by Andrew Casale (VP Strategy)
The first wave of private exchanges has been dismissed as marketing rather than reality by some industry insiders. In many cases the model meant charging more for the same buyer experience that the open exchange model already affords. The issue isn’t about the buy side’s willingness to transact through the model. It isn’t about the sell side’s willingness to bring differentiated offerings to the table. Instead, it’s mostly been a technical disconnect (or deficiency).
The first private exchanges were basic in the flexibility they offered – effectively a white list and price floor per buyer. The trouble is each buyer is generally a major agency trading desk having many clients, each with their own pricing needs and dynamics. Many concluded that despite the innovative technology of real-time bidding (RTB), it can’t facilitate, nor supplant, what a piece of paper — an insertion order (IO) — has been doing for the past 15 years. IOs carve out unique deals for different clients and campaigns, each having different needs. With Deal ID now effectively acting as the automated equivalent of an IO, RTB is starting to bring the buy side closer to the sell side and enabling meaningful deals to be transacted.
Just like each IO has a unique number, a Deal ID (deal identifier, in ad tech geeky speak) is a universal identifier that specific attributes for a campaign can be tied to. Deal ID is the parameter carried into every bid request a private exchange transmits to DSPs, indicating where a private deal is available to be activated. For instance, a Deal ID can grant access to differentiated or unique placements,or data that a publisher makes available only through its private exchange. It can grant access only to specific brands or campaigns, based on the deals struck between desk and seller.
The benefits of Deal ID are relevant to any major brand. Single brands may be running a multitude of campaigns in parallel promoting different things – pure direct response driving a low cost per order, brand building, company recruitment, etc. Telecommunications companies – among the biggest ad spenders, are an example of advertisers with these needs that already spend significant amounts of budget through the RTB model. One price doesn’t work for disparate buys.
Direct response campaigns might need low CPMs to hit their costs-per-order goal, but will purchase a sizable volume of impressions. Branding campaigns justify higher CPMs if it means accessing finely targeted audiences within a high-quality placement. Deal ID gives agencies the flexibility to run nearly unlimited campaigns with different goals inside a publisher’s private exchange. Each campaign can be executed with the specific requirements (and dynamic pricing) associated with its “deal.” The buyer won’t need to pay one flat price (or floor) no matter what campaign they are running.
The buy side benefits from Deal IDs because of granularity. It sources out the value and gets more access to data, higher engagement and better, more creative campaigns – the things you can’t get when buying purely in the open market. The sell side benefits through the increased consideration gained by having more options to work with when speaking to buyers – a conversation similar to direct sales. For the seller, Deal ID offers specificity and transparency not seen before in RTB – sellers see what the buyer wants and they can tailor future deals with this intelligence.
Deal ID bridges the gap between what you can do with a piece of paper and what you should be able to do with an automated transaction. The “ad tech” side of the business has caught up, and it’s quickly proving to be the best way to create differentiated offerings in private exchanges. This brings the buy side closer to the sell side, getting the most out of campaigns run through the RTB channel. Three of the top DSPs have fully integrated Deal ID support. Deal ID is the solution to the misconception of private exchanges. It’s not theoretical – it happening today.