold, and somewhere north of its ad network/open RTB sold inventory.

Another important point: forecasting is very difficult for publishers due to the natural fluctuation in inventory demand. Will the sites direct sales team go on a tear one month? Will an ad network sign a huge deal, and approach a publisher with a monetization opportunity that’s more efficient than what’s being offered in its private exchange? There are a number of factors that determine the availability of inventory, but there’s no way to accurately predict this in advance.

This uncertainty means buyers and sellers must allow private exchange auction to operate as freely as possible. Both sides should ask themselves, is this ad, or is this publisher, a good fit for my brand and my target audience? If so, it makes sense to connect the two. Hey Buyer: You may find that Walmart shopping mom from Minnesota surfing private pools of inventory on that prized, niche site during your campaign, but please expect to hit her and her friends a limited number of times.

Interested in learning more about the ins and outs of private exchanges? Join us on Tuesday October 8th at 1pm for Demystifying Private Exchange, a webinar from Google and DataXu that will help further clarify the exciting new opportunities on private exchange inventory. Register now!