For premium publishers, there’s a stark bifurcation between manual direct sales and remnant sales, and it’s creating an abnormality in the ad market. This abnormality negatively affects publishers who rely exclusively on manual direct sales, limiting their revenue potential. Changing the direct sales process, for example by using programmatic direct, can normalize the market while helping publishers maximize yield.
Here’s a closer look at the market abnormality and what a normal yield can look like for publishers taking advantage of all direct sales channels.
The Yield Cliff
A publisher’s yield curve, representing potential profit from inventory sold, should be fairly smooth, curving gently down to the right, and should look a little something like this:
The best inventory, sold directly at high CPMs, is represented on the left. As we move to the right, CPMs decrease according to the market value of the inventory. Eventually, we see unsold or remnant inventory, sold at the lowest CPMs, all the way to the right.
For publishers using manual direct sales and remnant, here’s what yield actually looks like:
Instead of a smooth curve, with CPMs transitioning smoothly and slowly in direct proportion to the inventory’s value, we have a stark cliff. The cliff represents a failure to capture true market value for the fat middle inventory; it’s not a reflection of what that inventory is actually worth.
Selling direct manually is a very hard, very long, and very labor-intensive process. The difficulty of completing a single deal prevents even the best publisher sales teams from fulfilling every sale, even when buyers might be clamoring for their impressions. The “fat middle” inventory, including inventory that would have, could have been sold direct at a slightly lower CPM ends up in the remnant spot market. This is the biggest driver forcing the yield curve into a cliff. Despite buyers’ willingness to pay a premium for premium inventory, they can’t do so in a way that makes sense.
This is particularly true for a subset of buyers (think smaller agencies or large direct advertisers) that want to buy direct, but aren’t making buys on the same scale as the biggest agencies. These are high-quality advertisers, but they aren’t the spending the most. They’re being pushed out by the process, but have the potential to drive a lot of value (read: revenue) for top publishers.
Finding the Yield Curve
The manual direct sales process sacrifices the inventory in the middle of the curve below, which can be thought of as a publisher’s “fat middle” inventory.
Programmatic direct lowers the cost of ad sales for both sides, which means publisher sales teams can sell more, and sell more quickly, and advertisers have a lower barrier to entry for buying direct. Advertisers can justify buying direct due to a shorter and easier direct sales process, which lets them gain access to publishers’ highest quality inventory. Agencies too can justify buying the fat middle inventory directly (rather than just the top placements), since the resources required for buyers are so low.
All these factors in turn help publishers capitalize on the fat middle, fixing the gap in their revenue stream and correcting the market failure.
Creating the Fat Middle
Premium publishers’ fat middle inventory is incredibly valuable, but those relying on manual direct sales aren’t capturing it. Programmatic direct can change that.
In addition to helping the top publishers manage yield, programmatic direct can be game-changing for high-quality publishers who aren’t in the top 50 or 100 and are likely to be overlooked by buyers who dread entering into the direct sales process. Programmatic direct can change that, too.
The pain of the process shouldn’t distort the value of inventory, but that’s exactly what’s happening with manual direct ad sales. Fixing the market failure won’t happen without fixing the process.