Marc Barnett, Director of Specialist Sales, APAC Microsoft Advertising, discusses the ninemsn partnership in Australia and Microsoft’s strategy to team up with strong local publishers to roll-out the Microsoft Advertising Exchange in APAC over the coming year.

Barnett shares real results of how the exchange has delivered dramatically higher yields coupled with greater ROI for both advertisers and agencies while no impact on the premium display sales.

With APAC being 40% of the global online audience, and set to overtake North America by 2014 in online ad expenditure, he flags RTB as a key growth driver for online spend in Australia and APAC and projects a speedy migration to RTB buying for advertisers and agencies.

What is your role and remit for Microsoft Advertising & Microsoft Advertising Exchange within Australia and the wider APAC region?

My role as Director of Specialist Sales for APAC, is to maximize revenue for Microsoft Advertising and our Partners, across our entire offering of advertising solutions. I provide global and regional insights and thought leadership for our sales teams. I also work closely with our Corporate HQ to develop the go to market strategy for each of our products within APAC and drive execution on the roll out initiatives, in conjunction with our local market sales leads. Our product suite includes: Display, Audience, Targeting, Performance, Ad Exchange, Video, Mobile and Gaming.

In Australia can you explain the relationship between Microsoft and ninemsn? Is Microsoft exploring other media partnerships in the APAC region?

ninemsn is a 50/50 joint venture between Microsoft and Nine Entertainment Co (NEC). Established for over 11-years, ninemsn is the leading online publisher in Australia through both its audience and advertising properties. A successful business model for Microsoft Advertising globally has been to combine the strength of the Microsoft Advertising global platform, with the content created by strong local media organizations, and ninemsn is one of the stars of the stable. We have recently launched partnerships in three additional markets in APAC. In Singapore, Microsoft has partnered with MediaCorp to create www.xinmsn.com which has delivered outstanding first year results and is now the No.1 portal in Singapore. In Malaysia, Microsoft has partnered with Catcha Media Group, Catcha Digital acts as the exclusive representation for Microsoft Advertising, further establishing our leadership position in this market. In Korea, Microsoft has partnered with Joong Ang to create www.joinsmsn.com taking the MSN portal from the 107^th ranked site in Korea, to the 5^th ranked site within the first month of launch. Microsoft continues to explore media partnerships with leading traditional media and telecommunication companies across the APAC region, to grow our presence and provide consumers and advertisers with great online experiences.

Recently, there has been a lot of airplay regarding Australian publishers concerns about rtb, dsps and exchanges putting downward pressure on CPMs. What is your view on the evolving landscape?

The Microsoft Advertising Exchange is an exchange built by a premium publisher, for premium publishers. So when we hear that publishers perceive other RTB exchanges to have created downward pricing pressure, we feel excited because our experience as a premium publisher has been exactly the opposite. Our exchange has dramatically increased yield for us, whilst delivering our advertisers and agency partners with outstanding ROI.

 We see a huge opportunity for Microsoft to offer publishers a higher yield, while being able to manage conflict with their direct sales channels. We recently conducted a Microsoft Advertising Exchange case study involving our Windows Live inventory in the US and I’m happy to share some key results:

• We achieved higher yield. From November 2010 through March 2011, Windows Live inventory sold through the Microsoft Advertising Exchange monetized at rates 192% higher than the rates achieved through traditional discretionary channels.

•  We experienced no adverse impact on premium display sales. The volume, rate, and revenue all showed an increase year over year.

It’s important to understand yield management in the context of Ad Exchange models.  First off, RTB itself is designed to elicit the highest bid on an impression by impression basis – all RTB exchanges share that.  So, many of the perceptions about downward price pressure are from earlier incantations of exchanges that lacked RTB.  On top of the RTB capability, we layer intelligent price flooring and yield management features that leverage proprietary insights from our network and other advertising assets to drive higher yield for publishers. Additionally, we have gathered some of the greatest yield management experts (specifically from our acquisition of RAPT) to manage the Microsoft Advertising Exchange.  These experts have a deep understanding of challenges faced by premium publishers, like ourselves. Our teams manage the marketplace settings to safeguard the brand experience of premium publishers and advertisers alike, without adversely affecting the yield from the direct sales channel. Overall, it is a pretty compelling offering. 

What has been the response to the recent launch of Microsoft Advertising Exchange in Europe?

To date we have launched the Microsoft Advertising Exchange in North America, UK, Netherlands, France and Germany, with future plans to launch in several other key markets during 2011.  We have had great success, largely due to the participation of our demand partners.  The initial results have been very positive and our buy-side partners also seem to be very satisfied. One metric we monitor and we’re exceeding on, is the percentage of inventory purchased from parties in competition with our own Microsoft Media Network.  This win rate indicates that our customers are increasingly tapping into our Exchange for high quality RTB inventory.

When do you anticipate Microsoft Advertising Exchange rolling out to Australia and the APAC region?

We are currently planning on launching the Microsoft Ad Exchange in Australia and New Zealand in November of this year. Once we have successfully launched in these two markets, we will turn our focus to rolling out the Ad Exchange in other APAC markets in 2012.

Will you offer RTB? Who will act as the RTB engine for selling Microsoft’s entire non-guaranteed inventory in Australia and across the APAC region?

Absolutely: the Microsoft Advertising Exchange is a true RTB marketplace. Our Exchange offering and its rapid expansion in markets is in response to our customers’ requests to make our premium inventory available via RTB globally.

 AppNexus is our global partner and powers the RTB component of the Microsoft Advertising Exchange. We’re very pleased with the partnership; it’s enabling us to share the workload, letting us focus on developing superior yield capabilities, while AppNexus provides the RTB functionality.  This partnership is a key reason we are able to launch in critical markets such as those in APAC, sooner rather than later.

What challenges has Microsoft Advertising Exchange introduced into the Microsoft and ninemsn partnership?

As mentioned earlier, ninemsn is one of Microsoft’s leading Digital properties globally. The ninemsn shareholders, partners and advertisers are all keenly anticipating the launch of the Microsoft Advertising Exchange and the opportunity that it represents to further lead the market and enhance the ROI for both advertisers and ninemsn shareholders. The new CEO of ninemsn, Mark Britt, comes from Microsoft and has a deep understanding of our compelling Exchange value proposition and the changing ecosystem. We have in ninemsn a business primed to take advantage of the priority status Australia has received in terms of the global roll-out.

Will launching in different APAC markets present different challenges for Microsoft Advertising Exchange? How quickly do you anticipate Microsoft Advertising Exchange gaining traction in the region?

The Microsoft Ad Exchange is a global system that should be able to launch in all markets, without causing too many unforeseen challenges for us from a technical perspective. Due to the current state of play, we anticipate that in markets across South East Asia, there will be a relatively slower uptake of RTB and DSP demand than what we saw in US and Europe. These markets still have a relatively small percentage of ad expenditure online. As such, we see huge potential in exchange buying in the future, based on the size of the audience and the volume of inventory that is available. Greater Asia Pacific has over 1B online users (40% of the global online audience) and today attracts approximately $18B in online ad revenue. In terms of the revenue to audience ratio, APAC lags behind all other global markets and we see Exchange as representing a catalyst for rapid growth. By 2014, we envisage that APAC will overtake North America in terms of online advertising expenditure. Therefore, these markets certainly warrant focus and investment.

How will Microsoft Advertising Exchange guarantee brand safety for advertisers?

The Microsoft Advertising Exchange is one of the largest sources of premium inventory in the RTB landscape. Besides our own renowned publishing properties, we partner with other high quality inventory sources as well. There is no automatic inclusion for publishers in our network and as such we don’t have the long tail inventory, like some other Exchanges do. Each potential publisher works with our partner management team to ensure their site adheres to our guidelines, to ensure advertisers are provided with the brand safety they expect.

Will Microsoft look to add 3^rd party publishers to Microsoft Advertising Exchange?

As we look to build a scaled RTB marketplace, 3^rd Party inventory is a key part of the Microsoft Advertising Exchange strategy. A larger inventory pool in the exchange provides advertisers with a greater opportunity to reach their desired audience at scale, which will drive better ROI. In post launch phase, we will actively seek to partner with publishers that will allow us to deliver valuable audiences to the Microsoft Advertising Exchange.

What is your data strategy?  

Today, we are not selling any of our own data through the Microsoft Advertising Exchange. Buyers can leverage their own data or any third party behavioral segments available via their DSP for their Exchange buys.  Microsoft behavioral targeting and intent-based segments continue to be available for purchase via the Microsoft Media Network. Our Network offerings are augmented by Windows Live profile data, Bing data, MSN data and 3rd party partners such as Experian and Comscore. We can also create custom data solutions via the Microsoft Media Network, pairing our own data with our clients’ to create unique, valuable customer segments.

Will traders be able to buy mobile app inventory through RTB on Microsoft Advertising Exchange? Without a universal cookie how will mobile RTB be tracked?

Yes, all mobile inventory in the Microsoft Advertising Exchange for mobile is available via RTB. To account for the absence of persistent cookies across a critical mass of mobile devices, targeting in our mobile exchange is accomplished via a double anonymized device ID. This is then coupled with other non-personally identifiable information, such as the demographic and behavioral information associated with a user’s Windows Live ID.  The personal nature of hand held mobile devices makes privacy so important and Microsoft takes great care to safeguard any user data used for mobile targeting.

 What trends are we going to see in over the next year?

A few of the key trends we see coming are:

• Supply will continue to grow exponentially and supply point aggregation will occur
• RTB buying will continue to grow: the large Agencies and Advertisers will migrate quickly to Exchange models. We expect that the Top 5 Global Agencies may have up to 25% of their online buying transacted through Exchanges by the end of FY12
• Demand points will consolidate, driven rapidly by automation
• The industry will be bifurcating between extremely creative hand-held brand solutions and performance based audience selling
• Online consumers will gain more and more control: they will be able to opt in and out of advertising, effectively casting their vote. Advertisers will be able to see consumers preferences and respond in innovative ways
• Advertising, like programming, will fragment into highly targeted niche campaigns
• Customer relationships will become more interactive
• Exchanges will not replace Ad networks; both can and will co-exist and prosper in new ecosystem with differing and unique selling propositions
• Something will happen in the next 12-18 months that we didn’t see coming, it will change the game in a big way and these trend predications may be proven wrong!

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