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.