US Programmatic Digital Display ad spending is expected to reach $14.88 billion in 2015 and $20.41 billion in 2016, according to a recently published eMarketer article. Those dollar amounts will account for 55% and 63% of digital display ad spending in 2015 and 2016, respectively. Buyer survey’s show they are driving forward with a mission to automate their buying process and bring data into more of their media buys.
How does the current method of programmatic transaction work?
Currently, the largest programmatic transaction method is “Real-Time Bidding”. “RTB” is when thousands of advertisers are bidding on an impression that is about to be delivered to an anonymous person who fits certain criteria. Advertisers are not guaranteed to be on a specific publisher’s website or to receive a specific quantity of impressions. If the advertiser has the winning bid, their ad will be delivered to a person who fits their criteria, whichever site they may be on. Everything feared about programmatic is related to the fact that it is currently a remnant marketplace, however, that is changing quickly.
Even though Real-Time Bidding remains the largest programmatic transaction method, significant growth is expected to come from Programmatic Direct. Programmatic Direct is the automated process of advertisers buying directly from the publisher but allows the advertiser control to optimize their campaigns against their own data segments. The advertiser and publisher agree on a CPM and quantity of impressions. Programmatic Direct is expected to hit $3.87 billion in 2015 and $8.57 billion in 2016, which means it’s going to account for 26% of programmatic in 2015 and 42% in 2016. It is the fastest growing segment of digital advertising and a trend that will not reverse. In order to decide which operation would best suit your advertising efforts, you can check how one of our ad consultants will help you.
Advertisers have significant influence over the buying process and it’s clear they are seeking more automation. So what risks do we incur when partnering with a programmatic direct platform?
Programmatic Sales taking over Direct Sales?
A common concern is that programmatic sales will cannibalize direct sales. “Real-Time Bidding” will not do that, rather it will cannibalize your standard ad network buys and improve upon the rates we’re receiving because you are not handing margin over to an ad network. Programmatic Direct is really a form of a direct sale – the publisher still has to agree/approve every deal. The advertiser and publisher still need to agree on the rate and quantity of impressions. It may eventually take the place of a small run of site campaigns, but it won’t take the place of sponsored content programs for the foreseeable future, which will remain as an anchor to your biggest deals. In fact, Programmatic Direct can complement those deals and be used as a negotiation lever to close bigger deals. More about programmatic buying and selling you can check in this article.
Another common concern is that the sales team will feel threatened by programmatic sales. Programmatic can actually support direct sales efforts. Through a Programmatic Direct platform, Publisher’s will be able to see which advertisers are utilizing Real-Time Bidding and winning bids on their site. This can be a lead generation tool for Publisher sales team. Publishers can reach out to their agency contacts with this knowledge and offer a more premium offering, or they can attempt a Programmatic Direct deal. Also, more and more RFPs are requesting programmatic integration with the advertiser’s data management platforms. Right now these are missed opportunities for most publishers. Regarding this, if you are looking for any kind of programmatic solutions, our consultants will be happy to get in touch with you today!
Another common concern is integration with a programmatic platform will expose data about their users. Advertisers will never have data or access to individual users, rather advertisers will just be targeting segments of anonymous people with common criteria. Integration a programmatic direct platform will actually allow publishers to learn more about their user segments and, again, aid in direct sales efforts.
Programmatic platform’s postures the publisher to migrate indirect and non-guaranteed deal flow to preferred Private Marketplaces and ultimately to direct guaranteed deals. This is a blueprint for success in a changing marketplace.