A little while back ExchangeWire tweeted ‘will the growing demand for real-time inventory result in more publishers opening up greater inventory through RTB?’

Much as I tried I just couldn’t get a decent answer in 140 characters. The short answer is “yes, but...” The interesting bits here are in the reasons behind ‘yes’ and the debate around the ‘but’. We see automated trading as a fantastic opportunity for everyone involved in connecting brands with relevant people in quality environments. On the planning or buy side the positive view is fairly obvious: media has always been about getting the right message in front of the right audience in the right place, at the right time, at the best possible price. Addressable advertising, automated trading, exchange trading, RTB and all the other names we can invent for it virtually guarantees this is possible - so long as media owners make the ‘right audience’ and most importantly the ‘right place’ available.

For us there are real benefits to making that happen. It means we can realise the true value of all the people that spend time with us, not just the core audiences that we’re so well known for. It should allow us to do that more efficiently, freeing up resource from commodity trading to spend more time on activities that add more value. Our early experience certainly bears this out with RTB supplying 18% of our revenues from just 7% of our impressions on our non-direct, non-UK inventory. So, why the widespread trepidation?

There is something fundamentally scary about transparent markets - especially those where there is a basic imbalance between supply and demand. Digital display advertising will never grow as quickly as the network itself. In H1 2010 the IAB UK has digital display spend up 6.4% whilst UKOM shows page impressions for the same period up 23%. Transparent markets are especially scary to an advertising community that has, on occasion, fallen back on the odd bit of smoke and mirrors and inappropriate metrics to try and protect premiums and prove effectiveness. But, for those that do deliver value, and can balance supply and demand, transparent markets can be a very good thing.

We spend a lot of time in this space discussing the importance of pricing floors, in terms of how and where they should be set. But it’s really important to step back and understand the things that can give pricing floors teeth:

- delivering and understanding your value
- owning and monetising your audience data
- creating a balance between supply & demand

Without these basics it’s hard to command meaningful prices, or turn away any bid, which renders all the best management of pricing floors irrelevant.

At the Guardian, we are investing heavily in all these areas. Our investments in our direct, traditional sell are the ones that give us the foundations to trade effectively in real time. In the short term this works by ensuring demand on the top tiers restricts supply in the lower levels which are currently traded in real time. This works – as we have premium sell through rates on our UK inventory which regularly exceed 80%.

In the long term detailed understanding of who spends time with us and the value they have when they are on our site will give us the tools to trade all of our commodity sell - but only as the market develops, and it makes sense for us to do so.

Our partnership with Maxifier helps us optimise both yield and advertising performance, calculating the best placement for every impression and the impact on every other campaign across our portfolio. We are starting to use it to optimise on engagement metrics too, with fantastic results. We’re seeing performance uplifts of 20-30% across the site on click, acquisition, and engagement metrics. It’s delivering performance, which ultimately drives our value in the market.

The other thing that drives our value is how well we understand and leverage our audience data. In this area it’s the big picture principles rather than the nuanced details of which provider is used and how that will make all the difference. It’s vitally important to know and understand what the data is and how it’s being produced and used. So sometimes the simplest data relationships drive most value - like the one we have with our sister company Trader Media which helps us combine powerful auto intent data with our upmarket audiences and premium context.

The area that I think we, and others, are playing catch up in is in governance and permissions that we place around the collection of data by our advertisers. The Wall Street Journal’s approach in this space is highly commendable. They place strict controls on what data can be collected, by whom, and how it can be used. WSJ enforces these controls, and we can expect to see these constraints on data usage written into publisher T&C’s very soon. Companies like Better Advertising, which provide the governance to encourage compliance and trust, will become more prevalent. One way to get a quick view of what’s happening is by installing its free Ghostery plug-in. Group M Marketplace is currently having a transparent conversation about data trading and that will also be a growing trend. It’s easy to get scared about pricing in new areas like this. But willingness to experiment and partner judiciously will help us all find the real value of our data.

Finally, we focus on developing expertise in understanding our inventory and pricing, and developing a multi-tiered, rules based, dynamic approach which we can quickly and easily migrate across all trading approaches - traditional or exchange. And we experiment. We test different floors, permissions and controls on the parts of inventory that we trade in the exchange. Now is a great time to play and gain knowledge before the stakes get too high!

Tim Gentry (@timmgentry) is Head of Optimisation & Effectiveness at Guardian Commercial