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Interview: Zedo CEO Roy de Souza Discusses Ad Exchanges in the Current Marketplace

adoperationsonline.com
May 16, 2011
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As part of our “Experts Talk” series of interviews, we have asked Roy de Souza, co-founder and CEO of Zedo, to clarify a few aspects on how ad exchanges work and where they are heading to nowadays.

Otilia Otlacan: Ad exchanges are a hot topic these days, and, as you so clearly explained 1, they may overtake ad networks in terms of agency buys. Still, there are many in the online media arena who aren’t too sure on the difference between the two. To start with, could you give our readers a clarification on what distinguishes an ad exchange from an ad network?
Roy de Souza: An advertiser can think of an exchange as an Amazon.com type site that sells advertising space. Agencies go there, see what ad space is available and buy it.

Otilia Otlacan: There is a gap – at least a perceived one – between technologies employed by ad exchanges and those commonly seen in ad networks. Do you think this is indeed the case, and if so, what could be the driver for the discrepancy?
Roy de Souza: Ad networks were usually started by great sales teams. They are very good at selling to agencies. That is their strength. Ad Exchanges like DoubleClick Exchange, ZINC Exchange and OpenX Exchange were started by ad serving companies. Ad serving companies are sophisticated and technology companies with huge scale. An exchange is sophisticated technology that also offers the ability to buy ad space – so even more complex technology. As the the industry started seeing advantages from exchanges, it was far easier for the ad serving companies to build an exchange than for the excellent sales reps to start writing software.

Otilia Otlacan: We have seen how beneficial ad exchanges could be for large media buyers. What about publishers, what’s in the store for them?
Roy de Souza: Publishers can and should benefit too. And they will. Currently most ad exchanges sell only remnant space. They don’t pay the publishers much more than remnant ad networks so publishers don’t benefit much. However new premium exchanges such as ZINC Ad Exchange sell premium not remnant. They get high prices for the publishers and the publishers will benefit. Because there are so many advertisers across the world the premium exchanges will find them and bring new advertisers and money to publishers.

Otilia Otlacan: While still in the publishers’ zone, what is your take on yield optimization companies vs. ad exchanges? Are yield optimizers morphing into ad exchanges?
Roy de Souza: Yes. Yield optimization companies are good at optimizing remnant space. They are morphing into remnant exchanges that sell remnant space on an auction basis.

Otilia Otlacan: You have launched ZINC – Zedo’s own ad exchange – three months ago. What differentiates ZINC form other ad exchanges? Could you share with us what’s on ZINC’s roadmap for this year?
Roy de Souza: ZINC has been launched in private beta. It is for advertisers and agencies that want 100% transparency and guaranteed impression delivery. It sells only professionally created content sites in the news vertical. It also sells new ad types that are noticed by users. Agencies love the UI and the efficiencies from automating their media planning and buying. They are impressed that before buying they can see full availability data, prices and unique users their media plan will reach. This type of inventory is very attractive to agencies that are launching a new product or service or trying to make a big impact. The ad space is a little more expensive than remnant but agencies find that their clients are very happy with the results. Later this year we will add more high quality sites, add further innovative ad types (one on the iPad) and more targeting options like day parting. We will also launch ZINC internationally as we are seeing demand from agencies outside the US.