Video ad marketplace SpotXchange - a portion of whose inventory is real-time biddable - announced the integration of a new optimization technology called "Otto" which it says will allow buyers to more efficiently buy video ads. In a release, the company claims that "it is the first video ad network to automatically optimize campaigns to achieve the best performance possible at scale." Read the release on SpotXchange's website.
SpotXchange CEO Mike Shehan discussed the announcement and its implications.
AdExchanger.com: Why is an auto-optimization solution necessary? Can't SpotXchange buyers optimize effectively?
MS: SpotXchange operates an auction-based marketplace connecting advertisers and publishers in real-time, which has always allowed our buyers to operate the most efficient, best-performing video ad campaigns. However, Otto, our machine learning algorithm technology, represents yet another SpotXchange advancement that allows buyers to maximize campaign performance. From our perspective, when you’re talking about a video ad marketplace of tens of thousands of sites representing over 80 million monthly unique viewers, and 30 million daily impression opportunities in 15 countries, no human would be able to evaluate each opportunity and fully optimize every single ad placement. Otto doesn’t replace humans; "he" just makes them more effective.
Does this make you a competitor to some of your buyers in that you will be working on an IO basis with your optimization engine - and some buyers will not be using the engine? How do you handle this?
SpotXchange isn't competing with any of our advertisers regardless if they are buying on an IO basis (with or without our auto optimization technologies) or if they are accessing the SpotXchange marketplace via a trading desk, DSP or another ad network. However, yes, all of our advertisers are competing against each other because every single call ad call by a publisher in the SpotXchange marketplace results in a competitive auction between all of these participants. The advertiser that is willing to pay the most for any given impression opportunity will win, and their ad will be served. While it's true that those advertisers that leverage machine learning algorithms to improve campaign performance will have an inherent competitive advantage over those that do not; the overall incentive to publishers is to send high-quality inventory to the SpotXchange marketplace, therefore benefiting all advertisers.
How do you see the RTB versus non-RTB market evolving for video inventory? How do you see this playing out? What are some of the limiting factors for RTB in video?
While it's early, we expect real-time bidding to be a part of every video campaign in the next few years, whether a customer is using our learning algorithms or that of our partners, including DSPs and trading desks. Obviously, RTB isn't required for those media plans that involve direct sponsorships of sites, and we don't anticipate the industry to move away from premium sponsorships. However we believe targeting audience will represent the fastest-growing segment of video advertising, and therefore RTB will grow in popularity as well.
That said, it's not our job to tell the industry to use RTB, just like it's not our job to tell them that it's better to focus on certain performance metrics (like CTR, brand recall or video ad completion rates) to judge a campaign's success. Each company makes their own decisions in these areas. SpotXchange provides the platform and the marketplace that allows our clients to maximize the performance and efficiencies. How they choose to leverage those is up to them.
The limiting factor for RTB is, of course, scale. SpotXchange has been building our video ad marketplace for more than five years now, and have successfully integrated thousands of publishers. We auction over 30 million daily impressions from more than 15 countries reaching 80 million people each month. Consequently, we believe SpotXchange has provided a solid answer to the industry when it comes to RTB and scale.
Do you see mobile video momentum? Can Otto or optimization tech be used in mobile video advertising today?
Yes, there is more interest in mobile than ever before, but it’s still early days, with very basic targeting and very little dynamic ad serving and optimization. So the marketplace isn’t yet there. As companies experiment with mobile video ads, and as mobile budgets grow, the marketplace will eventually hit a critical mass, and it’s then that technologies like Otto from SpotXchange will be really effective.
By John Ebbert