• by Jeremy Hlavacek , May 15, 2014

The current programmatic market is large and still growing rapidly, even after five years of impressive gains. It has largely been built off non-guaranteed or “remnant” inventory that publishers have put into real-time marketplaces, where buyers can use data to bid on what they want, and buy as much or as little inventory as they need at any time. It’s a real marketplace, with shifts in demand and supply happening all the time.

This model has worked great for the buy side and many tech vendors, while many publishers would argue that this new innovation has been neutral if not negative for their business. However, I think we are on the cusp of a major change that will greatly benefit publishers. Let me explain.

As dollars have continued to pour into the programmatic space and both the savviest buyers and sellers have gotten better at using data, It’s becoming clear which cookies and impressions are most valuable. The result is that buyers are competing for the best inventory, driving up prices in the process. Publishers who have embraced programmatic have been thrilled with this trend, but I think there is actually a new wave coming that will lead to buyers looking for programmatic guarantees from the best programmatic publishers.

This is great news for publishers, since revenue can become more predictable. It is also great news for marketers, because they can lock in things that work and not be subject to shifts in the marketplace.

But doesn’t a buyer lose the ability to optimize in this scenario? On a short-term, day-to-day basis, the answer is yes.  But the biggest brands in the world are not interested in day trading with their billion-dollar media budgets. They are more interested in making investments that generate long-term value. Companies like P&G, GM and Coca-Cola can’t deploy their budgets in a non-guaranteed fashion -- the risk is too great. So as more large marketers are buying into data-driven marketing via programmatic tools, asking for a guarantee against programmatic inventory -- or even an upfront commitment -- makes sense.

As much as there are large volumes of inventory available in exchanges, the truth is that much of it is just that: volume. Even though some buyers would disagree,, I believe there’s much more scarcity in high-quality digital media than commonly thought.

So what should a publisher do? Embrace programmatic, understand the value of your inventory, start the conversation with clients, and figure out a business model that works. We’ve found that the smartest clients want to have this conversation, and think it’s time to bring guarantees to the programmatic channel.