By Centro Team Jun 13 2012 Blog

The Makings of the Centro Brand Exchange

In today’s increasingly fragmented media landscape, publishers with high-quality, journalistic content can only survive by protecting their inventory and user data. It doesn’t take a rocket scientist to understand that scarcer inventory begets better rates.

Over the past several years, many exchanges and supply-side platforms emerged with their own solutions to help premium publishers capitalize on their unsold inventory. They promised premium publishers increased CPMs across tier-two inventory, while also harboring their inventory and user data in a protected environment and preventing leakage of these valuable assets across the web.

While CPMs have increased slightly, we have not seen  monumental improvements in these areas. In fact, a recent study shows that CPM’s have remained roughly consistent, and that first quarter rates are roughly the same as fourth quarter of 2011 and the first quarter of 2011. (Joe Mandese, Mediapost, “RTB Ad Market Soars in Q1”, 4/24/12). In addition, inventory and data leakage is more prevalent than ever.

In order to create value and drive demand, you must first create scarcity. Media buyers are savvy and know that they can access your valuable inventory in a multitude of places.  Until premium publishers put a stop to inventory and data leakage across the various SSPs, open exchanges and ad networks, we will not see a significant increase in rates anytime soon.

One of the largest problems is that SSPs don’t have large, well-trained premium sales forces sourcing directly from advertisers.

They instead trade inventory amongst many other networks and exchanges whose main goal is to pay the lowest CPM possible—and brand advertisers have caught on. They know the same inventory is for sale in numerous locations and they can simply shop around for the lowest rate. At Centro, we saw this practice first hand with our niche local network, Spectrum. Over two years as we tried to push for higher rates, the response we kept getting was, “Why would I pay Spectrum $1 more when I can buy the same publishers from 10 other places for less?”  Centro, and the publishers we serve, had hit a price ceiling.

We realized the industry was continuing to head towards exchange-based models, so we evolved Spectrum into our own proprietary ad exchange—The Centro Brand Exchange. You’re probably saying, “Wait!  She just went on and on about why exchanges are flawed. Now she’s saying that Centro started an exchange??”  YES, because the problem isn’t in the technology, but rather in how publishers are using it.

The Centro Brand Exchange enables publishers to regain control of their inventory and their user data (you can read more about the data piece in this blog post from our friend and new partner Krux). Instead of re-trading our publisher partners’ inventory, the Centro Brand Exchange offers a protected environment backed by over 500 advertiser and agency relationships. Limiting where inventory can be bought creates scarcity in supply, while sourcing campaigns directly from advertisers and agencies creates demand; this combination increases yield for publishers. It’s pretty simple. Our goal is to protect our partners’ valuable inventory and prevent data leakage to third parties.

Now let’s talk about volume. One exchange solution will not provide publishers with enough volume to fill 100% of their unsold inventory… yet. This is where our publisher partners come in. In the near future, we’ll give our partners’ sales forces the ability to buy from Centro Brand Exchange as well. The Centro Brand Exchange revenue for 2012 has already surpassed the Spectrum revenue from all of 2011, while still growing Centro’s premium direct business. We’ve proven with Spectrum that we can grow a network product without cannibalizing our core direct business, and also drive higher CPMs for publishers across their unsold inventory. With the recent launch of the Centro Brand Exchange, we feel like we’re just getting started.