De Telegraaf is arguably one of Europe's most progressive and innovative publishers. Having seen the potential in RTB at an early stage the leading Dutch publisher is building successful revenue models around the automated channel. As well as being one of the first to put inventory through RTB, it also appears to be the only European heavyweight publisher to roll out a functioning Publisher Trading Desk (a publisher strategy that this blog continues to argue for very strongly). Here Martin Van Der Meij, Yield Manager at De Telegraaf, discusses RTB strategy, how it is working for De Telgraaph, the advantages for both publisher and advertiser in operating a PTD and the move towards full automated buying.

Can you give insight into the current strategy of De Telegraaf in the automated space?

When we started with Yield Management a few years back we basically had one goal. How can we improve revenue from our secondary channel? We were working with just one ad network so there was definitely an opportunity. We knew that we had to start selling CPC right from the start so we wouldn't create a situation where advertisers could buy on a CPC basis only through our secondary channel.

When RTB came along in the first half of 2010 and we grabbed the opportunity. Our own publisher network switched to RTB in Q4 2010. Right now we’re in the process of changing our strategy to more automated-selling. How can we make it easier for agencies to buy our inventory? So we’re moving into a “private exchange” - but more importantly we’re trying to build real sales optimization within the company where we can have our sales people focus on premium products as well as keeping existing business. We’re just trying to automate everything. It's not about our secondary channel or performance anymore that’s for sure.

You are making significant volumes available through RTB. How are you avoiding sales cannibalisation of top-tier inventory?

Cannibalization is a risk that's always there. But people tend to forget that cannibalization can happen with the “outside world”. When we started selling on a CPC basis, was there cannibalization with our CPM campaigns or were we’re just aiming on the CPC budgets that are going to Google and other publishers?

With CPC we didn’t see any cannibalization because CPC budgets are not premium budgets. For RTB it's the same. Different advertisers/budgets/goals, and it all works together. With RTB we get access to new opportunities. Not just for RTB but also for our own premium and performance sales. So with our own CPC-model and RTB we’ve got a wider spread in sales products, working together for the benefit of all parties involved - publisher and advertiser.

Because we act as an ad network on our own exchange we needed full RTB on all impressions. The combination of our exchange (SSP) and our ad network (DSP) gives us the power to scale things on both sides. That’s one of the main reason we had over 1 billion impressions RTB enabled by the end of 2010.

How are you making inventory available in real-time? And how do you manage buyers and floor prices? Is De Telegraaf happy to sell to everyone in market?

We’re using Admeld to enable our inventory. Floorprices are basically not something we prefer at the moment. It’s important to have floors - but you can create floor prices with other tags and competition. Our traditional network deals are already setting floors. Using high floor prices at the start can ruin your RTB-business. And the whole industry? RTB at this stage is about the second price auction so buyers must be able to rely on the 2nd price principal.

When we move into the private exchange space, it will be more about automated buying. We’re going in a whole new direction. Guaranteed buys and a private exchange are not based upon 2nd price but more on the relationships between buyer and seller where we just automate the actual buying/selling process.

With regard to the question about selling to everyone: we have strict creative guideliness and business rules. We don't allow everyone to buy. It's more of a “we-don’t-refuse-everyone” policy.

Is this real-time strategy working for De Telegraaf? Are you seeing a discernible lift in yield and revenue growth?

RTB is working really well for us - from a sell side and a buy side perspective. Revenue for RTB is 250% higher. Looking at it from the buy side we can just get better results for our own advertisers with less impressions. And RTB gives much more controls and information about what’s happening on our websites. For our sales organization it’s even better. We can see what a retargeting advertiser is willing to pay on our inventory so we can help that advertiser increase his cookie pool. Reach-extension is something we didn't had as a product a year ago. Because of our own campaigns we are seeing a big increase in revenue from RTB campaigns. So we help the advertiser with a product that delivers and we get extra demand on our exchange.

You use AppNexus as your demand buying tool to bid on your own inventory – with the intention of bidding-up impression pricing. Is there a danger of you winning the majority these bids, and losing revenue? How are you making this work? And why should other publishers consider a similar strategy?

When you have tons on RTB enabled inventory it makes sense to give your own advertisers the same choice - traditional buying and automated buying. Agencies do have the choice to buy direct (calling a sales rep and talk about the IO) or to enter our automated system. With AppNexus we just give this option to all our clients. The competition element makes sense. Why should we sell an impression for €1 to a direct advertiser if we can sell it for €5 through an RTB-buying network?

Of course there is a chance might lose revenue when you alter your own bids and give yourself a price advantage. From a true yield perspective we believe that all bids should be net payable to us (the publisher). So our own sales team has to take into account that there is going to be a cost of sales incurred. You could argue that we give ourselves a disadvantage but I would disagree. Because of this open and transparent playing field we forced ourselves to adapt. Basically we now act like an ad network, and we had to learn the game within a year working this way. And for our secondary channel it's good to know that our exchange operates fair and there are no hidden features to favour one buyer over another.

We did some testing with the cost of sales fee. Ironically we noticed that when we lowered our cost of sales on our regular tags our RTB revenue went sky high.

Do you think there is still a hesitance among most big publishers of putting inventory in the automated channel? What steps should they be taking to work in this space?

Of course a lot of publishers are still hesitant. It’s new so people might find that a little intimidating. Stick to the old. It's something you see in every industry. You just need to be able to see and use it to your own benefit. Lots of people think they lose control when they automate a process. In fact you rule out the change of making a human error.

If you want to attack tons of budgets you should make it easy as a publisher for advertisers to give you their money. And it doesn’t make sense to test this on a few impressions. If you start testing this space and you’re limiting revenue as a business rule well…. Automated buying is about making it easier for agencies to spend money. So scale is key as is full access.

Do you think a pan-European publisher exchange give publishers more control over inventory and data. Is a European-wide exchange, owned and operated by the continent’s biggest publisher even feasible? Would it be better to localise it first – starting with Dutch and UK focused exchanges?

This discussion should be broken down into two key decision areas, technical and business. When Google is buying everything we have to make sure that a Pan-European exchange is also owned by these publishers. Not just operated. I think a European exchange is a bridge too far for most publishers. But general country-based exchanges make perfect sense. As soon as publishers start to understand it’s about scale and there are not one but two 800lb gorillas out there (Facebook and Google) they will see the need to work together on one platform. All publishers can set their own business rules. This publisher-exchange is just saying to advertisers: "I know you can buy effectively on Facebook and Google. I know. We know. But here you go. We as premium publishers offer you the same benefits."

And keep in mind that a ton of advertisers prefer to advertise on brand safe inventory that premium publishers can offer. Automated buying access on premium publishers is key the next few years. The Google acquisition of Admeld says it all really.

How do you see the exchange space developing over the coming twelve months? Will we see the rise of private exchanges in Europe? More brand budget in the automated space?

We went from unsold inventory to remnant inventory into exchange and automated buying now. The new buzz word is private exchange but I think the real next big step is full automated buying (FAB). I'm talking about rate card here. And yes that’s branding. Full automated buying (FAB) is about making sure you don't waste valuable resources on parts of your business that can be automated. Make those resources available for the sexy and more profitable products - sponsorships, content integrations, tablets etc. On reflection I’m not even sure if you could call our next step a private exchange. It might be better to say it’s the first truly operational FAB plaform.

Martin Van Der Meij Will Be Speaking On The Publisher Panel At The Ad Trading Summit On September 20. Be Sure To Get Your Ticket Today...