We were lucky to have an incredible group of speakers talk candidly about the (relatively) recent emergence and evolution of a new space in the ad tech landscape: Programmatic Direct.
isocket’s own John Ramey kicked off the afternoon with a state-of-the-union on programmatic direct.
John addressed some common misconceptions about the differences between different methods of buying ads online. One of the key differences between RTB and direct advertising is that direct allows advertisers to to place a contractually guaranteed order that’s certain to run. RTB involves competing in an auction, which means there’s no guarantee of ads appearing. For advertisers, that means you can’t be certain when, where, or even if your impressions will appear.
Private exchanges emerged as a means of buying and selling non-guaranteed inventory at higher rates than remnant. They can be a smart inclusion for publishers with lots of inventory, but they’re still non-guaranteed, and have more in common with traditional RTB than with direct ad sales.
The Emergence of Programmatic Direct
We’re currently in the fourth generation of ad tech. The first generation began around 1998, when the first ad servers were developed making online ad sales possible for the first time.
Around 2005, networks emerged and the reach wars began. Online advertising became highly scalable and there were massive opportunities for arbitrage. The third generation began in 2008, with the advent of real-time bidding, which emerged to improve the inefficiencies of the previous generations.
Today, we find ourselves in the fourth generation, where there’s a startling imbalance in the technology that’s been developed for remnant inventory and the technology developed to sell premium inventory direct. We’re one of the companies filling that gap.
RTB and Programmatic Direct
Tony Katsur, CEO of Maxifier, discussed similar themes in his talk, stressing the point that programmatic direct isn’t RTB, or an RTB competitor; it’s a compliment. Media plans are complicated – most buyers and sellers should offer (or buy) a mix of guaranteed, direct inventory and RTB. High-quality inventory should be sold directly for high prices, and some should be sold indirectly for low prices. Even more inventory should fall somewhere in the middle. Programmatic direct lowers the cost of direct sales, which means publishers can sell high-quality inventory directly to advertisers at the optimal price for both parties.
80% of the Tech for 20% of the Spend
All speakers discussed the obvious mismatch of technology and ad budgets that’s currently the hallmark of the fourth generation. Despite the fact that the bulk of ad technology is creating efficiency in remnant, the bulk of spend is on direct sales.
Brand association, brand data, and quality content really matter to advertisers, as they should. Direct sales provides the transparency, safety and trust that big brands with big budgets need. “When you buy on the New York Times, you know what you’re getting,” Tony Katsur pointed out. That’s why advertisers are still buying direct, even when excel was the most robust tool supporting it.
NextMark’s Joe Pych brought up the point that RTB has paved the way for the success of programmatic direct–RTB has proven that automation can drive transaction costs to zero.
Thus far, we’ve seen non-existent transaction costs in remnant, and the buyers and sellers currently working with programmatic direct tools are seeing transaction costs decrease for transactional RFPs. Now, it’s just a matter of scale.
Cadreon’s Teri Gallo drove home the point that programmatic isn’t all automatic. Her five P’s of a successful programmatic direct strategy are people, partnerships, pricing, performance, and platform. Working with the right partners, and using the right technology lets you set the right prices and optimize outcomes for both buyers and sellers. And the right people are crucial to building that process.
Programmatic Direct and the Supply Side
During the closing panel, we heard from the publisher side. Robert Volz of Reuters and Alanna Gombert, Senior Director, Programmatic & Trading at Condé Nast weighed in on what programmatic premium means to them.
Alana Gombert, Senior Director of Yield at Conde Nast, defines programmatic direct as premium placements sold programmatically, not through RTB, because it’s a direct deal between Conde and specific advertisers. For Reuters, programmatic premium makes sense, because small buys simply aren’t worth a sales person’s time. The sales teams should be focused on larger deals, and programmatic premium can provide the opportunity for more direct sales while creating efficiencies in volume.
Teri Gallo joined the panel as well, speaking from the trading desk perspective, she talked about performance and attribution. We’ve grown accustomed to the availability of data as it relates to RTB, but with a lot of direct buys, there aren’t always direct response metrics to fall back on. Many buyers are looking for more brand-focused metrics, like brand attitudes, which are much harder to lock down than, say, clicks.
As the programmatic direct market continues to grow, we’re glad to have had the opportunities to gather leaders in the space and get them all in one place, talking tech. We’re also glad to have had such an incredible, engaged crowd. We hope everyone enjoyed the event, and we’ll see you all next time!