Call it the death of the middleman. The next big push in programmatic media-buying is going to be about streamlining processes, stripping out intermediaries and creating as much direct access between brands and the audiences they are trying to reach through what has become an increasingly complex ad technology ecosystem. The latest players in the push to centralize, simplify and make the process of programmatic audience exchanges more direct, are two important developments from both the demand and the supply sides. This morning Havas unveiled what it dubbed the first “meta DSP” in an attempt to reduce the litany of supply-side players (see related story) and Sonobi is doing the same.
Sonobi, which most players in the programmatic industry would call an SSP, or a supply-side platform, builds technology to help publishers create more “liquidity” by facilitating more demand for the inventory they sell through exchanges or via direct private exchanges with advertisers and agencies. To help premium publishers attract even more advertiser dollars, it is now launching a product to help the demand-side patch directly into premium publishers, bypassing many of the intermediaries that complicate the programmatic marketplace, and typically erode publishers’ margins in the process.
According to analyses by ad technology investment banking specialist Luma Partners, fees and commissions taken by some of those intermediaries can eat up as much as 60% of the money between an advertiser making a bid and a publisher accepting it.
“It’s true,” says Chris Karl, Chief Sales Officer and head of market development at Sonobi, adding that it is that kind of margin erosion that turns a lot of premium publishers off from using programmatic audience exchanges.
The new system, which Sonobi calls “Reactive Segmenting,” enables advertisers, agencies or trading desks to deal directly with premium publishers, but utilizes Sonobi’s automation technology to do it. Hearst Corp., Reader’s Digest, Cafe Mom and Intermarkets are among the publishers that have already begun using it.
In some ways, the system is similar to the ones being developed internally at big agency holding companies, most notably, GroupM, which has declared it will pull out of open, auction-based exchanges altogether by year-end, and will rely exclusively on using programmatic technology to power private exchanges with premium publishers.
Like GroupM’s approach, Sonobi’s new Reactive Segmenting system utilizes so-called “deal ID” tags that enable an advertiser or an agency to negotiate the terms of a deal (audience being targeted and the price being paid) upfront. When the audience becomes available to the publisher, the tags simply allocate those impressions to the advertiser based on the pre-negotiated terms of the deal.
Essentially, this approach enables the direct sales organizations of a publisher to work directly with their clients on the buy-side, but uses automation to facilitate it.
What makes it work, says Sonobi’s Karl, is the ability to exchange the advertiser’s data to identify and carve out the specific audiences the advertiser is looking to reach before those audience impressions are sold in other markets -- either directly by the publishers’ sales teams, or in other programmatic markets, including open ones.