Walton Comer and Michael McCrary, President of Federated Sample give an inside look into Exchange Dynamics and the history of exchanges at SampleCon 2013.

1. SampleCon 2013
Exchange Dynamics

2. Exchange Dynamics
Who is Walton?
• Co-Founder, Investor and Board Member.
• Colloquially, known as a “quant” on Wall Street.
• A practitioner of derivative pricing and high frequency trading.
• He’s traded more than half a trillion dollars of commodities.
• Including enough crude oil to run North America for over half a year.

3. Exchange Dynamics
How supply meets demand

4. Exchange Dynamics
How supply meets demand

5. Exchange Dynamics
How supply meets demand

6. Exchange Dynamics
How supply meets demand

7. Exchange Dynamics
Impact on liquidity

8. Exchange Dynamics
Impact on liquidity

9. Exchange Dynamics
Impact on liquidity

10. Exchange Dynamics
Impact on liquidity

11. Exchange Dynamics
Transformative impact
A
E
CB
D
X
E
CB
DA
● Transactions
● Netting
● Credit risk

12. Exchange:
Record of Transactions
• Set transaction rules
• Set consequences
• Maintain method of recording
transactions
Exchange Dynamics
Exchange and clearing recap
Clearing:
Record of Fulfillment
• Rules for delivery, payment &
reconciliation of disputes
• Netting: Centralized payment
• Centralize credit risk

13. Exchange Dynamics
Effects of commoditization

14. SampleCon 2013
Online Advertising

15. Proprietary and Confidential
Medium Options
Network Television ABC, CBS, NBC, FOX
Cable Television ESPN, TNT, TBS, MTV
Radio Clear Channel, Cumulus, Pilot,
Local
Magazine Time, Conde Nast, Hearst,
Meredith
Newspaper Gannett, NYT, WSJ, Local

16. Proprietary and Confidential
• Annual Up-Front Agreements
• Audiences at Scale Achieved with Major Media Firms
• Significant Barriers of Entry for New Players
• Defined or Costly Limits for Placement Opportunities
• Television & Radio have limited minutes per day
• Print happens page limits
• Ad Sizes are defined and simple
• Broadcast 30 & 60 second spots
• Print – full page, half page, some smaller units

17. Proprietary and Confidential
• A New Medium Emerges
• Incumbent Media Giants Copy Offline to Online
• A New Wave of Options Emerge
• Yahoo
• AOL
• Google
• Facebook
• And Millions of Other Options

18. Proprietary and Confidential
• Audiences of Scale Are Possible, however;
• It’s Unmanageable to Match Supply & Demand
• Even Major Publishers Can’t Sell Every Available Unit
• Lower Barriers of Entry Lead to Glut of Supply
• Price Compression Resulted

19. Proprietary and Confidential
• A Media Buyer Uses a DSP to Place Ads
• Major Publishers Still Sell Direct “Guaranteed
Impressions” with Large Buyers at Higher CPM’s
• Major Publishers Make Unsold Inventory Available on
Exchanges as “Non Guaranteed” Impressions
• Smaller Publishers Sell More “Non Guaranteed” than
Guaranteed
• When a Page is Loaded, the Guaranteed Direct
Impressions are Served and;
• All other Ad Units are Filled Through Exchanges
• Often the Same Ad Serving Technology Handles Both

20. Proprietary and Confidential
• Media Buyer Uses a DSP to Place Ads
• Publishers Use SSP to Sell and Serve Ads
• Major Publishers Still Sell Direct “Guaranteed
Impressions” with Large Buyers at Higher CPM’s
• Major Publishers Make Unsold Inventory Available on
Exchanges as “Non Guaranteed” Impressions
• Smaller Publishers Sell More “Non Guaranteed” than
Guaranteed
• When a Page is Loaded, the Guaranteed Direct
Impressions are Served and;
• All other Ad Units are Filled Through Exchanges
• Often the Same Ad Serving Technology Handles Both

21. Proprietary and Confidential
64 62 62
58
36 38 38
42
0
10
20
30
40
50
60
70
Q1 Q2 Q3 Q4
Channel Mix 2011
UNRESERVED RESERVED