Over the last few months, I have been struggling to come up with a pithy term to accurately express why all advertising exchanges to date don't truly work for publishers. Now I've found it - 'The Publisher's Dilemma' The Publisher's Dilemma describes the set of questions that remain unanswered when selling inventory through and exchange instead of a sales team. It is the challenge a publisher's sales team overcomes every day when they manage inventory sales. The reason people are so valuable in guaranteed and premium inventory sales is information. A good sales team will find the market and sell inventory across a spectrum of pricing that maximizes the publisher's revenue. These optimizations are achieved by managing information. For example, the little spender has no idea how big a discount the big spender got on the same inventory. This is the key, managing what information is exposed, to whom, and when. This is why publishers don't want to post their inventory into an open exchange.
While it might sound like heresy coming from the 'exchange guys', we completely agree.
The reality is that each advertiser is buying inventory for different reasons and is able to derive performance at different rates. This means that in reality each advertiser represent a unique market segment. Using a sales team, publishers naturally manage this complex web of market segments. In an exchange, an auction collapses many buyers into a single auction, and undermines all the work a sales team does.
So here's some of the questions that the Publisher's Dilemma describes:
- How do I sell volume discounted inventory on an exchange without undermining my pricing power on the rest of my inventory?
- If inventory can be sold on its own, as part of a package, or as part of sponsorship how could an exchange help me understand how to sell it?
- How can I leverage the value of my hard earned 1st party data to unlock its full value to my advertisers?
The questions go on and on. That was just a sample.
The team at MASS Exchange decided to do things differently. We didn't assume that some academic studying financial markets already figure this out, with all due respect to William Vickrey. We went back to the drawing board. We engineered an entirely new market structure for the advertising market. The first part has been patented but more great stuff is still to come.
We're ready to make The Publisher's Dilemma a thing of the past and we're well on our way.