Confusion Over Programmatic Obscures Value to Publishers
Although programmatic advertising continues to grow in popularity, and is predicted to capture two-thirds of all digital ad spend in the U.S. in 2016, there’s still plenty of confusion in the publishing industry about what programmatic actually is and how it can play a role in publishers’ revenue mix. Joseph Galarneau, founder and CEO of adtech company Mezzobit, hopes to eliminate this confusion during his session at the Yale Publishing Course this July.
The Yale Publishing Course is a six-day event that will gather magazine media professionals in New Haven, Connecticut to discuss the future of the industry and explore strategies to adapt and thrive in the face of change. The course will be held July 24-29. The last day to apply for YPC is July 1st.
In the following interview, Galarneau offers a taste of what he will cover during his YPC session. Galarneau defines different programmatic models, from real-time bidding to programmatic direct, and outlines new opportunities for publishers to streamline and monetize their digital inventory.
Why is the course you're leading valuable to media professionals?
Media professionals, no matter where they sit in the organization, need to understand the changing dynamics of revenue. Programmatic has risen quickly in recent years to comprise more than two thirds of all digital display spend in the U.S. So as publishers continue their digital transformations, it's hard to ignore the role of programmatic in their go-to-market strategies. In fact, among smaller publishers, programmatic likely has a larger role to play because it gives them access to deals that their scale historically may have locked them out of.
Additionally, even the term "programmatic" isn't well understood, in that many distinct selling modes are wrongly conflated into this one word. There's real-time bidding (RTB), which is what most people mean by programmatic. But there's also programmatic direct, where technology automates direct publisher-agency/brand relationships. And then there are private marketplaces (PMPs), which blend characteristics of each. Add the recent rise of header bidding and native advertising into the mix, and it's definitely reasonable why there's confusion among media professionals, particularly those outside of the advertising team.
Will programmatic ever replace direct ad sales?
It has already on a number of sites, with some well-known publishers having taken the 100% leap (although it's a mix of programmatic direct and RTB in different measures). When you talk to agencies, they see a strong push to buying audience instead of publishing brand. Of course, publishers want to maintain some differentiation in the marketplace instead of just selling eyeballs as they travel around the Internet.
The trust issues are impeding a fuller conversion to more RTB -- less so with PMPs -- but there are many trade associations and vendors who are working hard to clean up the adtech supply chain. There's a fair amount of value leakage because the large number of adtech players involved in any given transaction -- we've seen more than 100 different companies glom onto a single pageview on certain sites, which also causes issues with negative user experience that drives up ad blocking rates.
As for using programmatic direct, it makes sense for that to increase in usage, particularly when there are a number of efforts such as the Rubicon/Mediaocean project to push even harder for end-to-end order automation.
Programmatic in total will inexorably increase in volume, but I'm not sure what the ultimate balance will be between direct and open auction models.
How can publishers prevent or limit some of the downward pricing pressure of programmatic buying?
The modern supply-side platforms (SSPs) and exchanges give publishers nearly all of the tools they need to keep their rates and revenue from going into free-fall. It depends on what inventory is offered up at what pricing on what exchanges.
It's reckless to engage in programmatic by signing up for a platform and basically posting your inventory for sale without a solid plan behind. Also, the nature of the technology and ecosystem makes experiments relatively easy, but your media company needs the personnel who understand how to do this instead of just basic traffickers. There are plenty of consultants who work with publishers big and small to move them up the maturity curve, and the IAB offers training and certification to help.
How should publishers be utilizing data analytics to sell programmatic or enhance the value of their programmatic ads?
In an ideal world, data is a way to supercharge programmatic, but in reality, a minority of publishers really get how to leverage data properly. Even those who make the investments in data management platforms often don't use them properly to drive increased inventory value.
Vendors have tried to make using data as turnkey as possible, but I think it's still too complex for many organizations, particularly those that also struggle with the transition to multi-platform selling. Additionally, data doesn't only drive targeting, it can drive the personalization of the ad content itself, which can further improve performance.
The ecosystem is actually awash in data, but the quality is sometimes low. That advantages publishers, who should know their audiences better than anyone else and can connect the dots for advertisers on which segments should deliver the best. Whether they actually do is based on their investment in the technology and capabilities.
How has programmatic technology changed in recent years? And where do you think this technology is headed?
Pretty much anything that can be sold online is headed to programmatic, with video and native being among the more recent émigrés. The industry still has to work out its fraud, viewability, and value leakage problems to the point where the buy and sellside can feel comfortable. As the saying goes, when there's mystery, there's margin, so there's a feeling that some parties are still gaming the system.
As for the overall market direction, it's towards smarter automation and more complex transactions that don't require buy or sellside rocket scientists to execute. While North America and Western Europe are deep into the programmatic world, this is less the case in other markets, but they're catching up more quickly.