If Wall Street Does It… (or “Why We Built an Exchange of Exchanges”)

Blog   |   Operative Team   |   September 14, 2015

Suppose you have something to sell. Maybe it’s a car. Maybe it’s a piece of jewelry.   The object of sale doesn’t matter. You believe the item holds value and that someone else will want to buy it.

So what now? You could call your friends and family. Perhaps you could email some coworkers to see if anyone is interested. You’d probably be lucky to make your sale quickly and easily. And even if you did sell the item, with a small pool of potential buyers, the odds are you’d probably have to be flexible with the pricing. The true value of something, after all, is defined by the price a buyer is willing to pay.

Services that facilitate sales exist for a reason. It works to the seller’s benefit if they can inform the largest number of potential buyers possible, because the object stands a greater chance of being sold. And the higher the number of potential buyers in the loop, the more accurately one can gauge the true value of an object.

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The importance of sales exchanges cannot be overstated. There are a number of people who have dedicated their careers to proving this point. Some of them have even been awarded Nobel prizes for their work.

Most publishers rely on one or more ad exchanges to sell some of their advertising inventory. Many sites know they aren’t going to be able to sell all of their inventory through direct channels, so listing some of it on an exchange is an important way to supplement direct sales revenue.

But what if you listed your inventory on one exchange without realizing that a pool of buyers on a different exchange would have paid more for it? If you had that information, you’d move your inventory to the other exchange, of course. But in order to get it, you’d need to understand what buyers on what systems typically pay what price for which inventory, at what time. And that’s just understanding the data – now you need to act on it. For most ad operations teams, systematic daily inventory movement is time consuming and low on the priority list.

This problem plagued Wall Street traders for years. Imagine selling a stock on the New York Stock Exchange without realizing that someone in London was willing to pay 30% more for it. A solution was born out of necessity, and for the last few decades, stock traders have relied heavily on an “exchange of exchanges” – an electronic network that that executes transactions by connecting buyers with whoever is the highest seller, regardless of the exchange they sit on.

This is the way programmatic advertising sales should work. So we built Operative Compete. Imagine being able to sell your inventory in a way that automatically allocates impressions by exchange to optimize your eCPM. Operative’s team of engineers and ad experts created Compete to help our clients better monetize exchange-based sales. The tool calculates the highest CPMs across the exchanges and reallocates inventory daily. Just like Wall Street.

You can try it yourself and see. We’re so confident in this product, we guarantee at least a 30% increase in revenue in the first 60 days.

We’re also having a free, in-person workshop around Best Practices for Programmatic on September 22. Registration is still available.