Programmatic direct on the march

Paul Sternhell, general manager of programmatic direct and ad server for OpenX

Ad tech is a forever changing industry – and nowhere is this more apparent than in the world of programmatic. What was once seen as a way of trading remnant inventory, and using audience data and optimised algorithms for performance campaigns, has rapidly evolved into an ecosystem that underpins much of digital advertising today.

New and improved developments and initiatives such as programmatic direct mean that the technology is no longer ‘just’ for performance campaigns and has clear benefits for publishers and media buyers alike.

Below Paul Sternhell, general manager of programmatic direct and ad server for OpenX, explains what those advances mean for publishers and advertisers – and where next the technology might take us. Premium is the new programmatic buzzword, and advertisers are looking for three key things: certainty, priority and choice.

He says that programmatic direct started to evolve in 2011 but that five years ago the industry didn’t have the tools in hand to make it work seamlessly. Now, though, there is much to excite both sides of the industry.

What is programmatic direct?

Programmatic direct is the buying and selling of advertising through workflow automation by buyers and sellers who are known to each other. It gives publishers efficient and automated execution of direct sales, and for buyers it enables the efficient discovery of inventory and the automation of execution for direct purchases. As a result, consumers are served more relevant advertising for a better online experience and more valuable content. Products include automated guaranteed, real-time guaranteed and private marketplaces (PMPs).

What does it mean for brands?

From a brand’s point of view, transferring as many manual direct buys (through an ad server) to programmatic as possible is the ideal way to transact, but first three things need to happen: the ability to communicate campaign needs; the certainty that publishers have the inventory available and the security of knowing that the right amount of inventory can be bought at the right price at the right time.

The guarantees we offer are also becoming more sophisticated: there is no one-size fits all for brands, and the industry at large must do more to acknowledge and service that. It should not just be about impressions. Buyers might want a viewable CPM (cost per thousand) guarantee, or a fraud-free guarantee, or another that is tailored to their KPIs. I believe we’ll see more development in this area over the coming years.

What does it mean for publishers?

The big fear of programmatic for publishers in the past was whether it would destroy business by, say, pushing down CPMs – it was potentially a threat. However, through programmatic direct, the value of their inventory is communicated to buyers in a way that an open auction or exchange, cannot. In the long term it helps sustain higher prices by building more direct relationships and lowering costs through streamlining a publisher’s sales force.

How has it evolved?

PMPs were the first iteration of programmatic direct and helped establish programmatic as a technology that could handle the premium as well as the performance – that which is directly tied to sales, as opposed to the longer-term brand-building. Publishers can present high quality inventory to select buyers in a private auction.

Automated guaranteed uses technology to broker a one-to-one deal with fixed terms and for a set amount. Real-time guaranteed brings the best of both worlds. It offers certainty, priority and choice by combining the sophistication of a traditional audience-focused buy with the speed of real-time auctions – while keeping inventory assured and prices fixed.

Where does header bidding fit in?

Header bidding is a relatively new way of helping buyers find valuable audiences, access a wider pool of inventory and compete for premium placements. In a waterfall model publishers open up unsold ad inventory to the top-ranked ad exchange and downwards; if it is not sold in the first exchange the impression continues to move linearly down the chain to other exchanges.

In contrast header bidding essentially allows a publisher (via a piece of code) to simultaneously offer inventory to multiple demand sources, before calling its ad server. This maximises scale and yield for publishers – but also benefits buyers by providing them with a complete view of all publisher inventory, giving greater choice for them to reach their ideal audience and improve both targeting accuracy and engagement.

Challenges?

The proliferation of header bidding technology brings its own challenges, which the industry must tackle together. Header bidding maximizes competition, but potentially lowers win rates because there are more people simultaneously seeing that inventory. If you’re a DSP (demand side platform) it’s possible to see the same impression through 10 different exchanges – when you really want to see that only once. And if publishers use too many header tags at once they risk causing slower page load-times, increasing the chance that readers will leave pages before the ads have a chance to appear. These are things the industry at large is working to resolve.

Where next?

A lot of newer programmatic technologies started with solutions focused on desktop display and have broadened out from there. Expect to see header bidding and programmatic direct move beyond desktop to mobile web and mobile app, video, and native advertising. Programmatic video has made a strong start, but there is still a long way to go. We’ll also see more ‘header-like’ bidding within the mobile app environment, where consumers now spend the majority of their online time.

Successful publishers and buyers keep in control of their own destiny and rarely leave all of what they do in anyone else’s hands. The pace of change is only increasing – so I’d advise the savvy advertiser to experiment. Build a culture of data experimentation and continuous learning. Measure revenue, improvements in yield and latency – learn from what those metrics tell you. Talk to your peers, your partners and the wider industry.

Join us, it's free.

Become a member to get access to:

  • Exclusive Content
  • Daily and specialised newsletters
  • Research and analysis

Join us, it’s free.

Want to read this article and others just like it? All you need to do is become a member of The Drum. Basic membership is quick, free and you will be able to receive daily news updates.