Where Is Premium Inventory In Programmatic World?

Programmatic platforms are continuing to gain momentum as an efficient way to buy and sell advertising. Still, there’s been considerable debate about whether truly premium inventory is being made available in these new automated systems.

By all accounts, most publishers have not committed to making their most valuable, premium inventory available to advertisers in a programmatic environment.

There are basically two ways that publishers currently use programmatic systems: open and private exchanges.

1.     Open exchanges: Top publishers who are experimenting with programmatic use open exchanges to make remnant or pre-emptible inventory available to advertisers. They’ve built secondary teams -- usually focused on operations or yield -- to get the best performance of their unsold inventory from their programmatic partners. Basically, the monetization or yield teams attempt to sell anything the direct sales team cannot sell by putting the inventory on an open exchange. This keeps the sales team stuck in the manual world of filling out spreadsheets, requesting inventory avails, and sending emails back and forth to manage the bigger revenue deals.



2.     Private exchanges: To meet the standards for putting premium inventory in a programmatic environment, some publishers are turning to private exchanges. This creates another set of issues, since publishers may not be getting the benefits they think they’re getting. Buyers still get a cheaper rate than with direct deals, as well as getting an early look at inventory. And, as with open exchanges, private exchanges still require a fair amount of manual work from publishers.

The challenge with both these systems is that they fundamentally discourage programmatic buying of premium inventory. The unsold exchange inventory is quickly categorized as remnant and pre-emptible – or, effectively, non-premium. As a result, this inventory is sent to Run of Network (RON), Run of Site (ROS), Run of Content (ROC) or other generic buckets of inventory that flood the exchanges.

Advertisers benefit from this because they can use cookies to “cherry pick” the inventory -- selecting the premium inventory at second-hand rates. These behaviors perpetuate a cycle that forces publishers to push down the value of their premium brand.

While “first look” may be a good way to sell truly remnant inventory, for “not yet sold” premium inventory, it cherry picks high-value users and diminishes the value of the direct-sold inventory segments.

If the open exchanges and private marketplaces most premium publishers are using don’t help them maximize revenue, what should they do? The answer: Take more control over their inventory by using what the Interactive Advertising Bureau calls automated guaranteed platforms, sometimes called programmatic direct.

These platforms allow publishers to get the efficiency and convenience of automation while still getting the top dollar return of a direct deal. While open exchanges and private marketplaces enable publishers to automate the process of negotiation to fulfillment, automated guaranteed solutions offer publishers more power. They can list their premium inventory, respond to RFPs, and maintain higher sustainable margins.

2 comments about "Where Is Premium Inventory In Programmatic World?".
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  1. Bob Sacco from Travel Ad Network/Travora Media, November 13, 2014 at 2:15 p.m.

    It would be interesting to see comments from Premium publishers regarding this article. Even more to the point, are they seeing the same ROI from programic participation or from old-school exclusive representation?

  2. Tom Henshaw from Operative Media, November 16, 2014 at 3:48 a.m.

    @Josh - some good points raised, but I have to call you out on one.

    It's an oft quoted myth that direct sales equals "filing out spreadsheets", "sending emails back and forth", etc. There is a multitude of solutions available on the market that remove a significant portion of the manual and time consuming elements of selling, delivering and collecting revenue on ad campaigns, and still enable you to retain full control of your inventory.

    On the plus side, I'm pleased that you didn't mention the fax machine.

    Disclaimer: I work for Operative Media, one such company I reference above.

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