Commentary
Publishers Say Less Than 10% Of Digital Ad Revenues Coming From Programmatic
- by Tobi Elkin , Staff Writer @tobielkin, January 23, 2017
A study from Operative of more than 300 advertising and publishing executives in the U.S. found that advertisers might be embracing automated buying, but publishers are feeling the strain as the actual work involved in "automation" falls on their shoulders.
Half of the publishers surveyed reported they make less than 10% of their digital ad revenue from programmatic. Even though more money is being spent programmatically, it's going to middlemen and platforms, not premium publishers.
Publishers cited low CPMs as their biggest complaint about programmatic. Half the publishers said direct sells for at least 50% more than programmatic. Google and Facebook, not surprisingly, are sucking up a lot of the revenue.
Publishers cited conditional metrics and lack of sales training as the main problems facing their programmatic business.
The “Programmatic Is Here To Stay” study suggested three things publishers need to focus on to increase programmatic revenue, improve overall company yield, and bring programmatic into the heart of the ad sales organization:
*Publishers transact in a way that buyers want to buy.
*Make the programmatic process more efficient.
*Focus on improving the predictability of programmatic channels.
The survey was taken by MediaPost subscribers, as well as Operative clients and newsletter subscribers.
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Tobi Elkin is the Editor of MediaPost's Real-Time Daily and the RTBlog. You can reach Tobi at telkin@mediapost.com.
A strange study, Tobi. I would ask how representative the sample was and what happens if you weight their answers by the size of their ad revenues. For example, if the results from all respondents were averaged, based on their size, we might find that 25% of the total billings were sold programmatically.
I would actually be curious to know how much of their inventory is sold Programmatically? It makes sense to me that their percent revenue is so low, b/c we use it for audience specific targeting - not publisher targeting, and that allows us to buy at extremely discounted rates off say a premium direct buy. That said - if all of our audience reports came back showing the users were on "x" web site, I guarantee you - I'd be buying more premium. So to me, this isn't necessarily a buying platform problem as much as it is the same old story of build quality content and engage with users, and advertisers will come.
Taken at face value, though, this makes some sense. Looking at as TV, programmatic buying is selling off remnant media. It's being bought by a ton of middle men who mark it up and claim to add value. In the end, the advertiser pays the same, but the provider gets less.
And 10% is far more than Bob Hoffman's recent suggestion that only 3% makes it past the middlemen.
The early TV programmatic I've seen is exactly this approach. Except some media outlets are trying to use it to establish more profit than they can get with DRTV but I can't imagine that lasting after the middlemen get their hands on it.
But I must be missing something.
Doug, as has been reported, there are hosts of programmatic as well as related platforms trying to make big bucks in digital media buying and selling. It has also been reported that the combined fees of all of these platforms---on the buying and selling side---consume up to 45%---some estimates place it even higher----of the digital ad dollars using such mechanisms. Even if an ad agency uses only the programmatic portion to purchase digital video time, it costs about 12%---which is roughly ten times the fee for buying national netwrok, cable and syndicated TV, and servicing same. Put all of this together and it's small wonder that many of the programmatic folks are having difficulty making the kinds of profits they hoped for in digital---too much competition and too high fees. So, naturally, they have been waging a well orchestrated camppaign to take over"linear TV"--which doesn't really need this kind of service--- making vastly overstated promises about increadible improvements in targeting efficiencies, using "big data" TV set ratings meshed with "third party" product purchase info---all mashed upon Nielsen ratings.
Despite the incessant propaganda campaign, neither the TV time buyers---if they could speak freely--- nor the time sellers have bought into this deal and the latter, in particular, do not believe that it serves their interests. Result: a few experimental and/or promotional, single seller "programmatic" sales, mostly of very low rated, marginal time on a national level plus some more serious investigations into spot TV time selling, as many of these buys are more tedious and many fewer program types are involved. Yes, the buzz continues, albeit much toned down in nature, and it may well be that more aspects of the time buying process can, indeed be automated---but mainly in the clerical and accounting phases, not the crucial decision and deal making aspects. And certainly not at the kinds of fees that programmatic and adjunct platforms/services are getting in digital. Even if the vast majority of TV viewing shifted to digital venues-----not even remotely a short term proposition----the programmatic approach would require a tremendous overhaul---both in methodology and pricing---before it would come to TV in a big way and, so far, there are few signs that this need is even being considered. We are still in the promotional phase, though it may soon begin to wind down as reality sets in and more advertisers check the concept---as currently proposed----out.
Interesting findings here. Do we know if this is trending up or down?