Despite what some industry reports are saying, mexad is NOT a DSP. It's doesn't licence technology to other buy-side vendors. And it hasn't built a next generation buy-side ad server. So what is it? Well, Mike Nolet coined the phrase DEM (Display Engine Marketing Agency) last year to describe buyers who used enabling technology and know-how to deliver display performance for agencies. Mexad has since been happy to describe itself as a DEM while other similar companies are still grappling with the thorny issue classification. ExchangeWire recently spoke to Sacha Berlik, CEO/Founder at mexad, about the company's positioning, the US DSPs, and the complexities of the European exchange marketplace.

mexad defines itself as a DEM (Display Engine Marketing Agency). Given that the enabling technology is now available for anyone looking to trade across dynamic supply, how important do you think your service and optimisation layer will be in delivering campaign success for agencies?

SB: To be honest, it´s impossible to compare our services with a platform. That would be like asking an international SEM/PPC agency why they are in business when everyone could have their own Google Adwords account.

The problem in our space is not technology or the platforms itself. The challenge in our part of the industry is the inefficient operation of technology. That is where mexad, with its service layer comes, into play as a DEM. We employ the people that have worked across multiple ad exchange platforms for many years. Our CTO for instance has worked across exchanges for over 6 years. This knowledge is key to guaranteeing successful campaigns.

We are currently working with 250+ clients, and manage more than 2000 campaigns in over 15 countries. We have offices in London, Paris, Cologne, Milan, Vienna and Newport Beach. This pan-European presence really gives us the knowledge and experience to know what works best in terms of vertical/product on an ad exchange, SSP or DSP across different regions.

At mexad our greatest asset is our people. Our analysts know which inventory works best in the different European markets. Technology is of course very important. But we believe the people using these tools are more important than the tech itself. This is our key advantage. We can choose any ad exchange, SSP, DSP, DSPP, but we can also use our proprietary technology to trade across dynamic inventory.

If in the future a large publisher prevents a DSP from bidding on its inventory or if an ad exchange shuts out a leading DSP, then we can still access all of that inventory without committing to any single technology. We don’t limit ourselves. We are platform agnostic.

Don’t forget that the market is still quite immature. Anyone relying on one single technology could lose out pretty quickly.

You just can´t do business in Europe without having a local presence. It´s just impossible given the differing privacy, legal and tax-issues. Everyone who is doing this currently is working below the radar of regional laws and won´t be able to scale their business properly.

It´s not wholly dependent on technology.

mexad is very much focused on working with agencies. How does the DEM model differ, in terms of pricing and inventory transparency, from the dominant DR networks like Specific Media and Adconion?

SB: We focus on agencies to give them a competitive advantage, allowing them to use the best possible service for their clients. This is done through 100% price transparency and without having pre-bought inventory. That means we only buy converting inventory in real-time/near-real-time. And, with our inventory transparency, detailed reporting, and dashboard we make it a lot easier for agencies to use us. As our margin is very low, networks just can’t compete with us.

I don´t really think we are a competitor for a well-resourced DR network like the ones you mentioned. More likely we will make the small- and middle-sized networks suffer.

You say you are platform agnostic. How does that help your agency clients?

SB: As we mentioned above, we are not restricted to any one technology. Let’s say there will be three major DSP players in the future: one owned by Microsoft; one owned by Google; and maybe one owned by Yahoo. There might also be some smaller ones with limited access to inventory owned by the big three. This means that none of them will have access to 100% of the inventory? You ultimately need to have access to all inventory sources to deliver the best results for your clients. That is what we do.

Does mexad use any proprietary technology in its display buying?

SB: Yes, we have our own technology. We are able to use a real-time-bidding technology on inventory where existing bidders have failed to hit campaign targets.

Do you think DSPs with managed services, such as MediaMath and Turn, will be able to scale their businesses across the different European markets?

Look at what these DSPs are doing in the market here. They offer a managed service similar to ourselves with one small exception: they are not platform agnostic. These DSPs are limited to their own technology, meaning they might have to rely on some exchanges more than others.

Mexad is leading the way in Europe. With the opening of our Milan office in February this year (and other international offices), we continue to be the first to support local markets. We anticipate opening offices in Spain and Warsaw next – and there are plans to expand further in the Asian market and internationally.

The key is knowledge of the auction-based environment across Europe. In the last sixteen years I founded and co-founded one national and two pan-European/international ad networks. Our country managers have an average of 10 years’ experience in the display market. You can´t buy this level of knowledge. You need to know the cultural and legal differences across these markets. That´s why US-based companies often fail when setting up in Europe.

Will the emergence of third-party data provider’s fuel growth in the European exchange marketplace in 2011? If not what factors do you think will help grow the adoption of data-driven display buying?

SB: Yes, we believe data is key. That is why we have a data infrastructure that allows us to scale most campaigns. But only qualified data is relevant data.

What we mean by that is simple: the US market is very advanced when it comes to data because it is one homogenous market. Europe is much more fragmented - most available data increases the CPM more than the extra ROI.

Of course that might change over the course of the year. For 2011 and probably 2012 it will still rely heavily on knowledge and experience of where to bid, how to bid and which technology to use.

Exelate opened a French office in late 2010, which is a very smart move to get into the European market. 2011 will be the year when data becomes more relevant in display buying - but 2012 will be the year of data.

Can you give some more details on the launch of mexad in Italy? Is the Italian exchange market primed for growth this year? Is there enough dynamic supply on market?

SB: The Italian market is a key one for us. As a first mover in the market, we can educate the buyers early. Really, in terms of figures, Italy is much smaller compared to the UK, Germany or France. But Italy is not to be neglected. It is a market that is rapidly expanding, and the exchange market is likely to experience huge growth over the coming years.

In terms of inventory this market is very dynamic. We have had over one hundred campaigns run in Italy. It just works.

You’ve also just recently launched in France. How different is the market there in terms of exchange buying?

SB: France is one of the big three markets in Europe. The way they approach ad exchanges and SSPs differs a lot from the UK. We expect to see a lot more local players in the exchange space compared with the rest of Europe. But that’s the usual French strategy.

What are we likely to see from mexad in 2011? More expansion into other European and International markets? Will we see more innovation on the tech front?

SB: Besides the expansion in Europe and internationally, we are looking to launch our self-service tool for agencies. This is due to go live the end of March and will allow clients to see campaign reporting in greater detail, including data visualisation and sources. Also, as a next step, agencies will be able to book online too.

Mexad is also growing in its respective offices. In the UK we recently appointed a Sales Director, and will shortly appoint more account managers to build out our service layer which we are renowned for. Two more European-based offices are already planned, and mexad is looking at expansion outside of Europe later in the year.