Programmatic Premium is not about Bidding

bid-nobid-article “A market is never saturated with a good product, but it is quickly saturated with a bad one” – Henry Ford

When it comes to digital publishing sales, it seems like many publishers are questioning whether the product they have—the standard banner ad—is what they should be selling. Last month, I wrote that 2013 would be the year of “premium programmatic,” where LUMA map companies who make their living in real time bidding turn towards the guaranteed space, where 80% of digital marketing dollars are being spent. My recent experience at Digiday Exchange Summit convinced me that this meme continues—with an important distinction: “premium programmatic” is not about bidding on  quality inventory through exchanges. Rather, it is about using technology to enable premium guaranteed buys at scale. Here is what I heard:

The Era of the Transactional RFP is Over

Forbes’ Meredith Levien currently gets 10% of her display revenue from programmatic buying, up from 2% in 2011. The rest of her revenue is comprised of 45% premium programs , and 45% from what she calls the “transactional RFP” business. The latter is the type that comes from continually responding to agency RFPs for standard IAB banner programs, with little customization. Levien questioned whether that type of transactional business was completely on its way to becoming driven exclusively by technology.

Are publishers really going to be able to abandon the  relentless RFP treadmill where countless hours are spent reacting to agency RFPs—many of which are sent to over 100 publishers, despite the fact that an average of 5 find themselves on the campaign? In order for that to happen, Levien said, the very language we are using must change. The language of the transactional RFP (“GRP,” “CPM,” “Impressions”) must change to the language of premium (“Social Shares,” “Influence,” and “Engagement”). Ultimately, Levien sees a world where there are fewer people managing  RFP response and more multi-disciplinary teams that create super premium tentpole programs for large brands. Forbes’ teams feature copywriters, developers, and creatives who don’t talk about the “buy details” of a campaign, but more about the social and cultural implications a great advertising program can create.

To paraphrase Federated’s CEO Deanna Brown, publishers “really have to question whether sending 100 e-mails to win a $50,000 RFP is worth it.”

Create Scarcity

Gannett’s Steve Ahlberg was even more forceful in his rejection of programmatic buying, and the transactional nature of guaranteed buying. After living in a world of their own creation (pages festooned Nascar-like with low-CPM banners) USAToday.com took the draconian move of removing all below-the-fold ads from its site, stripped every network and exchange tag from its pages, and decided to have one large ad placement per page. The experiment—revenue neutral in the 4th quarter of 2012—has thus far proven that publishers can get off “set it and forget it” SSP revenue by creating the type of scarcity that drives up both rates and demand. According to Ahlberg, the publication is talking to quality brand clients that were not on the radar just months before.

Part of the equation is getting away from standardized IAB units and trying to create a “television-like” experience for brand advertisers. Like Forbes, that means getting RFP response teams away from transactional duties, and leveraging cross-disciplinary teams that think like wealth managers, rather than salespeople. Instead of asking about reach and frequency, USAToday.com asks brands what they want to accomplish, and works with them to craft campaigns that work towards a different set of KPIs.

“If the Premium Publishers’ Product is the Banner Ad, then they are in Trouble”

For Walker Jacobs, who oversees Turner’s digital ad sales, the recent leaps and bounds in programmatic technology has done nothing but “accelerate the bifurcation of the ecosystem” which is divided been the good inventory and the bad. Like Gannett, Turner takes a jaundiced view of the programmatic ad economy.  “Our RTB strategy is ‘no’,” as Jacobs concisely put it.

Going further, Jacobs suggested that “there is no such thing as programmatic premium” in a world saturated with banner ad units, many of which go unseen. Standard banners, therefore, are a “flawed currency.”  It is hard to argue with Jacobs in a world that sees 5 trillion impressions every month.

It is clear that, despite the massive strides being made in programmatic buying technology, there is a very large gap between publishers who control super premium inventory, and those that do not. Publishers in the former want to find more streamlined and efficient ways to respond to RFPs, and ultimately turn more of their efforts into selling creative, multi-tiered, tentpole solutions to major brands. It doesn’t sound like many premium publishers are implementing private exchanges either, despite all of the hype in 2012. As Dan Mosher of Brightroll Exchange remarked, a private exchange “is just a blocklist feature of a larger platform.”

In 2013, it seems like premium publishers are not embracing private exchanges, not because of the technology, but rather because they are rejecting the notion of commoditization of their inventory in general.  For most premium publishers, there are the types of sales: Super-premium programs, that will continue to be handled primarily by their direct sales force; “transactional RFP” business for standard IAB display units, which most see being streamlined by “systemic” reserved platform technologies; and programmatic RTB sales of lower class inventory.

So, is 2013 the year of “programmatic premium?” Yes—but only if that means that publishers embrace technologies that help them streamline the way they hand-sell their top-tier inventory.

[This post originally appearded in the EConsultancy blog on 2/5/13]

About these ads

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s