Demand-side platforms (DSPs) have dominated the exchange world for a long time now.
But Telefonica-backed mobile exchange Axonix is looking to change that dynamic with the launch of a white-label product that will allow publishers to create their own branded mobile exchanges.
“This is about swinging the power pendulum back from the demand side, where it’s been for the last couple of years, to the publisher side, so that the latter can retain the value that their data generates,” Axonix CEO Simon Birkenhead told AdExchanger. “For too long, poor old publishers have been relegated to pumping their inventory through other people’s exchanges and not really getting good prices.”
The white-label exchange, announced Thursday, works like this: Users, mainly publishers and mobile carriers, license the tech as a platform-as-a-service solution, which includes access to Axonix’s existing demand network of roughly 100 DSPs. They pump in their inventory and their first-party data and then the exchange does the rest.
But how is that any different from the private exchanges that have been gaining in popularity among publishers and content creators looking for more control over their data and inventory?
Axonix is also looking to cut down on arbitrage by letting its clients effectively own their own programmatic marketplace.
“When publishers sells all of their inventory themselves without having to rely on an intermediary, that cuts down on the often huge and hidden margins that come about when they have to rely on ad networks or third-party exchanges,” Birkenhead said.
Speaking of transparency, Axonix is acutely conscious of not making the same missteps that Verizon’s Precision Market Insights division made with its now notorious tracking header, which gave users the option to opt out of receiving targeted advertising, but didn’t allow them to opt out of being tracked. (Reacting to pressure, Verizon has since announced that users will soon be opt out of its persistent tracking mechanism for good.)
Axonix is in talks about providing its white-label offering with five mobile carriers in Europe, Asia and Latin America.
“There are two things we always have to be very careful about: one, that we protect the anonymity of PII information, of which mobile operators have quite a lot, and two, that we pass that data in a way that doesn’t conflict with any privacy rules and regulations,” said Axonix COO Simon Bailey. “In other words, not do what Verizon did.”
To that end, Axonix uses a tokenization methodology, substituting PII data for tokens that “only last for a short space of time” making them “worthless to anyone else because they disappear after just a couple of minutes,” Bailey said. Before that happens, Axonix matches the tokenized data with anonymized segment data and stores it to be safely used at a later date. The goal is ensure that the data is utterly valueless outside of a publisher’s own exchange environment.
“Verizon perhaps came into this a little naively,” Bailey said, referring to heat Verizon took after Stanford University researcher Jonathan Mayer discovered that DSP Turn seemed to be taking advantage of the carrier’s unique identifier header to revive opted-out cookies. (Turn claimed that all Mayer saw was a back-end coding issue that got solved quickly.)
“Whatever you do in the digital advertising space, you have to predict what other people might do with anything you launch,” Bailey said.
Just like the exchange aims to give publishers and carriers more control over how their first-party data and inventory is traded programmatically, consumers deserve the same right.
“Ensuring that users have complete control over their data in terms of opting in and opting out and ensuring that the data is properly maintained in this enclosed environment – those are both very important aspects of the white-label exchange,” Bailey said. “Maximizing the commercial value of data and minimizing the risk of data leakage go hand in hand.”
Axonix is offering the solution on a rev share basis. The company will take an agreed upon percentage of the sales price for each ad sold through the white-label exchange, thereby cutting down on hefty upfront investments.
In addition to a handful of mobile carriers – Birkenhead declined to name names, but noted the company’s Telefonica connection means “it’s natural that they’ll be one of the first key partners we work with” – Axonix is in negotiations with about a dozen publishers that are planning to go live with their own branded exchanges over the next several months.
Birkenhead is banking on the idea that the ability to gain more control over data will make publishers and carriers less “programmatic averse” and help them monetize their ever-growing cache of mobile inventory.
“Premium publishers are nervous about using programmatic exchanges because they feel they commoditize their inventory, which is represented in these exchanges alongside lots of long-tail app inventory with low value and generally low CPMs – and when they don’t get good prices they feel like it’s not possible to get decent returns from programmatic channels,” Birkenhead said. “We’re trying to change that by enabling them to sell more inventory through their own branded product so they can decide who and when and with what data.”