Ad Tech Analogies: Simple is the New Smart (The Nordstrom Analogy)
Next up in our ad tech analogies series: The Nordstrom analogy, which explains the daisy chain/waterfall process of monetizing inventory.
In programmatic, the daisy chain/waterfall process is a technique publishers use to sell and make the most money out of their inventory. Publishers work to exhaust as series of demand sources to make sure their inventory ultimately gets sold.
Centro Brand Exchange, for example, is first in the daisy chain/waterfall and has first look at the inventory it sells. Meaning anything the seller doesn’t sell directly will go to Centro Brand Exchange to be sold before it goes anywhere else.
This is similar to what happens in retail. Think about Nordstrom and Nordstrom Rack. When Nordstrom doesn’t sell out of its clothing inventory or the clothes they sell change every season and Nordstrom needs to get rid of it, the inventory will go to Nordstrom Rack to be sold. If it doesn’t get sold at Nordstrom Rack? Then it might go to Marshalls, or T.J. Maxx – and so on and so forth.
It doesn’t matter if it’s clothing or ad inventory: As it gets farther from the source, it tends to reduce in quality, because it’s been picked over and passed on, leaving the undesirable – and usually cheaper – inventory on the table. It’s something to keep in mind when buying programmatically.
Next week we’ll dive into the concert ticket analogy, which explains the difference between preferred deals, private marketplaces, and the open marketplace.
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