A Publisher’s History Of Programmatic Media

EvolutionIt’s hard to argue that the banner ad era has been good to publishers. After a brief initial period in which banner inventory matched audience availability, publishers enjoyed double-digit CPMs and advertisers enjoyed unique access to a valuable audience of online “early adopters.” Prognosticators heralded a new golden era of publishing, and predicted the eventual death of print. Fifteen years later, print is barely breathing, but publishers are still awaiting a “golden era” where the promise of online media matches its potential. What happened on the long road of publisher monetization, and how did we arrive in this new “programmatic” era?

It didn’t take long after HotWired sold the first banner ad to AT&T for other online properties to start making banner ads part of every page they put onto the Web. Not immune to Adam Smith’s economic theory, banner CPMs lowered as impression availability rose. Suddenly, publishers were in the single digits for their “ROS” inventory, and had plenty of impressions left over every month. Smart technology companies like Tacoda saw an opportunity to aggregate this unsold inventory, and sell it based on behavioral and contextual signals they could collect. Thus, the Network Era was born. Because networks understood publishers’ audiences better than the publishers did, they were able to sell ads at a $5 CPM and keep $4 of it. That was a great business for a very long time, but is now coming to an end.

While not creating tremendous value for publishers, the Network Era did manage to pave the way for real time bidding, and the start of the Programmatic Era. Hundreds of millions of cookies, combined with a wealth of third-party data on individuals, presented a truly unique opportunity to separate audiences from the sites the visited, and enable marketers to buy one impression at a time. This was great for companies like Right Media, who aggregated these cookies into giant exchanges. For advertisers, being able to find the “auto intender” in the 5 trillion-impression haystack of the Web meant new performance and efficiency. For publishers, this was another way to further segregate audience from the valuable content they created. The DSP Era ensured that only the inventory that was hardest to monetize found its way into popular exchanges. Publishers ran up to a dozen tags at a time, and let SSPs decide which bids to accept. Average CPMs plunged.

Over the last several years, it seems like publishers — at least those with enough truly premium inventory — are fighting back. Sellers have brought programmatic efficiencies in two ways: implementing DMP technology to manage their real programmatic (RTB) channel; and leveraging programmatic direct (sometimes call “programmatic premium”) technologies to bring efficiencies to the way they hand-sell their guaranteed inventory. Let’s look at both:

  • Programmatic/RTB: Leveraging today’s DMP technology means not having to rely on third-parties to identify and segment audiences. Publishers have been trying to take more control of their audiences from day one. The smartest networks (Turn, Lotame) saw this happening years ago and opened up their capabilities to publishers, giving them the power and control to sell their own audiences. With the ability to segment and expand audiences, along with new analytics capabilities, publishers were able to capture back the lion’s share of revenue, previously lost to Kawaja-map companies via disintermediation.
  • Programmatic Direct: Although 80% of the conversation in publisher monetization has revolved around the type of data-driven audience buying furnished by LUMAscape companies, 80% of the display advertising spending has been happening in a very non-real-time way. Despite building enough tech to RTB-enable the globe, most publishers are selling their premium inventory one RFP at a time, and doing it with Microsoft Excel spreadsheets, PowerPoints, PDFs, and even fax machines. RTB companies are trying to pivot their technology to help publishers bring efficiency to selling premium inventory through private exchanges. Other supply-side companies (like iSocket, ShinyAds, and AdSlot) are giving publishers the tools to sell their premium ads (at premium prices) without bidding—and without an insertion order. On the demand side, companies like Centro, Facilitate, MediaOcean, and NextMark (disclosure: I work there) are trying to build systems that make planning and buying more systematic, and less manual.

As programmatic technology gains broader acceptance among publishers, they will find that they have turned the monetization wheel 180 degrees back in their favor. DMP technology will enable them to segment their audiences for targeting and lookalike modeling on their own sites, as well as manage audience extension programs for their clients via exchanges. They will, in effect, crate a balanced RTB playing field where DSPs and agency trading desks have a lot less pricing control. Programmatic Direct (or, more correctly, “systematic reserved”) technologies will help them expose their premium inventory to selected demand side customers at pre-negotiated prices, and execute deals at scale.

The Programmatic Era for publishers is about bringing power and control back into the hands of inventory owners, where it has always belonged. This will be good for publishers, who will do less to devalue their inventory, as well as advertisers, who will be able to access both channels of publisher inventory with greater efficiency and pricing transparency.

This article originally appeared on 3/14/13 in AdExchanger.

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Is Programmatic Premium?

Will "buy it now" buttons control display media?

Will “buy it now” buttons control display media?

As the bloated Display LUMAscape shifts, more and more companies focused on real time bidding are turning their venture-funded ships in the direction of “programmatic premium” and trying to pivot towards an area where nearly 80% of display media budgets are spent. This has been called the “Sutton Pivot,” referring to the notion of robbing banks, because “that’s where the money is.”

The fact that that 80%—over $6 billion—is largely transacted using e-mail, Microsoft Excel, and fax machines is staggering in a world in which Facebook is becoming passé. The larger question is whether or not publishers are going to enable truly premium inventory to be purchased in a way that lessens their control. At a recent industry conference, publishers including Gannett and Turner completely rejected RTB and “programmatic” notions. In a world of ever growing inventory, the premium stuff is ever shrinking as a percentage—and that means scarcity, which is the publisher’s best friend. Selling less of a higher margin product is business 101.

As I wrote recently, at the same conference, Forbes’ Meredith Levien laid out the three principle chunks of inventory a super-premium publisher controls, and I want to examine the programmatic premium notion against each of these:

  • Super Premium: Big publishers love big “tent pole” branding campaigns, and are busy building mini-agencies within their sales groups, which bring together custom sponsorship packages that go beyond IAB standard banners. A big tent pole effort might involve a homepage takeover, custom rich media units, a dedicated video player, and branded social elements within a site. While some of the display elements within such a campaign can be purchased through a buying platform, this type of complex sale will never scale with technology, and is the very antithesis of “programmatic.” For many publishers, this type of sale may comprise up to 50% of their revenue. Today’s existing buying and selling platforms will be hard pressed to bring “programmatic” efficiencies here.
  • Transactional: Many super-premium (and most premium) publishers spend a lot of their time in the RFP mill, churning out 10 proposals and winning 2   or 3 of them. This “transactional RFP” business is begging for reform, and great companies like AdSlot, iSocket, Operative, and ShinyAds are starting to offer ways to make selling premium inventory such as this as programmatic as possible. Companies such as Centro, Facilitate, MediaOcean, and NextMark (disclosure: my company) are starting to offer ways to make discovering and buying premium inventory such as this as programmatic as possible. Much of the RFP process is driven by advertisers looking for information that doesn’t need to be offered by a human being: How much inventory do you have, when do you have it, and how much does it cost? This information is being increasingly found within platforms—which also enable, via tight pub-side ad server integrations, the ability to “buy it now.” 100% of this business will eventually happen programmatically. Whether or not today’s big RTB players can pivot their demand- and supply-side technologies to handle this distinct type of transaction (not very “real time” and not very “bidded”) remains to be seen.
  • Programmatic: There will always be a place for programmatic buying in display—and there has to be, with the sheer amount of inventory available. Let’s face it: the reason the LUMAscape is so crowded is that it takes a LOT of technology to find the “premium” needle in a haystack that consists of over 5 trillion impressions per month. If the super-premium inventory publishers have to sell is spoken for, and the “transactional” premium inventory publishers sell is increasingly going to other (non-RTB) platforms, then it follows that there is very little “premium” inventory available to be bought in the programmatic channel.

The middle layer—deals that are currently being done via the RFP process, is where “programmatic premium” is going to take place. In this type of buy, a demand-side platform will create efficiencies that eliminate the cutting and pasting of Excel and faxing and e-mailing of document-based orders, and a supply-side platform will help publishers expose their premium inventory to buyers with pricing and availability details. That sort of system sounds more like a “systematic guaranteed” platform for premium inventory.

So, is programmatic premium? Not the type of programmatic buying happening today.

[This post originally appeared in ClickZ on 2/18/2013]