Will 2013 Be the Year of ‘Programmatic Premium’?
There has been a lot of debate lately about the definition of programmatic buying and selling of digital advertising. For most people, programmatic means computers doing things instead of humans — think program trading on a stock exchange. Real-Time Bidding (RTB) fits this definition nicely: the computers use algorithms to decide which impressions to buy, how much to offer, who wins and at what price.
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Programmatic buying has benefits for buyers: It is easier to buy lots of inventory, it is easier to pick through to find just the inventory that’s wanted, and because there’s tons of inventory available, it’s a lot cheaper than other methods. There are also seller benefits: They save on sales costs, and, by having multiple bidders, increase the value of their inventory.
What’s missing from this picture is the “premium” part — the value created during a process that involves both the buyer and the seller working together to increase the benefit to both. Marketers can get access to publisher first-party data, publishers can craft special packages and placements, and publishers can offer to lock up scarce inventory with a guarantee. This value-add is what makes the inventory “premium.” But, by their very nature, these are things that resist “programmatic” automation. This is why 80% of the market is still sold directly, and why even the most optimistic pundits don’t predict more than 50% of the market going to RTB any time soon.
Of course, this only considers the sales process. Other parts of the execution, like sending tags, trafficking flights, changing orders during a flight, reconciliation, and billing, are all tedious, often-manual tasks that could benefit from automation. This suggests that there is worth in “programmatic execution” that still respects the value of direct selling.
So, if there is “programmatic premium,” it would seem to include the following:
- A direct sales force that can close deals quickly without a tedious RFP and IO process.
- Sales planners empowered to analyze, package, and sell any audience target.
- consultative sales approach that marries the best of publisher content and data with the marketer’s goals.
- “Programmatic execution” that helps automate campaign execution and billing.
Fortunately, several companies are engaged in building these platforms today, so 2013 may well be the year of “programmatic premium.”
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