MediaGamma's DYnamic PRicing & INventory ALlocation (DYPRINAL)

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MediaGamma is an advertising technology company that operates the world’s first automatedfutures ad exchange for online display advertising, guaranteeing future ad placements.The DYnamic PRicing & INventory ALlocation (DYPRINAL) project will create anautomated online ad inventory pricing and allocation tool, assisting web and mobilepublishers to better monetise their display ad inventories - much like how airline companiesprice and sell their tickets as they know how many to sell in advance and how many to reserveuntil just before take-off to maximise revenue.The transition to online has been tough for both traditional print and “native” web-onlypublishers: The New York Times Co.’s digital advertising revenues decreased 3% in Q3 2013whilst its print circulation continues to decline. The latest figures from The Tribune Co. andTime Inc. tell a similar story. Publishers have unsuccessfully tried to transplant the traditionalprint ad sales model into the online space by pre-selling ad space for a fixed price.In parallel there has been a technology revolution in how online display ads are sold. Thedemand for automation and optimisation have been the key drivers in the adoption of realtime bidding (RTB), which mimics stock spot exchanges and uses computer algorithms toautomatically buy ads instantly via an auction mechanism between buyers (advertisers) andsellers (publishers).Despite the strong growth of real time display ad spot exchanges, RTB technology is a lastminute (“distressed”) sale and thus only cheap remnant inventory that publishers could nototherwise sell in advance via phone negotiations is sold. However, within the last year, thisautomated technology is starting to be applied to the better quality, pre-sold inventory and isset to dominate digital ad trading. Publishers are now facing the challenge of knowing how toallocate and price their ad inventory between the pre-sold and RTB (spot) markets, a problemDYPRINAL aims to solve.