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The Publisher Dilemma: Programmatic vs. Direct

The Publisher Dilemma: Programmatic vs. Direct

As the global media landscape evolves from broadcast/print to digital, advertising revenue grows ever more important for publishers, both large and small. Programmatic advertising is driven by the Facebook/Google duopoly and currently dominates this environment.

Programmatic is convenient for advertisers, particularly smaller advertisers that previously could not afford to run broadcast/print campaigns. However, programmatic has effectively commoditised publishers advertising inventory. Regrettably, publishers have found, to their cost, that programmatic competes with their advertising sales teams and devalues the value of their advertising inventory. There are several issues that any publisher should consider when comparing the value of programmatic vs. direct advertising.

Sales

Most larger established publishers have a legacy culture of advertising sales, while most small new entrants do not. By connecting directly with advertisers the publisher better understands their clients' needs and expectations and can customise campaigns to their particular requirements. Though more time consuming than programmatic the publisher team builds a valued relationship with the advertiser that cannot be achieved with anonymous programmatic techniques. Furthermore, direct sales allow the publisher to guarantee the advertiser campaign delivery for a negotiated price, something that is difficult if not impossible to achieve with programmatic. This can often benefit both publisher and advertiser.

Note: Infomo R3 is designed to primarily address the commercial requirements of the publisher and to optimise the value of their advertising inventory. Where advertising inventory cannot be filled by private campaigns, they may be optionally filled by public/programmatic campaigns sourced from SSP/DSP platforms, house, or passback campaigns/creatives.

Targeting

With direct sales, publisher advertising inventory is sold directly to advertisers who are interested in having their ads served in a specific context. This is particularly powerful where the publisher has a deep or broad brand presence in their territory. As in legacy broadcast/print ecosystems, both advertisers and agencies understand the value of publisher brand and the nature of their readership and are prepared to pay a premium for guaranteed access to such an audience In programmatic sales, each page visitor is evaluated while a page containing advertising inventory is served. Based on this evaluation, however relevant or not, a real-time bidding (RTB) auction is initiated in which the highest bidder is selected to insert their creative in any particular ad inventory zone. Unlike direct sales where advertisers pay for where, when, and how their campaigns are presented and choreographed, advertisers in programmatic sales bid for their preferred target audience regardless of publisher brand thus commoditising the publishers advertising inventory.

Note: Infomo R3 targeting offers the best of private and programmatic targeting across both web & mobile visitors. Supporting multiple bidding type and/or visitor devices, It can target publisher categories (arts/entertainment, automotive, etc.) as well as a variety of behavioural, contextual, demographic, geographic, predictive and retargeting techniques.

Web vs. Mobile / Private vs. Public

Increasingly the demand for mobile (defined as smartphone and tablet) campaigns is growing while the demand for web remains strong. This may differ slightly country to country. Often programmatic campaigns differentiate between web and mobile campaigns meaning the advertiser needs to manage multiple campaigns depending on device targeting thus creating campaign management complexities. Moreover, there are some discrepancies between which mobile ad formats are supported across different programmatic platforms.

Note: With Infomo R3, a single campaign can address, web. mobile or both. Likewise, a single campaign can be private, private-public, public, or public-private. Any campaign can be underwritten with house campaigns or passback creatives.

Inventory

With direct sales, a bulk of the publishers advertising inventory is sold at a negotiated rate. These inventories will be guaranteed delivery according to the terms of the sale. This is not dissimilar to broadcast TV, where campaigns are targeted at potential audiences of specific programming. This approach delivers revenue certainty for the publisher as well as delivering the advertiser certainty that their campaigns will meet specific audience exposure goals, something that programmatic cannot achieve. Alternatively in a programmatic scenario, a multitude of advertisers are constantly bidding at different rates for each impression in real-time. In this dynamic and unpredictable marketplace, ad delivery is “non-guaranteed”.

Note: With Infomo R3 the value of advertiser inventory can be maximised by utilising the best of both direct and programmatic sales to ensure the best possible fill rate at the best possible price across the entire ad inventory reducing risk and better managing crucial assets.

Value

The method by which inventory is valued is significantly different between programmatic and direct. The price in direct sales is usually a private fixed and agreed rate between the publisher and advertiser. The fact that campaign delivery can be guaranteed based on pre-defined criteria enables the punisher to charge a premium rate. With programmatic sales, the prices for each impression can vary greatly over which the publisher has little if any control, hence the commoditisation of publisher inventory. If an advertiser values a particular impression highly enough they can bid high in the hope that they win the ad inventory but again there is no value guarantee for either the advertiser or the publisher in this scenario.

Note: Unlike programmatic, with Infomo R3 publishers can take back control of their advertising inventory and ensure maximum value for every ad slot at all times.

Barriers to entry

Direct sales are best suited to established publisher brands with pre-existing direct advertising sales cultures. Programmatic sales are most appropriate to smaller less well-established publishers. Larger publishers negotiating guaranteed private campaigns require advertisers to commit to specific budgets to meet their audience reach goals. This ensures that advertising budgets can be better planned, controlled and utilised for both publishers and advertisers where, in many cases, programmatic is effectively a “crapshoot”. Committed budgets may not be feasible for smaller publishers or advertisers thus the rationale for programmatic.

Note: Infomo R3 offers publishers the best of both worlds. Publishers can incrementally build their direct ad inventory while back-filling with public/programmatic if an ad slot cannot be filled by guaranteed private campaigns.

Inventory Utilisation

For direct sales, utilisation of the publisher advertising inventory is largely dependent upon the performance of the publisher’s advertising sales force. This is similar to the traditional broadcast/print model. For programmatic sales advertisers are targeting audience segments instead of particular brands/sites, thus publishers are beholden to external fill-rates largely beyond their control.

Note: Advertising inventory utilization rates can be best managed with a balanced mix of premium private guaranteed campaigns supported by programmatic to back-fill any vacant inventory, a fundamental capability with Infomo R3. If programmatic cannot fill the vacant inventory house campaigns and/or passback utilisation is available.

Campaign Scheduling

As publishers guarantee impressions to advertisers in direct sales, serving impressions for direct sales will inevitably have priority over programmatic sales. This means that if the demand for guaranteed inventory on a particular website increases, the impressions available on that website to do programmatic sales correspondingly decreases.

Note: Six campaign scheduling levels are available with Infomo R3: Private; Private-Public; Public; Public-Private; Passback; and House.

Positioning

With direct sales, advertisers are paying publishers for guaranteed delivery of campaigns in a range of specific contexts. With programmatic sales, publishers are competing with other publishers with a similar audience defined by the programmatic ecosystems, often with questionable data privacy issues. As personal data privacy concerns increase around the world industry cornerstones likes Apple and Google and clamping down on the use of third-party data in targeting. Thus, the import of publishers first-party data and potentially that of the telecom operator must be better utilised by publishers to maximise the value of their advertising inventory.

Note: Infomo R3 adopts a dynamic approach to building, growing, and maintaining publishers first-party data, often used in conjunction with telecom operators first-party data where appropriate.

Conclusion

Direct and programmatic sales can work harmoniously without cannibalising each other. This is the approach that Infomo has adopted along with the flexibility to balance direct vs. programmatic on a campaign-by-campaign basis. The real question that any publisher should be asking is not whether programmatic or direct but how to best balance programmatic and direct to maximise the value of the entire advertising inventory across all platforms.


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