Commentary

The Rise Of Programmatic Direct

It's amazing the difference a single letter can make.

About a month ago, I wrote a RTBlog titled, "The Ruse Of Programmatic 'Direct.'" The post sparked some debates in the comments as to whether or not it really was a direct way to sell inventory.

The purpose of that post was not to question what programmatic direct companies do, but to question whether or not the word "direct" belonged at all. Some of the big guys in the programmatic direct space tracked me down and made their cases. And I must say, it was pretty convincing.

I had two different conversations, one with John Ramey, founder and CEO of iSocket; and the other with Anthony Katsur, CEO of Maxifier. Ramey started off by saying that he believes a lot of ad tech is BS, but that programmatic direct isn't.

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So what does Ramey say makes a deal direct? "When people choose who they specifically work with," he reasoned. He went on to note that with real-time bidding (RTB), people are just "pointing and shooting" because they don't know exactly who they are working with.

"Is it a guaranteed campaign or not? Did you specifically choose who you worked with?" he asked. Programmatic direct does not deal with biddable/non-guaranteed inventory.

Good point.

"We've completely filled that manual gap in the middle with tech," Ramey claimed. "We've created piping directly from ad software into specific publisher software."

Another way Ramey rephrased his argument was by essentially asking, "If we haven't considered Excel or Outlook middle men, why consider automated tech that essentially does the same thing (but better) a middle man?"

Good question.

Katsur said the goal of programmatic direct was to increase efficiencies. He pointed out how RTB is hovering around 20% of publisher revenue, and asked, "How do you support was is arguably 70-80% of a publisher's revenue? By introducing efficiencies. Why not be able to do more with the same people you have? Spreadsheets and people don't scale."

Good point. But...

I had a question that I was sure would point out the flaw in using the word "direct." I asked Ramey what would happen if iSocket were to go out of business tomorrow…what would the brands and publishers that had been using them do? (The question was entirely hypothetical, Ramey assured me that iSocket isn't going to explode tomorrow).

Ramey answered that if iSocket were to explode tomorrow, there would be other companies to fill the void. And he's right about that. Plus, some publishers are building their own APIs to programmatically sell their inventory direct with buyers, which Ramey said classifies as programmatic direct.

Good point. But...

What about private marketplaces? Isn't that a way to guarantee your trade partners while working in an automated environment? I asked Ramey if private marketplaces were the arch nemesis of programmatic direct companies. He said that in some people's perception, "yes," but "in reality, no."

Ramey called private exchanges "the top shelf of the basement," noting that they still deal with "leftover" inventory. "It found a home but it's not everything." He was careful to mention that he did not think private marketplaces were bad, but that they weren't in direct competition with programmatic direct despite that perception.

Okay, I'm convinced. If a buyer is guaranteed specific inventory direct from the seller, then it's a direct deal. The rest - how the money is traded, how the ads are displayed, how the buyer and seller flesh out the details, etc. - is irrelevant to the term "direct" at that point.

5 comments about "The Rise Of Programmatic Direct".
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  1. Dave Martin from Ignited , July 19, 2013 at 3:47 p.m.

    What about your other conversation with Katsur?

  2. Tyler Loechner from MediaPost, July 19, 2013 at 3:53 p.m.

    My conversation with Katsur was a lot of background and priming. The one with Ramey was more of the argument (the conversation wasn't an argument..it was him presenting the argument) ---- they were both equally important conversations to the article, it just so happened that Ramey's came second and flowed more like an article with more quotable stuff. Thanks for the comment/question!

  3. Eric Wittlake from Babcock & Jenkins, July 19, 2013 at 7:04 p.m.

    Tyler, I'm ok with direct, I actually take issue with the idea of calling this "programmatic." It has bothered me since my first introduction to these platforms.

    This is less programmatic than me logging into my brokerage account and buying 100 shares of FB.

    Programmatic buying has come to mean RTB, exchange, DSP (the limited definition version), etc, and it is the hottest space in digital. Instead of admitting that they are modern incarnations of FatTail, Ad Planner (Atlas), MediaVisor, Solbright, and countless others that once had this buyer / seller efficiency vision (and these are still valuable opportunities), they have picked up the programmatic moniker, making it sound like it is part of the fastest growing area in digital today.

    To Ramey's response that private exchanges are simply the top shelf of the basement, whereas this is *guaranteed* inventory, say what?!?! Although (sometimes) these buys include guaranteed placements, many of them are ROS, which can be both above or below the fold. Increasingly, many publishers are putting all inventory into the same pot, allowing very high RTB bidders to compete for premium inventory that is otherwise direct sold (and rarely completely sold out). A simple categorization of inventory is high quality simply because it is directly purchased is extremely misleading.

    I don't mean to knock these providers, I do believe there is value in the functionality they are offering and I'm looking forward to the day when they have more inventory available from the high quality niche publishers I often work with. I just don't believe the programmatic moniker is appropriate.

    -- @wittlake

  4. John Ramey from isocket, July 21, 2013 at 7:03 p.m.

    @Eric - 100% of the campaigns booked through our system (and platforms like it) are guaranteed campaigns. So it's not "(sometimes)".

    And while many publishers sell ROS packages, it is ROS at the placement level - which is labeled as ATF or BTF. It's not a black box. You know what you're getting.

    My top shelf of the basement analogy reflects the publisher ad stack. Private exchanges source their supply from the remnant portion of the stack, and then give it a first look to the private buyers. So the comment is more about guarantees vs non guarantees and where it sits in the stack, not the age old debate about what is a "premium" impression.

    Do agree with you on the word programmatic. I wrote in an AdExchanger piece a couple of months ago I can't wait until things evolve to just calling it "Direct".

    P.S. wouldn't it be nice if mediapost comments maintained paragraph formatting?

  5. Eric Wittlake from Babcock & Jenkins, July 22, 2013 at 12:01 p.m.

    @John - yeah, paragraphs would be nice. Happy Y2K, right?

    (Sometimes) was misplaced by me. Yes, the inventory is traditional guaranteed inventory, but increasingly direct and indirect buys compete for the same pool of inventory with many publishers. The gaps in the actual placement within a given publisher is closing. So sometimes there isn't a meaningful difference anymore in inventory.

    Where I see the bigger difference is the transparency into sites and the traditional planning process that has planners still reviewing and selecting sites to run with. While the testing I have done on this is still limited, I am consistently seeing site is a key indicator of performance, and many exchange buys suffer more because of low-quality sites than poor placement within higher quality sites.

    Hope that helps to clarify. And random HTML added in the hope that paragraphs can at least be spotted...

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