Why You Need To Care About Programmatic Premium

In our lightning progress toward a programmatic future, we in ad tech sometimes forget to stop and bring the rest of the world up to speed about what excites us. The latest buzz is about “programmatic premium,” and I’d like to explain to marketers why this is something they should be jazzed about.

Traditionally, media buyers were locked into guaranteed contracts with publishers -- a fixed rate for a fixed number of impressions, regardless of the audience that is shown a given ad. The demand-side platform (DSP) programmatic interface enables buyers to cherry-pick the impressions they are interested in and at prices that are ROI-positive.

Why then, is the majority of ad inventory still bought in a “premium” fashion?

First, when publishers cannot sell out their entire premium inventory via their direct sales team, they monetize it via indirect channels but without full disclosure of the context of the inventory. Buyers can buy premium inventory at remnant prices via exchanges, but they often don’t know which impressions are premium.



Second, buyers desire the halo effect that premium inventory brings their brand. Thus, they will pay more to associate their brand with a well-known publisher.

When sellers do not disclose where on the site the ad will be shown, buyers discount the amount they are willing to pay. Accordingly, there is a direct relationship to the information disclosed by sellers and the value attributed to this inventory by buyers. This is one of the chief reasons why inventory bought through exchanges is one-tenth the price of inventory purchased from publishers’ direct sales force.

Now, publishers are looking to increase revenues by expanding their indirect revenue stream via programmatic buying to include programmatic premium and “programmatic guaranteed” (locked in rate/impressions regardless of content quality) inventory. Sellers are looking to disclose the site sections to buyers (i.e., premium content) in exchange for both a minimum cost and a minimum budget (i.e., guaranteed revenue) via the programmatic interfaces that support real-time bidding (RTB) today. Buyers are interested in programmatically purchasing this transparent inventory if they can match their advertisers’ audience to the publishers’ inventory. Thus, so long as premium guaranteed can match the buyer’s demand for a specific audience in a premium context, both sides win.

Today, with premium inventory, the seller matches their audience and inventory packages to the buyer’s needs. With programmatic premium, the buyer undertakes this burden. The seller needs to disclose the information required to evaluate the relevance of their inventory to the buyer. However, buyers are often looking for unique combinations of their target audience in a particular context, which is at odds with sellers’ strategy of standardized packaging.

While advertiser audience information is far more transient than the publisher-defined audience/inventory packages, here are three transparent solutions that publishers can offer buyers:

1. Publishers can offer buyers a “first-look” (advertiser preference but available to the general exchange market) option. Buyers pay a minimum price to have access to this inventory with full disclosure of the site section or publisher-defined audience they are buying. If the buyer does not want the inventory, it can be passed back to the publisher via a private exchange, or passed via RTB to a general auction.

2.  Sellers can offer a hybrid approach and buyers could overlay their own audience data in real-time to evaluate which impressions they should buy, reducing the risk on both sides. This “premium guaranteed” hybrid (guaranteed fill rate and guaranteed price) would dramatically improve the ROI for advertisers, since they would not be at the mercy of publishers to simply send them the audience and inventory combinations that the publisher cannot otherwise monetize.

3. Sellers can disclose to the DSPs identifiers of their inventory and audience packages (via pixels or RTB ad calls), and the buyers’ software could recommend which seller-defined packages best meet the buyer’s needs at the right price points.

Programmatic guaranteed has the power to improve publisher yields by simultaneously unlocking additional buyer demand at higher rates through disclosing additional information. Those of us at the vanguard of the industry see enormous potential, and it’s my hope that we can continue to communicate the clear and simple value proposition here -- bringing tremendous ROI for marketers and the highest revenue for content creators.



1 comment about "Why You Need To Care About Programmatic Premium".
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  1. Karan Bavandi from WebSpectator, February 21, 2013 at 8:39 p.m.

    If buyers could get a Guarantee that their ads are seen (so placement in this case does not matter as much since only ads that are in view are sold) and publishers could sell impressions that go over X seconds (our research has shown that 20 seconds is sufficient to retain a brand) you will add tremendous value to both sides. Our technology WebSpectator can deliver that today.

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