Wednesday, August 4, 2010, 9:18 AM ET|Posted by Will RichmondOnline video ad network BrightRoll is launching the BrightRoll Exchange ("BRX") this morning, a self-service online video ad exchange intended to catalyze large-scale, efficient pre-roll video ad buying. BrightRoll CEO Tod Sacerdoti told me yesterday that BRX has been in the works for over a year and began a quiet beta test in April, initially with BrightRoll itself as the primary buyer, and in June with the first 3rd party buyers added. Tod said BRX now has hundreds of publishers participating and thousands of targetable URLs.
Exchanges have long been important parts of the display ad buying ecosystem and Tod sees online video advertising following the same cycle. Over the past several years more and more brands and agencies have begun buying online video ads, learning about the new medium and its ROIs. Some bigger buyers are already looking to buy at scale, and others will surely follow. However, BrightRoll research suggests that key obstacles remain, with half of publishers it surveyed unable to sell 20% of their online video ad inventory. BrightRoll believes this is primarily due to buying inefficiencies.
With BRX, buyers are able to select URLs to bid on, using user level targeting from their own data sources, 3rd parties or BRX's. Inventory is awarded on a real-time auction basis at the impression level, which means that buyers can tightly control their budgets. Reporting includes placement data and campaign performance.
Again looking to the display world for precedents, Tod sees BRX as a strategic move for BrightRoll as he believes that display ad networks that did not own their own exchanges were eventually weakened. While Tod insists that BRX isn't a hedge on its core ad network business, and that video ad networks will be around for a long time, should BRX succeed and its ad network falter, BRX will be a key BrightRoll asset.
I raised a concern that if BRX works well for media buyers, they might shift their spending and cannibalize BrightRoll's network business. Tod acknowledges the risk, but sees BrightRoll network differentiators like its focus on premium inventory only, its research suite and personal relationship with buyers as important defenses. BRX is being set up as a separate unit with its own sales team and transparency so that BrightRoll itself isn't advantaged vs. other BRX buyers.
To get a sense of the potential scale ahead, Tod mentioned that there are now large casual gaming sites that, if they were to create video ad inventory in front of each game play start, could create massive inventory overnight. An exchange like BRX is intended to help clear that level of supply.
BRX follows at least one other exchange initiative, from Adap.tv, launched early this year, which Tod views as a potential partner. It's still early days for online video advertising generally and for exchanges specifically, but as BRX and other initiatives show, key industry players like BrightRoll are gearing up for massive scale down the road.
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