It’s clear that programmatic buying – that is, the automated buying of ad inventory at the level of each impression in real time – is being enthusiastically embraced by advertisers. In August eMarketer found that nearly one-fifth of US display spending will be automated this year, prompting Ad Age to comment that “real time, automated digital ad buying is growing so fast, even the forecasts can’t keep up.” More recently, analyst house IDC predicted that spending on real-time-bidded display advertising will accelerate at a 59% compound annual growth rate through 2016, making it the fastest growing segment of digital advertising. (If you want to see more examples, we bookmark them live at our Mobile Advertising Stack and publish a daily newsletter from the most popular stories).

This is just one of the reasons we focused our efforts on developing our mobile Demand-side Platform (DSP) called Madison, enabling advertisers to plug into the mobile Real-time Bidding (RTB) markets.

But what of the publishers? Certainly some publishers are fighting the shift to programmatic because their perception is that programmatic merely drives prices down. It’s possibly true that an ecosystem wholly made up of programmatic buying could do this through relentless downward pressure. However, this isn’t reality.

The truth of the matter is that, while programmatic buying is here to stay, it’s just one part of an ecosystem that offers more options to publishers to improve their yields. If publishers are going to move towards programmatic, then this journey will be hastened by one stick, and four carrots.

The stick: if you can’t beat ’em, join ’em

The one ineluctable truth of any marketplace is that sellers must satisfy demand, and advertisers have sent signals loud and strong that they want to buy inventory using programmatic methods, by plugging into RTB exchanges via DSPs. They want to make their data work not just harder for them but smarter, to feed their DSPs’ data-hungry algorithms and maximise reach and performance.

So this is the stick. Publishers simply have to recognise that this is how advertisers want to buy inventory, especially those with significant budgets. The publishers who continue to hold out against programmatic will lose out to those that adopt it.

Carrot #1: Reduced risk

From their experience of desktop advertising over the years, sales teams have found the right mix of direct sales, private exchanges, marketplace exchanges and networks. So while the mobile mix may be different for each publisher, and even different throughout the year, plugging into programmatic offers a way of spreading the risk. If programmatic’s closest analogy is to the financial markets, then this is a classic means of spreading the risk to maximise returns, as any spread portfolio expert will tell you.

Carrot #2: Increased sophistication

Programmatic affords publishers an opportunity to become more sophisticated in the way they monetise their inventory. More channels means more sophisticated pricing models and pricing rules across inventory types, driven by the publisher’s first-party data.

As publishers add to their audience attributes, so they become more tempting to advertisers impression by impression; and, in a virtuous circle, the more data they accrue the more they start to gain insights into the inventory preferences of their buyers, enabling them to optimise towards those they work most effectively with.

Carrot #3: Increased differentiation

In an automated environment the human factor becomes more important. So, publisher sales teams will find that they have a fantastic opportunity to differentiate through unique packages such as sponsorships and seasonal deals. This is part of the ‘portfolio’ approach, but one that relies on the long-established relationship that has been built between buyer and seller – and can even enhance it.

Carrot #4: Improved efficiency

Finally – and this is where programmatic’s strength really lies – publishers can benefit from improved efficiency too.

This is chiefly through private marketplaces, which offer a way to embrace programmatic through specific deals. Here, the buyer and seller agree on a start date, end date and fixed rate, unified through a deal ID and executed through DSPs and Sell-side Platforms (SSPs). When the DSP wins a bid for inventory, and there’s a deal ID tied to that inventory’s data, the deal is struck according to the agreed flat rate.

This is essentially like working in a non-programmatic environment, through an Insertion Order (IO), but without the admin involved, while preserving the trust between buyer and seller. Effectively, both sides win.

The private marketplace is where SSP requirements meet DSPs, and this is why we’ve made considerable investment into our private marketplace functionality. There’s a huge opportunity to make programmatic work for both sides, capitalising on the the shift from manual (IO) to automated (RTB through private marketplaces) and publishers realise that programmatic is not just for remnant inventory.

Follow the leaders: The Fifth Carrot?

These drivers – one stick and four carrots – are just some of the reasons major publishers are moving to programmatic, who until quite recently swore they never would.

For example Turner Digital Ad Sales recently announced the launch of the Turner Premium Xchange, a private ad exchange via which it will sell digital ad inventory programmatically to preferred partners. This is quite a turnaround for a company that initially resisted ad networks and ad exchanges.

Likewise, as of August, News Corp has been working on a global programmatic advertising exchange which will move its online and mobile products over to programmatic buying and real-time bidding. This is a sea-change for the company, especially as it will discontinue any remaining arrangements with third-party ad networks.

And they’re not alone. Other heavyweight premium publications are moving to private marketplaces, such as the Wall Street JournalHearst Digital Media and La Place Media.

There’s an unspoken truth among marketers that brands follow brands. If this is in any way true, then these are big publishing brands that could influence others to start their journey towards programmatic.

So maybe it’s not all a game of sticks and carrots: perhaps it’s more a case of follow the leader.

Victor Malachard

Victor Malachard

Contributor


Victor Malachard is CEO and Co-Founder of byyd.