Private exchanges are controlled environments, typically run by major publishers or a group of them, with ads sold through carefully selected agencies or advertisers using trading desks and/or demand side platforms. They are used by publishers to more carefully control who can buy their inventory, and at what price. Instead of releasing its inventory into an “open” exchange and letting anyone buy them, a publisher may prefer to offer its inventory (particularly its more premium or exclusive inventory) to a pre-selected set of advertisers, or an agency it has a close relationship with. It might also wish to cut off access to networks and other third parties that could sell those ad impressions on.
How widely used are they?
The adoption of private exchanges by publishers has steadily grown over the last twelve months but their uptake is expected to increase significantly over the coming years with more and more publishers encouraged to take the financial risk of developing its own private exchange (either for itself or in conjunction with other publishers) and moving its inventory away from open exchanges. Yahoo, AOL, Microsoft and other media owners are launching their own private exchanges and selling directly to advertisers and agencies which connects supply with demand.
Some publishers, as a point of principle, are reluctant to put their inventory on open and public exchanges. They fear a race to the bottom in CPMs, as they compete against the sheer volume of impressions thrown off by the range of digital media spaces, which would undervalue their prime content. The use of private exchanges is therefore an attractive alternative to such publishers.
Agencies are also signalling a move towards private exchanges, GroupM recently pulled its clients from open ad exchanges citing that they did not want to compete in a “fictitious marketplace”. To continue reading please click the link below;