Matthias Pantke is CEO of AdScale GmbH, Germany. Adscale is one of Germany's leading ad exchanges, trading nearly 6 billion impressions per month. Pantke took this week to speak to ExchangeWire about the Adscale platform, the size of the German exchange market and when Adscale inventory would be made available to buy through RTB.

Can you give an overview of the AdScale platform offered on the German market?

MP: AdScale is Germany’s leading real-time marketplace for online advertisement. In this marketplace, advertisers and publishers buy and sell display ads, i.e. advertising space. It is possible to define ads and to plan target campaigns, simply and conveniently. As a marketplace for online advertising the pricing in our system is fair and transparent for both sides. For publishers this means that they can control their prices independently and effectively via AdScale. The price level can always be adjusted according to the efficiency of the advertising space. Therefore, the marketers have the full control over each campaign and what price it is running at. Thus, the average price level in our marketplace reflects the actual price level of the German online advertising market.

AdScale is a complete marketing solution for small and medium websites. For large websites with a higher traffic volume it offers an additional and risk-free source of revenue, which can be used parallel to ad networks and direct sales activities.

Agencies in Germany have been described as being very hands-on. Is the Adscale platform much more self-service - or does it have a service layer?

MP: We would say that agency campaigns are 50% self-booked, 50% serviced by AdScale, whereas in the direct advertiser business the majority of the campaigns are handled and booked by the clients themselves – at least 80%.

Is exchange trading getting much traction on the German display market? Do you think agencies are likely to use DSPs like Appnexus and InviteMedia for online display trading?

MP: We believe that last year roughly 5 percent of all display campaigns on the German market were traded via exchanges. The market share of ad exchange campaigns should increase up to at least 15 percent this year. The turnover of all display campaigns booked via online advertising marketplaces will triple in Germany in 2010 (from an approx. 5 percent market share up to 15 percent). Over the next three to four years, 50-60 percent of all standardised online bookings for display and performance campaigns will be processed via online advertising marketplaces and booking platforms. The rest will be sold conceptually and manually by marketers in certain environments.

Agencies are very likely to use DSP’s, but we believe that they will either build them themselves or buy one of the above-named players.

How do you see the exchange model progressing in Germany in 2010? Do you foresee the same trend towards audience-buying that’s happening in other markets?

MP: Definitely! 90 percent of all campaigns running on AdScale are not planned traditionally for editorial content. They are planned for NOT single sides but based on target groups running on aggregated traffic on multiple websites, thus running either in rotation of channel/network mode or fuelled with targeting technologies.

How is AdScale differentiating itself from the likes of Doubleclick Adx, RightMedia and other exchange and SSP (supply side platforms like Rubicon, Admeld and Improve Digital) platforms?

MP: The yield management of AdScale is today already comparable with that of the large US market players. It allows the publishers optimal inventory exploitation.

AdScale is the only marketplace in Germany that has managed to gain critical mass on the supply AND demand side. On the subject of reach/supply, we rank second behind Google content Network (comScore 01/10). In addition, AdScale differs in terms of the quality of the traffic: The booking of 75 percent of the top100 is transparent and not “blind”. In contrast, Google offers mainly long tail inventory for display, bookable only via Adsense currently. 30 of the top 30 German media agencies use AdScale for highly standardized, targeted channel/rotation campaign flights via a proprietary white label agency booking tool. 60 percent of all revenues are generated by agencies, 40 percent via performance-driven direct advertisers, thus displaying the independency and sustainability of the business model. All in all, AdScale serves between 800 and 1,200 campaigns a month, and is growing fast, 20 percent delivered by CPC, 80 percent delivered on a CPM basis. From the roughly 300 million AdImpressions a day we sell up to 50 percent, the rest goes back to the publisher as a backfill option.

Our platform is based on its own proprietary adserving-technology, complementary to all other adserving systems like Dart, Atlas etc. Positioned as an open and transparent marketplace, we believe that the supply and demand side should be able to use all state-of-the-art 3rd party applications for targeting, video adserving etc. in order to increase transaction volumes via the platform. We achieve this through a technical API, which allows both advertisers and publishers to connect their own systems in the most efficient way, e.g. data exports to proprietary billing and buying systems, planning system of media agencies, targeting systems etc.

In contrast to Yahoo’s Right Media and the Doubleclick Exchange, we prolong our platform business value chain by generating demand through AdScales own sales team, especially in the agency market, allowing us to charge on a commission basis, rather than on a license basis. We also extend our value chain by offering to manage and optimize the running campaigns, if required by the direct advertisers.

Are you seeing much brand budget running through the AdScale platform? Or are the campaigns mostly DR-focused?

MP: Both. On small standard IAB’s we mainly see performance driven campaigns, but especially the bigger formats (expandable, tandem, video interstitial….) are showing a strong development within the online advertising marketplace. Although the two formats Pop-Under and Video-Interstital were not launched by AdScale until the end of 2009, together they already made up around 16% of the turnover in January 2010.

Can you name any of the publishers currently trading on the exchange?

MP: All of them are transparent in the system at www.adscale.de.

Has AdScale experience a lot of growth since it was launched last year?

MP: AdScale recorded considerable eight-digit revenue in 2009. Thus, in 2009 we achieved the break-even point and are profitable one year after the start of the operative business. For 2010, we are anticipating a further increase in sales and expect to double the existing sales levels at least. For the German market in the coming year we expect to triple the market share of all booked online advertising campaigns via ad exchanges from five up to 15 percent. As the market leader, we will be able to benefit from this increase disproportionately.

Is AdScale offering inventory through real-time bidding? If not, are there plans to add RTB functionality to the platform in the coming months?

MP: Not yet, but we will add RTB in Q4 2010 at the latest even though we believe that this is a very hyped feature and suits mainly performance-driven direct advertisers. Secondly, RTB is not really a “big thing” in Germany yet.