What is a private exchange? How does it work? Is it an invite-only market? Will you still buy inventory through RTB? These are the type of questions that I have been trying to answer since Weather.com was launching a private marketplace. ExchangeWire spoke to Tom Jenen, Commercial Director, AdMeld EMEA, to get more detail on how all this will affect buyers, and publishers like Weather.com.

Tell us more about this Weather.com deal? Does it have any real European implications?

TJ: As a concept, “private exchanges” have been around about for a while, but we believe this is significant because The Weather Channel is the first global, premium brand to embrace the model in a way that stretches across platforms from web to mobile. It goes beyond just their flagship property at Weather.com.

The platform gives programmatic buyers one-stop access to all TWC’s users (more than 50 million) while the publisher retains complete control of how each impression is sold. We think it’s a model that makes sense for many large European publishers, but that said, the solution isn’t right for every publisher. It’s meant for those that have the scale and brand equity to attract advertisers into their own marketplace.

AdMeld has effectively built out a private exchange for Weather.com. Are we likely to see more of these off-exchange marketplaces pop-up?

TJ: I’m not sure the term “off-exchange” is accurate – the publisher can still offer their impressions to anyone they choose. But yes, we think there will be more. There is increasing awareness among many publishers that general ad exchanges lack the controls they need to protect their brands and bottom lines.

How does a private exchange actually work? And what role does AdMeld play in the process?

TJ: The private exchange is built on AdMeld’s core technology. First, it leverages our yield optimisation engine, which connects to every major programmatic buyer. Second, it has an audience sales module which enables the publisher to identify, package, and monetise their most valuable users. And third, it has the analytics and controls necessary to help them stay aware of buying trends, price effectively and sell only to those they want.

What’s the real benefit of having an invite only marketplace? Doesn’t this restrict potential buyers from accessing a publisher’s inventory – which ultimately weakens demand?

TJ: The real benefit is the ability to sell strategically, which potentially provides more long-term value on both sides. All publishers, but especially premium ones, restrict potential buyers, usually for content concerns. Every day they fight to protect their brand and direct sales over short-term profits, and that means making smart choices about who can buy, when, and for how much.

Can you still put inventory through RTB on a private exchange? Can DSP and ad network customers still plug into these siphoned-off ad impressions through AdMeld’s API?

TJ: Again, there aren’t any hidden or off-market impressions – the publisher simply decides which buyers can participate. All buyers can potentially join. Some publishers who choose this model will have more buyers, some fewer, but at the volumes we’re talking about, I’m sure it will be a pretty big tent.

RTB is simply a way to allow buyers to assess the mix of content, brand and audience on each impression and to decide which impressions to buy and for how much. So, in an AdMeld private exchange, buyers selected by the publisher will have the ability to buy via RTB, static bids or any other programmatic method. It’s extremely important to us that our clients can connect efficiently to every relevant source of demand.

I think it’s important to get past the fiction that the large, general ad exchanges are open, perfectly efficient, and therefore better for everyone, all the time. I don’t know a single premium publisher that would take seriously an “open” exchange in which they couldn’t strictly control the content that appears on their site.

Could a private or closed exchange allow a publisher to optimise across premium as well as remnant ad impressions - without cannibalising premium sales?

TJ: Absolutely. Our technology is flexible enough to enable that. The publisher decides what impressions they sell and how they sell them on their private exchange.

And finally, are we likely to see more European publisher opt for this type of ad trading?

TJ: Publishers who have a significant share of their market don’t have a problem finding demand. But they often need tools to manage it more efficiently. To embrace the new, automated ways of trading ad impressions, especially audience selling, requires specialised technology like this. So yes, I think we’ll see the private exchange model emerge in Europe and elsewhere in 2011.