Hearst Digital Media is launching its first private exchange, becoming the latest major, traditional publisher to attempt to reconcile the sometimes dueling forces of premium, direct sales and programmatic buying. The company has been working on the private exchange with supply side platform PubMatic for nine months, as it looked to ensure self-confidence that it could create a complementary tool for its sales teams without creating greater channel conflict.
In an interview with AdExchanger, Kristine Welker, chief revenue officer of Hearst Digital Media, emphasized that the strategy animating the Hearst Audience Exchange will be around brand advertising, not just unsold inventory, though natural benefits are expected there as well.
"Our advertisers have been telling us that they value our brand and our audience, and at the same time, we certainly recognize their need for greater efficiencies around managing the growing complexities around media buying and planning," Welker said. "So we, along with PubMatic, set out to create a platform that addresses both needs. But rather than just putting our brands and audience data out there in the general exchange marketplace, we sought a private option to determine the right levels of control."
The rise of real-time bidding the past few years have caused even more worries for large, traditional publishers, who have feared the dissolving importance of specific media brands in favor of audience buying. While other publishers have grudgingly embraced programmatic buying with resignation -- more and more and advertisers and agencies are funneling their ad buying through exchanges, eroding the amount going for direct sales -- Hearst believes that it can not only protect its traditional sales methods, but that it can buttress premium buys by managing its own audience segments starting with the food category and continuing with fashion and tech.
"We're concentrating on placing high-profile sponsorships on to the exchange," said Orchid Burside, director of digital operations for Hearst Digital Media. "We’re building the exchange to deliver against greater scale than the company at large, even beyond the magazine group. With audience and customer segments, there is an opportunity to sell inventory around behavior and interest, such as food."
Hearst plans to use its editors' insights to help decide on the right context for the ads. For example, audience segments can be created around content aimed at dieters or people looking for time-saving recipes and cooking tips, Welker noted.
Hearst Digital -- which manages more than 28 websites and 14 mobile sites for Cosmopolitan, ELLE, Good Housekeeping, Seventeen and others, as well as digital-only properties such as Delish.com, a food site in partnership with MSN -- will run the exchange; a group within the sales force has been created -- though PubMatic will offer consultation.
"We are excited to partner with Hearst as they advance their innovative strategy on the PubMatic platform," said Kirk McDonald, president of PubMatic, in a statement. "Audience marketing is not a new concept, nor is it exclusive to digital media. However, the requirements to execute in digital are unique. It requires forward thinking and the right independent platform partnership."
By David Kaplan