• by Tobi Elkin , Staff Writer @tobielkin, January 24, 2017

Aiming to automate direct media buys, PubMatic said it’s found a way to eliminate the trade-off between automation and the transparency and guaranteed nature of the direct buy by introducing something it calls “biddable IO.” It takes up the subject in a new report released today.

What PubMatic is calling "biddable IO" is driven by the shift of brand dollars into programmatic media. The company said it's a process that allows buyers to improve the efficacy of direct buys by using real-time audience data against brand-safe inventory. It also aims to facilitate the buyer-seller relationship by using header bidding and allowing direct negotiation of various aspects of IOs, including audience, volume, and price. The report said Biddable IO addresses brands’ concerns about the transparency, efficiency, and effectiveness of their media buys.

“For the last decade, buyers have been forced to deal with trade-offs between their buying channels.  Direct IOs were very strong, in that they provided prioritized access to publishers' ad servers, offered the ability to reserve inventory, and came with no media fees (which led to higher buying power),” Kyle Dozeman, PubMatic’s VP of advertiser solutions, Americas, told Real-Time Daily via email. “Programmatic provided phenomenally more powerful audience targeting and choice, but was relegated to a lower priority in publishers' ad servers, wasn’t capable of reserving inventory, and came with an unclear ad tech tax.” 

Dozeman said that with the rise of header bidding and RTB-based guarantees (such as private marketplace-guaranteed), such tradeoffs are no longer required.  Header bidding has laid the infrastructure for programmatic buyers to bid into higher priorities in publishers’ ad servers.  Private marketplace guaranteed deals have made it possible to execute inventory reservations over RTB.  PubMatic’s report claims that some media buyers have recognized these structural changes and are moving their Direct IOs to RTB – to biddable IO.  “These buys will be more data-driven and powerful as a result, and these buyers will become the differentiated buying platforms moving forward,” Dozeman said.

PubMatic said that programmatic advertising enables both buyers and sellers of digital media to introduce major workflow efficiencies while capitalizing on the vast amounts of data the channel provides. Header bidding enabled publishers to become even more savvy with automated buying and selling. The company said that the buy side is now  dealing with the same question of control that led to the rise of programmatic direct with the introduction of guaranteed and preferred private marketplaces (PMPs). Automated guaranteed buys emerged as a way for brands to streamline the mechanics of the traditional insertion order process. However, the dichotomy between automation and direct buying remained.

PubMatic's report indicated that it’s seeing demand for automation to close the gap between the efficacy of programmatic and the reliability of the insertion order. The agreement between buyers and sellers for specific placement of specific impressions will become automated, and it will become the Biddable IO. “The move of brand spend to programmatic is occurring, and is being accelerated by the availability of products that can support the transition of the traditional direct IO to RTB pipes,” Jeff Hirsch, PubMatic CMO, told Real-Time Daily via email.

With programmatic direct buying, marketers aren’t required to make a choice between quantity and quality when accessing programmatic inventory. Programmatic direct allows premium publishers to offer their ad inventory through automated channels while maintaining the brand safety and contextual relevance marketers seek. According to a PubMatic survey, 83% of publishers considered programmatic direct to be an important strategy for their business going into 2017, with nearly half of respondents claiming the tactic was very important. This trend was consistent across global markets, with similar responses from publishers in North America, EMEA, and APAC.

The way PubMatic sees it, the industry is experiencing a convergence of complementary factors, leading brand marketers to embrace automated buying more than ever before.

--The first of those trends is header bidding. Last year, an analysis of PubMatic’s internal data identified a 130% year-over-year increase in the number of publishers using header bidding strategies. The widespread adoption of the tactic has changed how publishers create competition for their digital assets. Rather than being forced to monetize biddable impressions within the sequential waterfall environment, publishers are now able to make their premium inventory available to various buyers simultaneously. The increased competition results in up to 30 percent higher CPMs for publishers. For advertisers, header bidding provides full visibility into a publisher’s impression pool. This allows them to gain first-look access to inventory that was previously reserved for direct sales, ultimately improving campaign performance by up to 20%.

The democratization of inventory access provided by header bidding integrations is leading to increased demand from buyers for quality inventory available via these new programmatic channels.

--The second trend is growth in data availability. According to IDC, the amount of information created worldwide is expected to nearly double from 2015 to 2017, totaling almost 20 zetabytes (or 20 trillion gigabytes) this year. This massive surge in the availability of data has had a huge impact on a landscape that is ripe with opportunities to leverage data for the benefit of both publishers and marketers.

Many publishers have tons of first-party data about their user base -- from hashed emails to registration information to content preferences -- which they can make available to buyers via the RTB pipes used for automated transactions. According to the CMO Council and IBM, 44% of marketers acknowledge that digital and data have become inextricably linked. Not only can marketers employ sophisticated targeting strategies for buys on the open exchange, they can also employ similar approaches for premium and/or reserved inventory via programmatic direct channels. This data-driven decisioning is one of the greatest benefits of programmatic advertising for buyers.

--The third trend is the increasing relevance of attribution. Brand marketers are striving to allocate spend toward channels and tactics that provide a return on the investment, particularly at a time when the variety of devices, channels and formats available is leading to a more complex ecosystem. According to the Interactive Advertising Bureau, cross-channel measurement and attribution represented the tactic that occupied the most time and resources for digital media and marketing practitioners in 2016, with 57.6% of respondents identifying it as a factor (up from only 35.4% in 2015).