Xtend Media CEO Orzel Says Ad Networks Will Need To Rely On Media Buying Skills To Survive

Adi Orzel is CEO of Xtend Media, an online display advertising network.

AdExchanger.com: How will ad networks need to change to remain viable?

AO: I think that ad networks will need to rely much more on media buying, rather than developing their publisher networks, due to the fact that more and more publisher relationships will move outside from ad networks to exchanges and yield optimization platforms. As a result of that change they will also have a huge opportunity to put a bigger focus on the advertiser’s needs when running a campaign, rather than the inventory they own and need to sell. I see ad networks being the dominant buying force on exchanges and not the agencies. Agencies will move slowly when it come to non-guaranteed display inventory. I think it will be a challenge for them to adjust to this opportunity. The ad networks are there and ready to take it on with full force and all of their campaigns, and I believe they will continue to be a valuable player in the value chain between the ad exchanges and the agency / final advertiser.

Where does XTEND fit in the online advertising ecosystem?

XTEND is a global performance display ad network. We are part of an international performance marketing group called Adsmarket. As such we bring value to media companies and publishers by helping them monetize their international inventory even in the most remote markets. On the other front we focus on direct response advertisers that look for a network with a strong global marketing approach.

What’s your view on Demand side platforms?

I think DSPs are a must when it comes to working with the new ad exchanges. The real challenge relies in connecting the bidding algorithms and decision making mechanism to the back end data of the advertiser. For DR campaigns I think this is the most important challenge; you want to be able to bid effectively for what’s converting. We are looking into working with DSPs to get quicker and more efficient access to the exchange platforms. I’m intrigued to see how we can integrate our backend data into their bid logic. Other parts of the solutions such as API integration with the exchanges are quite simple. I’m not running into developing under the same concept that we don’t need to build our own ad server in order to be in the business. However, we are enhancing our data analysis capabilities to build stronger campaign management logics.

What percentage of your business is brand, will you pursue it?

I’d say about 20% of our business is brand. We don’t pursue it that much. We want to stay focused on our agenda of performance advertising. We believe that many brands will develop their DR strategy from search into display in the near future.

How do you solve creative optimization? Multi variate tools? In-house team?

We use extensive conversion data to optimize creative optimization and publisher performance for our clients. It’s an ongoing process that never ends and relies heavily on the supply of new creative for the campaigns. We do have an in-house creative team that works with our clients to generate new ads and concepts for our campaigns.

Discuss the inventory across quality, across exchanges, ad networks and direct publisher relationships. How concerned are you about the placement from a quality perspective?

I think that inventory quality control is a burning subject in the industry right now and rightfully so. The problem resides across publishers, ad networks and exchanges. Basically anyone who is working with UGC inventory is exposed to the risk, because you can’t predict when someone will upload a bad photo or video file that your ad might appear next to. There are also publishers who might register one legit site on a network and then use the ad tag on 10 other sites that are not approved. The solutions we are looking at using or developing can help us assure quality across our own inventory, but when it comes to media buying from other exchanges / networks / platforms, you’re pretty much limited to what you can do and you have to rely on the other side.

Do you think Behavioral works? Contextual?

I see limited success with Behavioral targeting when it comes to conversions. I think most of the activity is still Retargeting campaigns for brands that still measure it at a CTR level and not much beyond it. I think that the potential there still needs to be proved from a DR perspective, because even if you get a 50% lift in performance, the scale is limited. With Contextual, we are still at early stages when it comes to display advertising, we are testing it in different cases, but again the scale of the opportunity is always a big trade-off when you narrow the targeting down.

What trends are you seeing from clients? Goal types? Vertical strengths? Budgets?

I think that during the last 12 months I’ve seen most of our clients turning defensive. This means aiming at CPAs rather than CPLs, and in general bringing the CPA targets down. These measures were taken due to fears that life time values of clients will shrink due to the current financial recession. We’ve also seen that clients who were used to consuming as much media as possible within their CPA targets moved to budgets in order to limit their risks. This is especially true with advertisers who are based on subscription model and long term user transactions.

Are you thinking about RTB? Do you consider this an opportunity?

Yes, I do think it’s an opportunity for us. Although, we do not use a lot of external data for targeting yet, we will need a way to hook our backend data analysis into the media exchanges bidding mechanism. This will have to be through automated processes and RTB access is the way to do that.

Follow Adi Orzel (@adi_orzel) and AdExchanger.com (@adexchanger) on Twitter.