Centro Throws Down Gauntlet to Ad Exchange Arbitragers

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Media logistics firm Centro is launching an ad exchange to help combat what the company believes is dragging down ad prices paid to publishers: mainly the current ad exchange ecosystem. The Centro Brand Exchange will operate differently from others, and promises to protect publisher's audience data that can sometimes be bought and sold by exchanges without publisher consent.

The firm, which has a legacy of working directly with local and vertical media publishers to connect them with advertisers, has partnered with data management and security company Krux to launch the private, invitation-only exchange. The exchange will include inventory exclusively from premium publishers, according to Centro, which says it will help its publisher partners garner higher CPMs for ads because it won't let their audience data leak onto other exchanges. It also will allow publishers more control over the advertisers buying their inventory, the company claims.

Ad exchanges "failed on their promises to deliver" higher CPMs to publishers, said Centro CEO Shawn Riegsecker (above, right, with Centro board member Andrew Swinand) who met with ClickZ last week to discuss the new offering. "Exchanges and [supply side platforms] haven't really helped publishers," he added.

He argues that arbitrage - the buying and selling of publisher's audience data by several middlemen - has become the name of the ad exchange game. He suggested many advertisers go to exchanges to target their ads to audiences of those premium publishers when the users are elsewhere online, thus reaching the audience at a much lower cost than when sold direct from publishers - and in arguably less valuable inventory. The result, said Riegsecker, is that the audience that the publisher pays to produce valuable content in order to attract does not reap the ad dollars it legitimately deserves in return.

"We're putting the rest of the market on notice to say, 'Guys, this has to stop.'"

The buying and selling of digital audience data has become a big business, and it could be difficult for Centro to build up enough inventory to make it worthwhile for advertisers to want to buy through the exchange. Still, Centro's promise to advertisers is higher quality inventory than what's in other exchanges. Riegsecker said he will appeal to publishers to participate by exposing the data dissemination problem.

Centro was founded by Riegsecker 11 years ago, and got its start helping advertisers buy local digital ad inventory. The Chicago-based company has 300 employees, 26 offices, and more than 400 agency clients, according to Riegsecker. Centro recently re-branded to highlight its evolution to a data-driven media buying and selling management technology and services firm.

The company also recently named members to its board, including Andrew Swinand, founding partner of Abundant Venture Partners and former Starcom MediaVest Group president, global operations.