John Were is Operations Director at Global Digital Markets. He took some time last week to speak to ExchangeWire.com about the state of the European exchange space, the arrival of the DSP's and why exchange trading can return strong results for both brand and DR campaigns.

Can you give an overview of the service Global Digital Markets offers advertisers and agencies?

Global Digital Markets (GDM) is an exchange traded media business. We offer an efficient means of harnessing the global reach and volume of the key media exchanges on behalf of our agency and direct advertiser clients. We refer to ourselves variously as demand aggregators, brokers and exchange specialists.

What attracted GDM to the ad exchange model?

Three of the founders of the company are from a media agency background. Agency-side we saw that we were buying increasing amounts of exchange traded media via third parties in the US and Israel. This led us to investigate the exchange proposition in more detail. After some research we decided that there was a significant opportunity for a UK business and that the market was about to undergo a dramatic shift in favour of exchanges. We wanted to be at the forefront of that change.

We also had issues with the service levels, inconvenient time zone differences, transparency and margins that we’d experienced with some of our exchange buying points at the time which encouraged us to begin trading in our own right.

As we went further down the path of setting up as traders ourselves we realised that a number of other agencies had attempted the same route. The majority of these had fallen by the way side due to the complexities of exchange trading and the lack of dedicated resource. This and the desire to widen the market for our services outside of the agency’s clients led us to set up a company completely independent of the agency and Global Digital Markets was born.

What exchange platforms are you currently buying from?

The majority of our buying is done through the Right Media Exchange currently though this will change. We have done limited buys on the rest of the exchange platforms but our view at the moment is that the upside for trading across multiple exchanges in the UK and Europe is limited compared to the downside. RMX represents most of the exchange traded volume at the moment and contains quality publishers which enable us to deliver large budget campaigns successfully for advertisers. As soon as we run campaigns across multiple exchanges then the campaign set up, optimisation, reporting and administration burden is multiplied and makes our business, and so the service we can offer advertisers, less efficient and less cost-effective.

Of course, our business is set up to trade across exchanges and we will be doing this from early Q1 2010 as soon as DSPs have located their data centres in the UK and are a viable proposition. We are in late stage discussions with a number of DSP providers and hope to announce partnership with a leading platform in early February.

A handful of holding companies are building out their own buy-side platforms to trade with exchanges. Is this a trend that’s likely to continue?

It is sometimes difficult to understand the difference between plans and concrete development when it comes to the holding companies and the space in general. I think the reality is that DSP development is a complex task requiring significant investment and extremely capable people to lead the development. There is a lot of room for getting it wrong along the way and I think we’ll see a number of the holding companies acquiring or licensing third party platforms which have proved themselves. Once the holding companies have this capability they will then need to roll it out to their subsidiary agencies in competition for planner/buyer attention with the likes of GDM as well as the more traditional traffic suppliers including networks and big publishers. All this will take time.

The majority of campaigns being run across exchange platforms are DR-focused. Do you think we will see more brand-led display buys in the coming twelve months?

Absolutely. I fail to see a binary difference between brand and DR campaigns – they both want to achieve an objective which is measurable using various online metrics and technologies. The main barrier to brand budgets at the moment, though we have run a number of brand-led campaigns, is the perceived lack of security concerning the inventory advertising will appear against. There are moves to address this security issue by the exchanges, networks, publishers, brokers and technology providers and it is quite possible to run an exchange traded campaign on named sites if this is required for total peace of mind. I think we’ll see brand dollars increase dramatically in 2010 particularly with the advent of increased data capabilities.

The exchange market is a lot more developed in the US. Would you say trading strategy in Europe/UK is a lot different from the US?

The US is more developed and it is also a single market some 6 times larger than the UK and larger by similar or greater orders of magnitude than all the other countries in Europe. These differences in market maturity and size mean that data is more significant for trading in the US than in the UK and that potentially it will always be more significant. Generating volume against data targeting requires scale – both in the data segment and in the media against which to map it. Without scale it is difficult to deliver the volumes and budgets that advertisers, and agency business models, require. Ultimately this scale is driven by population size.

The other difference is the wider adoption of DSPs in the US but that will change with the arrival of the DSPs in Europe. We are looking forward to working with our chosen DSP partner and evaluating the increases in data targeted inventory we are able to achieve trading cross-exchange in an integrated manner.

How has exchange trading developed here over the last twelve months? Are more agencies and advertisers turning to exchange specialists, like GDM, to deliver better results?

The buzz about exchanges grew steadily in 2009 helped largely by Google’s launch of the DoubleClick AdExchange and the sales efforts of companies such as GDM. This growing awareness has generated a desire in agencies and their advertisers to test the potential benefits of exchange traded media. As yet most of this testing we understand to be done through specialist outfits like ourselves but we also know that agencies are expanding their use of exchanges directly or through Account Managers at the likes of Adbrite and Adsdaq.

There are still the brand safety concerns referenced above but we’re pleased to count among our 2009 campaigns the likes of Orange, T-Mobile, Tesco, Microsoft, Virgin, and Coop and we’re expecting more brands to test the waters in 2010 as the exchanges gain further credibility and the economy recovers.

Do you think the Doubleclick Ad Exchange will have a big effect on how UK publishers, ad networks, agencies and advertisers view the exchange model?

Absolutely, Google entering the space has a legitimising effect. All involved in media know that they can’t afford to miss a market upheaval potentially as significant as the last major change Google championed.