What does an advertiser actually do?

What are the differences between OpenX, Google AdExchange, and Right Media, from an advertiser perspective?

• Looking into options for retargeting our audience on an ad network/exchange with a lot of inventory. We're looking for low-cost impressions. What are the relative advantages/disadvantages of the three solutions mentioned? Are there other alternatives?

• Answer:

  The quality of the inventory will vary widely across all three of these platforms - though Google AdExchange arguably has the highest quality inventory (there is a lot of variation, it also gives the best control in terms of selecting or deselecting sites to include in retargeting buys). Ultimately all three of these are "long tail" platforms, (but that isn't necessarily a bad thing for retargeting specifically!) and the ability to buy off of them directly will depend on getting a "seat" which is something most advertisers of moderate size cannot cost-effectively achieve and they would thus work through a "DSP" (who will charge them 8-25% of media cost typically to buy), an ad network (who makes on average 30-50% of media, but sometimes doesn't disclose that they are doing retargeting and/or might bundle this with other things) or a specialized retargeting company, whose margins can be anything from 0% or negative up to 60% plus. The higher margins are associated with those who charge clients based on an arbitrage model, often having clients pay on a 'view-based conversion' when they're buying on a CPM basis and making a lot of money doing so. Advertisers should be very careful of the latter model, as it is logically, statistically and ethically flawed. You are basically giving away your data for free and buying it back from these companies. I'm biased since we sell retargeting on exchanges based on a cost + margin model like a DSP, but I've seen plenty of cases where clients are very happy about a 3x ROI on retargeting when in fact it should be delivering 6-10x for them but their vendor is taking a larger chunk out of the media cost than they should. The other side-effect from view-based CPA charges are users seeing hundreds of retargeted ads so that the vendor can get a "last view" credit for conversions because the user saw their ad last. Again, this is BS and a very poor consumer experience. When retargeting is managed properly on a CPM, the things to watch out for with retargeting is (1) frequency as mentioned before and it's complement (2) bidding TOO LOW; you want to set a high reserve price so watch out for exchanges or partners who force you into a first-price auction or "mixed" auction instead of a second-price or Vickrey auction. The latter two give you an incentive to bid high for you retargeted traffic because these users are really valuable - you may have to cut back your pricing but in general I suggest NOT starting cheaply since you'll miss a lot of impressions; you should bid as high as $5-6 CPM and cut back if you're not seeing good results, and/or cut back on sites that are just bad (below the fold placements etc.). This is an area where the service provider can be helpful - if frequency is managed properly along with bidding then a CPM model is the best way to go. One thing to point out about the Right Media auction is that it's a mixed model - if you bid $4.00 for a piece of traffic and the next highest bid is $3.00, instead of the expected case where you would pay $3.00 or $3.01 for that traffic, you may pay $3.50 (this will vary also based on aggressiveness settings). This is bad for the advertiser but better for the publisher. On the other hand, with Google it's a second auction but there are many other opaque factors so it's a bit unclear what exactly is happening from a pricing and revenue perspective. To summarize, there's no silver bullet on retargeting - and it works on OpenX, Right Media and Google/Doubleclick AdX - but it's BEST to have someone who can help work across these and other multiple systems on your behalf, doesn't bullshit you with "view-based CPAs" and other weak ways to extract money from you while drenching the user in retargeted ads, and is upfront with you about how they make money and when they're doing retargeting and when they are not.