Monthly Archives: April 2015

A better way for publishers to manage ad inventory

By Eric Picard (Originally Published on iMedia – April 16, 2015)

Publishers in general have, up until recently, thought of programmatic advertising only as a mechanism to clear unsold (remnant) inventory. Over the last few years, publishers have been able to begin integrating their programmatic sales more completely into their overall inventory pool. And those publishers that dived fully into the programmatic pool have been gathering significant learnings and gaining sustainable advantage over their competition. For those publishers who have not fully adopted programmatic methodology into their mainstream revenue operations, the time has come.

Today I’ll be using Google’s DoubleClick for Publishers and Ad Exchange as the examples of how publishers are operating. But other ad servers, SSPs, and exchange technologies support similar functionality to what I’ll describe here. I’m using Google’s because, frankly, its documentation is public, easily found via a search (shockingly), and easy to understand. If you’re using different vendors, feel free to reach out to them and ask about these concepts. I’m certain they’ll be able to accommodate you with similar approaches on their platforms.

Starting with the basics

RTB and direct make use of different infrastructure for decision-making, and ultimately it’s the publisher ad server that “owns” the direct ad sales, which controls the destiny of whether an ad impression is available to be purchased on the exchange.

Below is an example of how ad calls are made when a user visits a web browser and the page loads. This fundamental of our business should be understood before we dive into the deeper arcana of how programmatic systems interact with the publisher ad server.

When a user visits a web page, myriad events take place — most of which we’ll ignore in this article. The important thing to understand is that publishers code ad tags into their web pages, which call out to the publisher ad server. The publisher ad server returns unique identifiers to the page that tell the browser where to find the ads that have been selected.

This is how nearly all ads are served online today — and have been for more than 15 years. What’s important is how this is fulfilled under the surface of the impressions. There are numerous interactions happening within the publisher ad server, and the external systems — including standard ad platforms like third-party ad servers (DFA, Atlas, Sizmek, etc.), dynamic creative and rich media platforms (Flashtalking, PointRoll, etc.), and programmatic platforms such as supply-side platforms, ad exchanges, and demand-side platforms.

More advanced scenarios

All sorts of decisions are made in the milliseconds between the user visiting the publisher’s web page in a browser, and all of these various systems interact with each other. But we’ll leave most of these interwoven interactions aside for this discussion and keep to the critical ways that the publisher ad server interacts directly with whatever programmatic integration it has made.

Most of the time the publisher ad server interacts with an SSP (Rubicon, PubMatic, etc.) or directly with an ad exchange (Google’s AdX, AppNexus, etc.). While I’m giving examples in some parts of this article to illustrate the kinds of companies seen in the space, the reality is that the lines are very blurry, and some might argue that components of AdX and AppNexus operate like an SSP, and components of Rubicon and PubMatic operate like exchanges. Think of them as relatively interchangeable at this point.

Regardless of what vendor and mechanism is used for the programmatic supply integration (and often multiple are used), the publisher’s ad server interacts in somewhat specific ways with these systems. So let’s begin with the prioritization queue set up within the publisher ad server.

Most publisher ad servers provide functionality to allow the ad operations teams to assign the various contracts (insertion orders, or IOs) and specifically their subsequent contract line items against specific prioritization levels within the ad server. DFP has 16 levels of prioritization available, with the first 11 levels being set aside for “reserved” or “guaranteed” line items. Of these top 11, typically the first three levels are used for sponsorships — as the highest priority line items placed into the ad server.

The Fundamental Changes Happening In Programmatic Today (What ever happened to Programmatic Direct – or Automated Guaranteed?)

By Eric Picard (Originally Published on – Friday, April 3rd, 2015)

Media buying and selling have been on a slow evolutionary course since the late 1990s. With real-time bidding at the forefront, the industry has evolved rapidly since 2007, but relegated primarily to direct response on the buy side and remnant inventory sales on the sell side.

Most media sales – about 80% of digital dollars – have still been done over the direct channel, with RFPs, negotiations and inventory purchased well in advance of the campaign’s “go live” date. Despite significant growth in programmatic mobile and video, programmatic still represents a tiny fraction of dollars spent in those media channels.

While we’ve heard a lot about “automated guaranteed” over the last few years, the sector hasn’t grown as quickly as many would like. Analysts have been bullish about its growth, with Magna Global estimating that 83% of digital display spending will be “programmatic” by 2017, largely driven by the adoption of automated guaranteed and other types of “programmatic direct.”

We see the kind of growth expected in the RTB space, but not in the automated guaranteed space. Although some were gaining traction, vendors had trouble making money and several leaders were acquired last year for fairly low prices.

The amount of traction has been debated behind closed doors, with the quiet consensus emerging that automated guaranteed isn’t really taking off. The question is: Why not?

Automated Guaranteed’s Biggest Hurdles

Until a few years ago, publishers were a bit squirrelly about RTB. Sales-driven organizations doubted that RTB could provide the value that direct sales have produced for 20 years, and there was a belief that RTB drove prices downward.

Five years ago, new vendors entered the fray to focus on solving an old problem: automating the convoluted process of buying and selling direct ad campaigns. They sold publishers on this idea and created pipelines that allowed publishers to create packages that could be pushed over an API to buying tools, and would automate and streamline the human interactions that take place during a media buy.

This is a very logical path to go down – billions of dollars are spent on these direct media buys and everyone agrees that this space is incredibly inefficient. So why not just build some automation and have the whole thing streamlined and driving growth of the market?

Several factors have limited growth of the automated guaranteed space. One is that publishers have treated it like a new sales channel to shop inventory packages, not as a means to replace the standard RFP-driven direct channel. Publishers use automated guaranteed as an intermediate sales channel between direct buys and remnant sales. They have tried to use it to open up more direct buys – effectively money that was never on the table before – and entice buyers to pick up inventory packages directly instead of using RTB.

But analysts, vendors and many sales executives didn’t envision this for automated guaranteed. The goal was to push direct sales into this automated process for selling and for buyers to adopt buying tools that streamlined the RFP process. While there has been some success with this model – particularly with dedicated buying tools in the direct space – overall it has been sluggish.

To exacerbate the problem, publishers tended to package inventory for this channel in ways they’d never do if they were responding to an RFP. One media buyer I talked to about this debacle laughingly said, “They’re creating media packages and pushing them through this channel that they can’t even sell with their sales force involved. Why do they think anyone will buy it over this channel if they can’t sell it with people?”

The implication is that most buyers aren’t interested in publisher-defined inventory packages that aren’t tailored to the specific campaign goals. And what most publishers have missed is that buyers have complete control over the inventory definition when buying over the RTB channel, which has been as much a growth factor as reducing waste or lowering average CPMs. Control always wins for buyers.

These various problems with the automated guaranteed channel have slowed adoption and growth of the programmatic direct space and produced a chilling effect on investment, leading to some of the vendor exits. But this is only in the automated guaranteed portion of the “programmatic direct” channel. There are many ways the market is beginning to improve and reinvent the media buying and selling process, and automated guaranteed is only one of them.

The final major issue here is that automated guaranteed is solving an old problem without changing the nature of the thing it’s trying to solve. It has made direct buys more efficient, rather than producing radically better direct buys.

As the automated guaranteed space was inventing itself, the RTB channel evolved much faster than anyone expected. Publishers began to begrudgingly admit that RTB wasn’t a “race to the bottom” as many feared and instead was driving significant revenue at a significantly lower cost of sales. As skepticism and suspicion evaporated, publishers have become open to bigger and broader uses of RTB.

RTB Growth

RTB has given us more value than direct buys and helped us find ways to radically improve upon direct buys. The largest vendors in the space, particularly DoubleClick and the closely related AdX exchange, rapidly innovated and released technologies like Enhanced Dynamic Allocation (EDA), leading publishers to experiment with the way they allowed direct and RTB demand to compete with each other over impressions in real time.

The result has been a significant increase in yield and overall rising CPMs in the RTB channel. In many cases, demand coming from RTB yields higher than direct buys. Using tools like EDA has not led to underdelivery or undercutting of direct deals.

And while “standard RTB” has grown rapidly and is now encroaching on inventory that traditionally was reserved for direct deals only, private marketplaces have been a real winner in the RTB space. While Deal ID as a mechanism for instituting a private marketplace buy has been somewhat vilified in the industry trade press, complaints are mostly unfounded. Private marketplace deals over RTB have grown incredibly fast and are poised to accelerate. We’ve also seen buying and selling tools rapidly advance and processes are becoming streamlined.

Buying teams within agency trading desks (ATDs) use various flavors of private marketplaces to enact one-to-one deals with publishers that largely replicate direct buys. They’ve also completed more extensive global deals with publishers that take advantage of the total demand they represent as an agency and share the supply among their clients. They are even using these broader deals as differentiators with their competitors.

Similarly, the demand-side platforms are creating differentiated supply deals with publishers that put them toward the top of the queue within the ad exchanges and, in some cases, help them bypass the exchange infrastructure altogether using RTB-based buying tools.

We’re now seeing that the ATD model itself is fracturing as media agencies pull the resources and capabilities of the ATDs in-house and push their media buyers to incorporate programmatic mechanisms into the standard buying process. Executives at nearly every large media agency and most holding companies are privately or even publicly stating that programmatic – primarily RTB mechanisms – will be incorporated into mainstream buying teams starting this year, if they haven’t done so already.

One major area of investment needed in order for media agencies to begin adopting RTB at large are tools for planning and executing buys that support the needs of a more “standard” media buyer. Specialists will certainly be helpful for the tools of today, but media planning and buying as a discipline is missing a significant window of insight and execution capability that could be coming from this channel. Tools for planning buys across direct and programmatic channels (RTB, private marketplaces, automated guaranteed and across various differentiated vendors) are desperately needed in our space.

As you might expect, vendors connected to the exchange infrastructure get access to data about all impressions defined by all criteria – including publisher, contextual, geographic and first- and third-party data segments. That data has yet to be unlocked for broad media planning and buying but soon will be. You might imagine this is an area where I’m spending a lot of my time.

I believe that success will be driven by broad shifts in the programmatic space, faster adoption of RTB-enabled buying and selling mechanisms, new programmatic offerings beyond RTB and tools to help less specialized buyers to be successful in programmatic.