Dennis Buchheim is the GM, Scale Display, Microsoft Advertising (MSA). Here Buchheim discusses the Microsoft ad exchange roll out In Europe, and what impact it will have on the European market.

How will the new Microsoft exchange fit into the media mix over the next couple of years?

We are continuously looking at shaping our offerings to meet our customer needs and the launch of Microsoft Advertising Exchange is in response to our customers’ changing preferences on how they want to buy our media and use their data to reach their target audiences. Advertisers will continue to look for guarantees and custom creative solutions, so reserved buys will continue to have an important place in the media mix. Undoubtedly the exchange will become a larger part of that mix as our partners look for new ways to tell their story to their audience at scale and more efficiently.

Will we see brand advertisers move into the automated channel?

Definitely, and in fact we are already seeing that start to happen. But let’s be realistic. There is work to be done by us as an industry to help advertisers realize the full potential RTB holds for true 1:1 marketing and branding campaigns. We need to clear the clutter and bring forward the art of storytelling, which is critical for brand advertisers. We will need to help them leverage technology to enable impactful connections with individuals, but in ways that allow creativity to flourish. Simply put, I see storytelling + ad technology as the art and science which will drive brand advertising and we need to make this combination work on exchanges to attract those brand dollars. As an industry we must change perceptions and make high-quality RTB inventory available for advertisers. Context and brand safety are required to give advertisers the confidence to spend on exchanges. In fact, that’s been an impetus for us to bring our quality inventory in the exchange.

Given that Microsoft is a publisher, an ad network and now an exchange, how are you as a company going to manage the inevitable sales channel conflict? Is this a problem that is likely to restrict the growth of RTB and programmatic buying?

Being a premium publisher, network and now an exchange we occupy an interesting position in the industry. And yes, managing among these positions requires a very fine balance. However we believe it gives us an acute appreciation of the differing dynamics and objectives within the industry. For example, we have been able to apply learning and first-hand experiences to our supply-side partners. Microsoft has always believed in evolving its offerings to meet the changing needs of our customers, be they agency/advertiser or publisher. We also believe in an open ecosystem where partnerships and healthy trading dynamics drive results and innovation – that’s the impetus behind the launch of our exchange.

As for sales channel conflict, our premium/brand business continues to thrive alongside the exchange as we fulfill campaign objectives that cannot be delivered via RTB today, such as guarantees and custom solutions. We expect this to evolve over time as the exchange enables more creativity and cross-device capabilities, but we know that our brand business will always play a vital role in the media mix for marketers to engage with our audience. With regard to our network, we still have audience segments, data, and consultation that are exclusively available via the network and again, we see this channel as another option for our customers to achieve a different set of goals.

How can we move the exchange piece up the sales funnel?/ You say that we need a “holistic storytelling solution” if we are to encourage TV spend into online. Can you give more insight on this strategy?

As I mentioned before, we need to evolve our industry so it enables advertisers to tell their stories creatively and effectively – as that’s really what’s going to drive success for them. I think there are four things that we as an industry collectively need to focus on.

First and foremost, creativity – there’s been a huge emphasis on technology and data in display over the last few years and we as an industry are probably overlooking the importance of how we engage with consumers once we’ve found them via the technology. Dynamic creative optimization is a great example of where we have made strides as an industry, but there is a long way to go before we create truly engaging experiences between brand and consumer.

Secondly, quality – and by that I mean we need to improve ad quality, relevance and brand safety standards in the exchange. Microsoft as a global premium publisher has made a huge commitment to RTB by taking the lead on putting our premium inventory online. We need other premium scale publishers to do the same to encourage more offline advertising to move into the world of RTB.

Thirdly, we need to amplify the connection - by bringing RTB to all multimedia devices and more formats, allowing for customized audience messaging and sequential storytelling, based on the individual and their device.

Last but certainly not least, establishing standards and ways to measure - we need to think about establishing consistent brand measurement techniques and metrics like online GRPs to create a common “language” of measurement across offline and digital. RTB promises brand advertisers the efficiency to connect with individuals to tell their story and unless we find a way to help them measure this, that promise cannot be fully realized.

What kind of risks do privacy and malvertising pose to the growth of the data-driven display space? What steps should we be taking to limit the malvertising threat – and ensuring the privacy of users?

For advertisers to be able to tell their stories at scale, availability of quality inventory via RTB is key. One big factor which can hold back quality publishers from putting their inventory on exchanges is malware. This, in turn, threatens the security of the publisher’s audience, which is detrimental to all involved. A malware ad on a popular site can reach millions, and the truth is automated buying makes it easier for such parties. We need to address this issue head on with appropriate technology and checks and balances, and make it as difficult as possible for malware to slip through the net.

As for other privacy concerns, the increased use of data by our industry to create meaningful audience segments has brought increased concerns from consumers. We are in the firing line of legislators around the globe, and together we need to think about ways to put the consumer in the center of the value exchange. If we do that, we believe we can gain new value and opportunities for consumers, advertisers and publishers. To be able to tell a story, we need confidence and trust from our audience, otherwise the story falls on deaf ears. Creating a more equitable exchange of data, where there is tangible value given and received between advertisers, publishers and consumers, is something we should strive for. We need to come together as an industry and hold our partners and each other more accountable if we want the ecosystem to flourish.

Can the Microsoft ad exchange offer the kind of scale to Europe’s brand advertisers that has been lacking in the data-driven space up to this point? What impact is this likely to have on European brand spend in the automated channel?

Our agency partners have been asking us to speed up the launch of our exchange in Europe as they are eager to tap into our quality inventory. We now represent the biggest cache of real-time bidded premium, brand-safe inventory with the availability of the Microsoft Advertising Exchange in European markets. The market has largely seen long-tail inventory until now and that adds to the notion that exchanges are a place to find cheap remnant impressions. This is not how we move the RTB space forward. We have already started to hear from our customers about the difference they are seeing in performance of their campaigns as they start to leverage the exchange. Brand advertisers who engage with us on our custom and reserved media solutions are looking to supplement their buys with this RTB inventory as they see this as an opportunity to tell their stories more broadly and reach all of their objectives at scale.