What Was Remnant Is Now Premium
Larry AllenApril 13, 2015
Publishing models are in a state of change. Are you ready for the next stage of development for publishers?
It is amazing what a difference a few years makes and how technology advancements can change perceptions. A few years back, programmatic was seen only as a remnant fill solution for publishers, giving way to bottom feeders, fraud, and the worst belly-fat ads one could imagine.
All publishers took the same basic approach to selling their ads: they led with a direct sales team running on the treadmill to get agency meetings, respond to RFPs, and closed new business. What they couldn't sell through this channel rolled down the yield stack and ultimately wound up on the open exchange to be auctioned off to the highest bidder for $0.50 CPM. The ad server played a critical role in managing yield and decisioning for the publisher. This strategy made sense at the time because there was less liquidity, buyers were not terribly sophisticated, and the tools for buying programmatically were rudimentary.
Fast-forward to present day and we are seeing a new trend: publishers of all sizes flipping the model on its head. In this new model the publisher makes all inventory available (based on capability) on the exchange to be auctioned off first before direct sales has access to the inventory. This method establishes a market rate for the inventory, and then the direct sales team is pitted against the open market and tasked with cutting bigger, more profitable deals. The challenge with this approach is that the advertiser buying via direct sales now is the remnant buyer despite paying a premium. The theory is that since the direct buyer isn't applying data to the purchased inventory, any inventory used for them is adequate. But what is impact to performance? What frequency is garnered? How does ad ops ensure smooth delivery and appropriate pacing? Not to mention that the supply-side tools don't support the constraints or features of an ad server that work really well for satisfying guaranteed buys.
Enter the hybrid. There is a new model brewing that we will see develop that brings the best of open market dynamics with guaranteed (private deals) ad delivery. It will provide the publisher with a single tool that magically melds the programmatic buyer with the direct sales channel. But what will this look like? I predict the evolution of the tools will mostly be around prioritization. This is something none of the SSPs do well today, and certainly not to the degree necessary to support the constraints applied by direct sellers. Concepts like pacing, frequency, viewability, and guaranteed delivery will get threaded into the delivery decisioning logic, and, more importantly, give the ad ops team the ability to override the auction when appropriate. This will give clear insight and guidance to how and when the manual override is costing or making them more money.
This evolution will be a huge advancement for buyers. Presently, they have to make a binary choice on how to engage with a publisher, or, in best case, go through weeks of testing to arrive at an optimal set up to achieve the right balance of scale and performance for their clients. What do you think about the future of ad-tech and its next stage of development for publishers?