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The Drum: Index Exchange’s Casale: ‘A correction will be driven into the market’

Having built his first ad network while he was still at high school, Index Exchange chief executive officer Andrew Casale can justifiably lay claim to being one of the foremost commentators on adtech. Albeit, his stereotypical Canadian modesty would preclude him from making that claim himself.

Speaking with The Drum on the sidelines of his company’s inaugural partner event in Miami, Florida, Casale addresses a number of issues facing the online media trading market. The discussion includes: market inefficiencies caused by ‘the adtech tax’; how the demand-side of the market is starting to cull its partnerships to help drive more value; and how the now ubiquitous ‘year of mobile’ is likely to impact product innovation.

The Drum: There is a lot of talk about change in the digital media market, particularly in the area of adtech. What do you think that means for publishers in particular?

Andrew Casale: I think one of the issues that media companies and buyers consistently say is that the adtech tax is too high, which means that building a sustainable business in the programmatic economy is challenging because all of the participants consume some of the media dollar along the way. They’re also a little frustrated at the lack of transparency that exists in a lot of business models.

A change has occurred in the market which we think has created a recipe with all of the ingredients required for efficiency to rise, and it feels that this change is heavily desired by the media companies. That was started by the wrapper, which at the core of its purpose was designed to reset who runs the publisher’s programmatic marketplace [and also helped address concerns over latency and header bidding].

Historically, the publisher would give the keys of their programmatic business to one vendor, and that means they’d say: ‘X is my exchange, Y is my SSP [supply-side platform], now try and get the most out of the market for me.’

They’d then have to hope that those businesses would drive the most value possible. However, the wrapper has changed that. Rather than outsourcing, the publisher should now be in control of their own marketplace, and shouldn’t give anyone that full autonomy, and in doing so, they should also gain a lot more transparency.

So rather than saying one party runs a publisher’s market, the publishers can now work with multiple participants, and have those participants become inputs into a market that they operate. What that has effectively done is remove what we used to call the waterfall, and align it completely horizontally.

Now we have many companies like ourselves all sitting next to each other on a competitive basis endeavoring to drive more of the dollar to the media company. I believe that’s a recipe for consolidation to occur and efficiency to rise, because we all want to win and out-price each other to help transact with that publisher. (Continued…)

 

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