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]

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]