Moving Towards a Programmatic First Era
Peter WagnerMay 11, 2015
Originally the word ‘programmatic’ simply described a technology for buying, selling or fulfilling advertising. Today, it has evolved into a way of doing business that has attracted immense investment in media spend and development from a vast array of players in the digital advertising ecosystem.
In the recent past, ‘programmatic advertising’ was heavily stigmatized. The early years saw sparse, low quality inventory; rudimentary toolsets with little to no optimization; and failure to address user overlap with largely untargeted buying. Fast forward to today and programmatic has shifted to characterize the achievement of scale and inventory centralization; automation and optimization; and intelligent, data-fueled targeting methods that are ever improving the way we buy and analyze digital media. With better client education of the processes involved in programmatic advertising, KPIs are being standardized and ROAS is becoming increasingly tangible for advertisers.
There are still concerns that persist on both the advertiser (demand) and publisher (supply) sides of the ecosystem. Some of the most common on the demand side are: inventory quality, fraud, viewability, and brand safety.
The industry is doing some excellent work addressing these concerns, primarily through the use of better data, technology, and inventory. Data gathered at an individual user level is allowing us to reach a level of informed media buying never before achieved to target consumers based on demographics, online behavior and purchasing, and brand affinity. Meanwhile, this same method of collecting and decoding data is being applied to analyzing ad traffic and inventory to weed out bots and other methods of ad fraud and ensure greater brand safety. This is being powered by the continual development of robust controls available in industry leading ad tech stacks resulting in improved buying and measurement processes for unique and advantageous strategic insight for advertisers. And lastly, the adoption of the programmatic model by publishers has improved buying efficiency and access to higher quality inventory through programmatic direct and private exchange models.
Similarly, there are some negative perceptions of programmatic advertising that persist on the supply-side. The most common among them include the erosion of premium price floors; association with dubious advertisers; and loss of direct sales. These misgivings come from the early days of programmatic when the word was typically associated with a remnant inventory solution. The predominant economic model had the publishers’ direct sales teams at the top of the food chain with many suppliers then releasing the unsold inventory to the open exchanges. Remnant impressions sent to open RTB platforms would largely run performance campaigns for advertisers with ads that promised the chance to win an iPod, eliminate belly fat, or worse.
Today we are seeing this model reverse. Publishers have started going programmatic first, making all or much of their inventory available to programmatic buying before direct sales. In this model, the advertiser buying direct is now buying remnant; the idea being that direct buys don’t apply data, so any inventory will do. There seems to be a present push for a hybrid model that incorporates both programmatic and direct sales. This model would likely involve prioritization of direct and programmatic sales unilaterally. Comprised within this hybrid model would be decisioning logic that effectively arranged pacing, frequency, viewability, and override capabilities for auctions (1).
As paradigms have undergone changes on the publisher side, attitudes towards programmatic on the advertiser side have to shift begun as well. As indicated by a recent eMarketer histogram (Figure 1), media agency professionals are reaping the benefits from the innovations described above.
Figure 1: Primary Benefits of Programmatic
It seems to me that programmatic is finally coming of age and as the industry continues to embrace Programmatic First thinking, the entire digital advertising ecosystem only stands to benefit.
1) Allen, Larry. “What Was Remnant is Now Premium” xaxis.com/insights. 13 April 2015. Web. 24 April 2015.
This article was originally posted here: http://mediaincanada.com/2015/05/08/blog-has-progrmmatic-moved-into-a-new-era/