It isn’t too often that you can get a top exec from Apple to come and work for you. But Nexage did just that with the recent hire of former head of iAD in Europe, Todd Tran, as its new MD for the region. Tran set up Apple’s advertising operations here and has worked in mobile advertising for more than a decade, bringing money-almost-can’t-buy expertise to Nexage’s mobile exchange operation.

But it’s also clear why someone like Tran would be interested in this mobile exchange. Nexage has been at the forefront of programmatic buying and RTB (Real Time Bidding) since 2011. In the last year alone, the entire company has grown by 170 per cent, while RTB has witnessed a 1,000 per cent surge. This area is ‘skyrocketing’, CMO Victor Milligan told Mobile Marketing, with RTB going from having an eight per cent share of spend to 60 per cent.

2bn auctions per day

The company now facilitates 2bn real-time automated ad auctions per day – where it takes just 700 milliseconds for buying decisions be made – and the number of bids and auctions is continuing to grow. “RTB is a much more efficient way of buying media,” said Milligan. “The emergence of more and more data means that buying has to be machine driven, which means there is a growing need for tech providers that understand how to mine and manage that.”

Nexage works exclusively with premium publishers, counting several UK national newspapers and Rovio, makers of Angry Birds, among its clients. But, while premium publishers are already on board, there has been a shortage of quality premium inventory. “Brand spend is just coming in so we’re at the early stages of another boost of growth,” the CMO said. “Prices will go up but advertisers will have better purchasing power as they aren’t buying things that they don’t need.” 

Around half of ad spend with Nexage is through DSPs (Demand-Side Platforms), 40 per cent comes from ad networks, while five to 10 per cent is trading desks. But he believes that in this complex food chain, the exchange is the necessary part – connecting the buy and sell. “The fact is, buyers don’t just buy ads to one place. But the numbers are changing as RTB takes a larger share, seeing the ad network share go down,” Milligan said.

“Larger networks will shift into programmatic buying in the near future – their business model is under significant pressure and change is necessary. Almost all of them are at different level of aggressively pivoting over to becoming more like a DSP and buying programmatically.”

Mutual transparency

Nexage works across the mobile web and in-app, with 65 per cent of impressions coming from the app ecosystem. While CPMs can be similar, rich media and video prices are higher, as well as inventory with rich data like lat/long information attached. Even weather, like a hurricane, can affect prices, by creating a significant spike in traffic.

Mutual transparency between buyers and sellers, Milligan said, is a trend that has only taken off in the past nine months. “Both parties benefit. They’re not going into transactions kicking and screaming, which builds a sustainable economy that is beneficial for all.

“Targeting too is shifting from context to attribution – buyers want to know how much data is available, so they’re targeting at the user, not a site level. The price of mobile inventory is strengthening across the board, with our CPMs rising about 40 per cent since last year.”

Nexage also does a quarter of its business via its private ad exchange, where CPMs are typically higher because it’s somewhere advertisers can ensure brand safety. They are also building a future capacity, not unlike trading futures on the stock market, where people can commit to buying upcoming campaigns at present-value pricing.

EU expansion

So what does Nexage think of its chances moving more aggressively into the European market? “Growth is still pretty impressive in the UK and higher than the US,” new hire Todd Tran said “Programmatic buying is really taking off, everyone is talking about it and agencies are getting excited about it.”

“There is more fragmentation in the region, which is always an issue, because you don’t have the ability to scale like US and budgets are smaller per campaign. The UK is more advanced than other countries – it currently sees half of the EU’s mobile advertising spend and is growing faster – so the UK is a high priority for us.

“Germany is fairly advanced in digital, only trailing behind the UK by a year or two. France has embraced programmatic quite well, creating a consortium of premium publishers to create private exchanges, and they’re doing mobile with us. Italy and Spain’s smartphone penetration and usage has been a surprise but theyre not yet there in terms of mobile advertising spend and programmatic buying. And there are of course the smaller but very advanced Nordic markets – the pioneers.”

So with all this data around, is Nexage worried peoples desire for privacy could harm their business? “There are privacy regulations in place and we’re working to provide guidelines, but people have to understand that making data available does not create a privacy risk,” Tran said. “People also know what they’re getting is free, in the past it was implicit but now it’s explicit that people are running an ad-supported model, not forcing you to buy. Its that ecosystem that iis making mobile so incredibly successful.”

Twitter – friend or foe?

Despite MoPubs focus on the long tail, Nexage sees it as its closest rival. “What’s key is that Twitter didn’t buy an online exchange, that’s a telling sign that mobile is becoming more important,” Milligan said. “Twitter’s extraordinary ability to explain their data in order to create greater value is what we’re doing now with third parties, and the dynamic enriching of real-time advertising with data is a marketplace trend that Twitter is helping shape. Anyone who brings big data stores into the marketplace is looking at mobile very significantly. But what they’re doing isn’t counter to what we’re trying to get accomplish. We might even work together.”

Both Google and Microsoft are reportedly working on ways to eradicate cookies, long the saving grace for the online market, and Milligan believes they will soon be a thing of the past. “Nine months ago, mobile’s lack of cookies was its Achilles heel,” Milligan said. “But our ability to operate without a cookie is why we will become a reference point for all things digital – what we are doing in mobile is the model for digital advertising.”