The Programmatic Explosion–What’s The Story Behind the Boom

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eMarketer has released their latest estimates delving into the percentage increase and overall spending (nearly $33 billion) that advertisers will allocate for programmatic ads during 2017. George Levin, co-founder and CEO of GetIntent looks at the programmatic ecosystem and why programmatic, especially video, is growing at such an astonishing rate.

Q: What is the difference between direct vs. premium programmatic buying?

o Programmatic direct is same thing as programmatic premium. Different people/companies call it differently. The key difference is between premium/direct and open RTB (open auction). Open RTB has less transparency and worse quality.

o So let’s start with quality. Publisher’s decide to sell the best inventory directly to their clients (via adserver), then a small portion of good inventory goes via programmatic direct (via some SSP), and only remnant traffic is forwarded to an open RTB (usually via the same or different SSP). Moreover, some SSPs have their direct clients (acting as DSP here), so the best remnant inventory goes to their clients, and only the rest goes to DSPs.

o Transparency is another issue. RTB is the second price auction, which means if buyer A bids with $1 and buyer B bids with $10, buyer B wins, but he pays $2.01. In reality this is impossible to check, thus SSPs can charge hidden commission – let’s say $2.21 instead of $2.01. There can be 10 bidders which of whom don’t know about each other. Read this for an example.

o Programmatic direct uses the same technology, but advertisers negotiate a deal directly with a publisher. So in most cases, advertisers negotiates CPM (some time even volume). This type of buying is more transparent and efficient. Advertisers know what they are buying and where there ad will be placed. It also solves another problem of Open RTB – which is domain misrepresentation. An example of this is when an advertiser buys CNN.com, expecting it to be the widely known and viewed news website, but instead it’s not CNN.com. In fact it is some fake traffic from a fraudulent domain, who pretends to be CNN (on a bid request level).

Q: Why is the ad-tech ecosystem noticing a decline in RTB?

o RTB is just a protocol, the way to buy traffic. Open RTB (defined above) becomes less and less popular because of the mentioned reasons. Everything goes to programmatic direct.

Q: Why are video advertisements campaigns increasing at such an astonishing rate? There was a 42% increase/over $9 billion in planned spending.

o Video is growing fast mostly because of a few top agencies, who’ve convinced their brands to allocate big budgets away from TV. Video Programmatic has some advantages (narrow targeting and better measurement: viewability, completion rate, etc), so brands are eager to spend more budgets on this channel. Why it’s growing faster now – I can only tell from our experience: as soon as we started to track viewability/completion rate and built viewability optimization algorithms, video has surged from 20% of total spend to current 70%. Brands like that they can measure their campaigns and pay only for viewable impressions.
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