Why would a publisher choose to create a private ad exchange? One reason is that at the very least, the perception is that private exchanges have better quality product than RTB exchanges, and therefor they can be specifically directed to the market the client is aiming to attract. There is a greater possibility of providing content that is better quality of merchandise which can make the client happy and create repeat business. There can also be less work required for the publisher to simply make an effort to have a large amount of overall inventory on hand just to satisfy what a customer may want. The focus can be on more premium inventory, and it can “aim” at more specific websites and brands.
Managing low touch ads takes as much time as managing high touch ads, so it makes sense to go to create an ad exchange that has more high touch ads to save time in effort to find the content necessary. The media content on private exchanges costs more than on an open exchange RTB, but the difference in quality, the increased access to better quality, and finding more quality product at one place is a great trade-off for most publishers.
Another benefit is the perceived integrity of private exchanges. A publisher can have more control over who is allowed to buy their inventory, and they have more control over the price. A publisher can control whether or not they want to offer their ads to a small list of clients with whom they’ve worked in the past, and they can cut someone out of the process with whom they’ve had a bad experience in the past.
It can also make it easier to move product that isn’t premium, but has some commonality with the premium product they have to sale. In all likelihood, the client and the publisher will both be focused on the premium product. However, the publisher may also be able to sell the client more of their other inventory, their less profitable but important inventory to that client. It is similar to the television channel, AMC, selling some of its lesser products (in this case channels) to a satellite company if that company wants to put the same network that shows “The Walking Dead”, “Mad Men”, or “Breaking Bad”.
Pairing the premium inventory with other inventory also helps prevent the possibility that only the premium inventory will be taken, then the publisher could be left with nothing but the cheaper inventory. The publisher who considers opening a premium exchange needs to ensure that this is the best option in their own situation. They need to ensure that they can move the product they have at higher prices than it would cost clients and potential clients who could use a public exchange.
Data is an important part of the equation when opening a private exchange, that is, the data that will help indicate success in the venture of the private exchange. In order to charge higher prices for the inventory, the publisher needs to prove that those prices are worth it.
Smaller companies can benefit from operating a private exchange by making more direct deals with clients. It is important to have enough premium inventory to attract clients and to give yourself a chance to garner more business and to be successful over the long haul.