Every online publisher generating revenue by selling display advertising has an inventory mix that’s unique to their business. This mix is the source of truth that tells the publisher what type of inventory they’re selling, the ways they’re selling it and the amount of revenue generated from it.
Right now, the inventory mix for most premium publishers (think comScore top 500) include Custom Deals, Direct Sales and Real-Time Bidding (RTB) with the importance of these parts fluctuating from one publisher to the next.
Here’s what the typical premium publisher inventory mix looks like:
To explain further, inventory for most publishers is divided into a couple of different sales channels. Premium inventory (the top two layers) is sold directly, and historically, that process has been entirely manual. Remnant inventory that wasn’t sold directly is sold programmatically through exchanges.
Custom deals, the top layer, will always require a human touch, and there’s already technology to fully automate the buying and selling of remnant. Where there IS room for change is in the middle. Here’s a closer look at each layer:
The top of the stack (labeled “Custom Deals”) is the most manual, and typically the most valuable to publishers. These high-value deals include custom content or native integrations that are extremely difficult to scale. Custom, truly white glove deals offer a more unique and emotional experience than standard display units, but take a lot of work to get up and running.
These are types of buys that will always be 100% analog. From a publisher’s point of view, it’s time well spent because of the high value it creates for advertisers and the high budgets they’re willing to allocate. That said, it isn’t where most of the spend is (or will be), because you can’t run campaigns at scale.
The bottom layer (labeled “RTB/Private Exchange”) is what’s left over after a publisher has sold guaranteed inventory directly to an advertiser or agency. This inventory is handed off to an exchange or supply-side platform (SSP).
This inventory is usually bought through a demand side platform (DSP), which can offer inventory from either a large number of supply sources or from specific publishers through a one-to-one private exchange. Both types of buying use RTB as the pipes, and neither offer guaranteed impressions.
The benefit for publishers is the ability to monetize inventory that would otherwise get them nothing. And because it’s 100% digital, transaction costs are basically zero. The benefits for advertisers are similar – it’s cheaper inventory with low transaction costs, which makes it easy to buy and scale.
The middle layer (labeled “Direct Sales”) represents transactions for guaranteed inventory that are contracted directly between a seller and a buyer. Historically, these deals have been transacted over email, phone calls and spreadsheets (80% analog, 20% digital). It typically represents 60 – 70% of a premium publisher’s total revenue, but until recently, the only technology that’s made direct sales any easier was Microsoft Excel.
The length of the direct sales process not only makes it hard for publishers to sell more of their inventory direct, it also limits the amount of time that can be spent on prospecting, selling and executing the custom deals that bring in the most dollars.
Recently, online advertising agency Federated Media announced that they were killing their direct ad sales business. In their words, they’re no longer selling “boxes and rectangles”. This is indicative of a larger trend – publishers and other groups are starting to realize that the amount of time spent shuffling spreadsheets is actually hurting their business. They need to spend time where it makes the most sense, around more custom and native deals which is why Federated made the commitment to not put resources towards selling direct display.
Display advertising isn’t going away anytime soon, but publishers need better technology that’s purpose-built for making directs sales easier and more efficient. Fortunately, that technology exists.
Enter Programmatic Direct. The goal of Programmatic Direct solutions are to reverse the ratio, making the majority of the direct sales process digital while leaving the fun, creative stuff (like relationship building) to the humans.
How does it work? Technology automates the parts of the process, like RFPs, IOs and order fulfillment, that don’t benefit from a human touch.
The publishers and advertisers who have already begun buying and selling inventory via programmatic direct have seen major gains in efficiency. But that’s not the only upside.
The Whole Pie Gets Bigger
With programmatic direct solutions in place, transacting true premium inventory becomes easier. Buying is easier for advertisers and accepting deals is easier for publishers, without sacrificing control or transparency. Both sides benefit. Direct sales stays a revenue driver for the publisher, becomes more effective for advertisers, and no one has to live their life in a spreadsheet.
One of the most powerful effects of optimizing direct sales with Programmatic Direct is the ability to grow the total amount of revenue that a publisher can generate. With less overhead spent on direct sales, more attention can be focused on selling and managing higher value deals and relationships. With larger parts of agency budgets being spent on high impact custom integrations, publishers will only benefit from opening up the opportunity to spend more time out selling these types of deals.
More efficient direct sales, more time and resources for custom deals and more overall revenue. Programmatic Direct keeps premium publishers in control of the most important part of their business today while allowing more focus on tomorrow’s high-value revenue opportunities.