It’s been a long time since publishers have truly been in control of their inventory, but new trends in procurement methodologies and technology are steadily giving premium publishers the upper hand.
The story of display inventory procurement started with the Publisher Direct Era, when publishers were firmly in control of their banners, and kept them safely hidden behind sales forces and rate cards. Then the Network Era crept in, and smart companies like Tacoda took all the unwanted banners and categorized them. Advertisers liked to buy based on behavior, and publishers liked the extra check at the end of the month for hard-to-sell inventory.
That was no fun for the demand side though. They started the Programmatic Era, building trading desks, and leveraging DSPs to make sure they were the ones scraping a few percentage points from media deals. Why let networks have all of the arbitrage fun? The poor publisher was left to try and fight back with SSPs and more technology to battle the technology that was disintermediating them, kind of like a robot fight on the Science Channel.
But all of the sudden, publishers realized how silly it was to let someone else determine the value of their inventory, and launched the DMP Era. They ingested first-party data from their registration and page activity and created real “auto intenders” and “cereal moms” and wonderful segments that they could use to effectively sell to marketers. Now, every smart publisher knows more about their inventory than 3rd parties, and they can also find their readers across the wider Web through exchanges. A win-win!
Then all of the marketers in the world started reading AdExchanger, and saw the publisher example, and thought, “Wow, good call!” They started to truly understand how much money Programmatic companies were taking out of the investment they earmarked for media (silly marketers, Y U no read Kawaja’s first IAB deck?), and decided to use their own technology and data to power audience targeting. If it were a baseball game, this DMP Era for Marketers would be in the first or second inning, but the pitcher is throwing at a fast pace.
The next thing that happened was the Programmatic Direct Era, which lasted about ten minutes and effectively jumped the shark when Rubicon bought two of the more prominent companies involved (ShinyAds and iSocket). Programmatic Direct marketplaces promised a flip of the yield curve for publishers to expose the “fat middle” of undervalued impressions. They attempted this by placing blocks of inventory in a marketplace, and enabled the publisher to set rates, impression levels, and provide API access directly into their ad server. Alas, a tweak to Google’s API did not an industry make. Marketers loved the idea, but since they use audience as the primary mechanism to value inventory, PD marketplaces failed as stand-alone entities and were gobbled up. Under the steady hand of RTB-based technologies, they slowly evolve based on buy-side methodologies. Again, the demand side foils a perfectly reasonable, publisher-derived procurement scheme!
So, what’s next?
The Programmatic Direct Era still lives, albeit within private marketplaces (PMPs) and Direct Deal functionality. The IAB’s Open Direct protocol remains stuck at 1.0, but there is hope—and this time it’s a change that is positive for both marketers and publishers. The latest Era in inventory procurement is what I call Total Automation. Let me explain.
Say a big auto manufacturer has a DMP and has identified, via purchase information, the exact profile of everyone who buys their minivan. Call then “Van Moms.” Then suppose the publisher, who licenses an instance of the same DMP, is a women-friendly publication chock full of those Van Moms—and women who just happen to look like Van Moms. It’s pretty easy to pipe those Moms from the marketer right to the publisher. That process, which you might call Programmatic Direct 2.0, is interesting.
It requires no exchanges, no 3rd party data, no DSPs, no “private marketplace” no SSP, and potentially no agencies (spare the thought!). All it requires is some technology to map users and port them directly into an ad server.
What I just described is happening today, and moving quickly. Marketers are discovering that the change from demo-based buying to purchase-based buying through 1st party data is winning them more customers. Publishers are asking for—and commanding—high CPMs, and those CPMs are backing out for marketers. Thanks to all the crap in open exchanges, paying more for quality premium, “well lit” inventory actually works better than slogging through exchanges trying to find the audience needle in a haystack full of robots and “natural born clickers.”
The new Era of Total Automation will start putting publishers back on the map—but not all of them. The big distinction between the winners and losers will not only be the quality of their audience but, more importantly, the first-party data used to derive that audience. Not long ago, it was easy to apply a layer of 3rd party data and call someone an “auto intender” if they brushed past an article on the latest BMW. But compare that to the quality of an “auto intender” on a car site that has looked at 5 sedans over the last 2 weeks, and also used a loan calculator. There’s no comparison. The latter “intender,” collected from page- and user-level attributes directly by the publisher is 10 times more valuable (or $30 CPM rather than $3, if you like). The reason? That user volunteered real, deterministic information about herself that the publisher can validate. I am willing to bet that an auto manufacturer would pay a high CPM for access to an identified basket of those intenders on an ongoing, “always on” basis.
This is fantastic news for publishers that have great, quality inventory and have implemented a first-party data strategy. It’s even better news for the marketers that have embraced data management, and can extract and find their perfect audience on those sites. The Era of Total Automation will be over when every single marketer has a DMP. At that time, we will discover that there is no longer a glut of display inventory—all of the quality “Van Moms” and “Business Travelers” and the like will be completely spoken for. What will be left is a large pile of unreliable, long tail inventory available for the brave DR marketer and his DSP.
I think both marketers and publishers should welcome this new Era of data-driven one-to-one marketing. The crazy thing is that, once we get it right, it looks just like an anonymized version of direct mail—perhaps the oldest, greatest, most effective and measurable marketing tactic ever invented!
[This post originally appeared in AdExchanger on 7/2/15]
The Devil's Work 