MediaMath Adds Layer of Efficiency to Already Efficient Ad Exchanges

Online publishers like ESPN and Forbes may be reasserting themselves as media brands, but Web media as a commodity still has its place. Indeed, ad exchanges emerged in order to make buying and selling typically non-premium inventory more efficient, and supposedly more appropriately valued. Enter MediaMath, which aims to add a layer of efficiency on top of that.

MediaMath offers a platform for agencies to access more than one ad exchange at a time. The promise is simplification of exchange bidding and management. The thing is, exchanges were supposed to make buying large volumes of ad inventory easier and more efficient in the first place. The company, which currently enables a handful of agency clients to access Yahoo-owned Right Media and Google’s DoubleClick Advertising Exchange through its system, believes some exchange buyers could use some hand-holding.

“Getting up to speed on the exchanges is not a small process,” said MediaMath VP Communications Peter Niemi. Exchange companies “are not in the business of the kind of client service, the kind of media optimization that we are accustomed to doing,” he said of the firm, which got its start last year and has been in market since Q4.

The man behind MediaMath is Joseph Zawadzki, founder and former president of the arithmetically-named optimization tech firm and ad network [x+1], once known as Poindexter Systems. While Niemi said the MediaMath platform is not based on the [x+1] technology, it’s difficult not to see the parallels between a technology intended to make exchange buying more efficient and one that focuses on ad and media optimization.

The question remains whether there’s a future for MediaMath or other third party exchange services that are bound to get into the game. For one thing, the company charges around 20 percent markup on media purchased from exchanges through its system, according to Niemi.

“Twenty percent is probably going to be unsustainable except for [those unfamiliar with] the exchange model,” said Derek Leedy, VP account director for media agency Mediasmith. “I wouldn’t disagree that some of the agencies steeped in more traditional backgrounds are challenged” when it comes to using ad exchanges, he added. However, “Digital agencies that have been in the space�¢ï¿½�¦are going to wade in there and learn it for themselves.”

In addition to supposedly simplifying the exchange process, the platform enables retargeting by collecting data on users through its own tags and retargeting those people when their traffic is discovered again flowing through the exchanges it works with. There’s no additional charge for the retargeting. Though many networks offer retargeting, all exchanges do not. The benefit here would be the ability to retarget ads to users across many exchanges, which could encompass a number of Web sites and in some cases, ad networks.

Traffiq, an exchange that has been approached to connect its system with the MediaMath platform, enables any type of targeting publishers in its exchange allows, including retargeting. Still, “We don’t provide an additional built-on layer of retargeting,” said Traffiq COO Dan Ballister.

A Traffiq partnership with MediaMath would “depend on what buyers do over time,” explained Ballister. If, for instance, the majority of media buyers and agencies become comfortable with using the exchanges on their own, there may be no need for such a third party system.

“In the exchange or ad marketplace, I think this was very, very predictable that exchange management would start to pop up,” said Ballister, who believes a firm like MediaMath can provide educational value to media buyers. “It mirrors what all of us saw in the search space originally,” he said, alluding to the multitude of third party software and services created to help agencies deal with search marketing.

Rather than using a third party platform like MediaMath’s to simplify the exchange process, Mediasmith’s Leedy wonders if it would help serve as an auditing tool to assess the value of what his firm purchases through exchanges. “Right now, there has to be some type of tool or audit or algorithm that’s working on the side of the buyer or agency, because right now the exchange is pretty blatantly a tool for yielding more profit for the sell side,” he said.

Either way, added Leedy, the ad exchange is “something that’s here to stay.”

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