The rumours of a publisher exchange in Australia is the worst kept secret in APAC right now. Four of the biggest Australian digital publishers have allegedly been spotted in New York, negotiating a deal with AppNexus. The "gang of four" in this new exchange proposition are some of the unlikeliest bedfellows you could think of. Mi9, Yahoo7, Fairfax and News couldn't be more diametrically opposed - in terms of where they sit politically and who their owners are. But there is one consistent and motivating factor for a proposed Aussie publisher exchange: a collapse in traditional ad revenue.

Australia is the Germany of APAC Digital Advertising

The APAC market is massively disjointed. Australia is no exception to this rule. If you want to do business there, you cannot manage it out of Singapore. The Australian digital advertising market is very insular, and on the sell-side in particular there are a handful of big premium publishers that control the market. The market is very similar to Germany in terms of the control publishers have over inventory supply.

With the advent of programmatic, publishers have now seized an opportunity to maximising revenue on a finite resource - namely Aussie-specific premium supply. More on the strategy later.

What about the competition authority, ACCC?

The idea that publishers might collude on pricing to build some commercial advantage is bordering on farcical. Most of these publishers - two in particular - are hemorrhaging cash, and losses in their offline business has resulted in deflated stock price and mass redundancies over the past few months. The ACCC will find it difficult to punish the actions of publishers looking to launch a new collaboration when the majority are teetering on the edge of survival. And let's be clear here, advertisers would look to buy the lowest price possible anyway. This is a natural equilibrium necessary in the market to allow publishers to create premium content. Price fixing is a dangerous and overly emotive statement to make - particularly when you have a pro-active agency like the ACCC involved.

What should Australian publishers do next?

ExchangeWire has been advocating a collective approach from publishers for a number of years. And we have documented at length a number of approaches publishers should execute. There has been much speculation about what the new Aussie Publisher Exchange (APE) entity might look like. In the first instance it will be a collective exchange open to a white list of demand sources with high floor prices. That should improve yield but Australian publishers should look at the following steps as potential strategies for leveraging the new exchange.

Adopt the De Telegraaf model

One day, De Telegraaf will be the case study on how a premium publisher can build out a real-time trading strategy. Abandoning the typical waterfall approach, De Telegraff looked at an "all-in" auction model for its inventory. By giving all demand - indirect, direct, and guaranteed - access to supply, De Telegraff has been slowly improving yield and boosting revenues. How does this work? Working with a local ad tech player here in Europe, the Dutch publisher, built a bidder to bid against other demand sources on its own inventory. The result was increased bid density as well as pricing. Smarter yield optimisation has led to a rise in revenue, increased efficiencies, and access to a whole new tranche of demand in the market

Build a Publisher Trading Desk

Some in the industry remain confused about the concept of the publisher trading desk. Effectively it is a trading desk on the sell-side. Leveraging prop first party data to trade across dynamic inventory is a pretty powerful commercial proposition. Every one of these participating publisher should be thinking about this strategy for all direct campaigns as well as a data-powered independent trading desk. To do otherwise would be leaving money on the table.

Most of these PTDs will end up competing with the ad trading desk. Remember all budget is not going to go to the ATDs - and this is an opportunity for publishers. This unfortunately is a competitive space, and the sell-side needs to execute trading strategies that are as sophisticated as the buy-side to maintain and grow spend. Sitting idly in an exchange is no longer an option. They ultimately need to create value for marketers, and the PTD is a real opportunity to do so.

Obfuscation is a pointless strategy

If the participating publishers sell blind through this exchange it will defeat the purpose of boosting revenue. Buyers don't want to buy buckets of undisclosed "premium inventory". Going down the transparent route will result in more demand and higher CPMs. This has already been proved by the likes of De Telegraaf.

Won't fulfilling direct campaigns be a problem?

If the publishers go down the route of opening up all supply to all demand source, indirect and direct (highly unlikely in the first instance) then you can be sure that the new exchange will have controls on fulfilment of direct sold. But this is likely to be baked into the rules of the new exchange.

Start leveraging the platform

If AppNexus is to be the partner then the participating publishers need to start thinking about new commercial opportunities. The open API available on the platform is allowing traders to access applications through the AppNexus counsel - social buying tools, DCO, analytics and other third party apps are available to use. Opening incremental revenue streams would be the smart move here. Hire some hungry commercial guys, and see if you can tap new rev sources like affiliate money by offering your own retargeting solution.

Let's not forget mobile

Mobile remains an untapped channel. Still starved of any real marketing spend, mobile remains a "green field" opportunity in mobile. If this consortium can build an audience play in mobile we could well see these premium publishers enjoy significant upside in revenue. They could run mobile-based audience extension across own and operated mobile apps using the partner platform. It still remains to be seen whether the AppNexus solution can help realise this potential.

Publishers of the world unite

This deal will happen regardless of what platform the collective use. Publisher collaboartion is a trend that will likely continue. In an insular market like Australia, it will be successful provided it's done right.