Video music site Vevo is ready to try real-time bidding as an option to augment its direct sales. The three-year-old company, a joint venture managed by record labels Sony Music and Universal Music Group along with Abu Dhabi Media, is working with digital video sales platform Adap.tv on setting up the private exchange.
In part, the move reflects the fact that more and more ad dollars are being funneled through exchange-based platforms -- IDC, in a report sponsored by supply-side platform PubMatic, recently estimated that RTB would grow at a nearly 60 percent compound growth rate over the next four years.
Beyond that, the decision also shows that there's only so much direct sales can accomplish as publishers' content distribution becomes more fragmented. "By launching our own private audience exchange, Vevo can maintain the premium marketing standards we’ve established within the extensive reach of our platform, while more efficiently monetizing our video inventory and maximizing revenue," said Welby Chen, Vevo's SVP, sales & revenue operations.
With a private exchange, Vevo is essentially taking its content delivery strategy and matching it to its ad sales. In addition to its own site, Vevo has content syndication deals with AOL, Yahoo, Viacom's BET, CBS Interactive Music Group's Last.fm, among other channels like YouTube, Facebook and Wenner Media.
Like most publishers with a good degree of scale, the challenge is always not to compromise the guaranteed inventory with lower priced RTB placements. While all exchanges have the ability to set price floors and restrict access to certain advertisers, the private exchange idea essentially packages those abilities from the start, making it feel more comfortable to publishers.
At the same time, Vevo does have some challenges. The latest comScore Video Metrix September numbers show a 12.4 percent decrease year-over-year to 50.2 million uniques. That said, the site's place in comScore's top five is safe and, unlike the rest of its top 10 Video Metrix rivals, Vevo is the only one dedicated to music and entertainment, making its a clearer brand play for advertisers.
That combination of security and challenges make opening a private exchange an easy choice.
"We see the private exchange as a complement to our direct sales efforts," Chen told us. "As VEVO continues to expand internationally, it helps us grow revenue while maintaining high yields."
Vevo plans to limit its programmatic partnerships to Adap.tv, at least at the start.
"We are exclusively licensing Adap.tv technology for our private exchange platform," Chen said. "The Adap.tv team has been great to partner with and we look forward to evolving the partnership as VEVO continues to grow from our current based of 3.4 billion global views per month."