Programmatic Primer for Data-Savvy Publishers (ClickZ, Maja Millicevic)

Originally published by ClickZ on April 18, 2014.
Embracing programmatic sales tools can allow publishers to jump ahead of the competition. Here are a few considerations to keep in mind as you build out your programmatic strategy.
Programmatic has been one of the hot topics of discussion for the last couple of years and will likely continue to be as wider adoption exposes new challenges. We’ve come a long way. Once, the advertising industry equated programmatic with low-quality supply threatening the high CPMs publishers commanded using direct sales. Today, with the emerging ecosystem of private marketplaces and programmatic direct, programmatic is poised to become a universal sales tool that both publishers and advertisers embrace. However, we’re still in the infancy of accepting programmatic as the underlying technology that will enable publishers and advertisers to benefit from faster transactions across all channels and mediums.
So why such reluctance to embrace a potentially better and quicker way of doing business? Let’s look at the brief history: Most large publishers with extensive direct sales efforts were primarily concerned with channel conflict, since they thought of programmatic as a separate channel that could potentially undermine the efforts of their direct sales channel. On the other hand, publishers without a direct sales force saw programmatic as a great opportunity to get their audiences and inventory in front of advertisers that would otherwise be out of reach. A similar split perception existed on the buy side: Advertisers were also initially reluctant to move spend into the programmatic channel – especially the big brand advertisers because to them programmatic equaled “questionable” inventory. As the programmatic ecosystem matured, with the emergence of both demand- and supply-side platforms as well as private deals, both the buy side and the sell side started to embrace programmatic as a sales “tool” instead of a “channel.”
Today, most of the conversations around programmatic still focus on the technology itself: how quickly bids are made, how many different parameters you can send in each request, how to sync data, etc. What we’ve seen is that most exchanges and programmatic technologies are reaching standardized protocols where many of the players are practically identical and easily exchangeable with one another. Where we fail to focus the conversation on is how to leverage these types of tools to make the most sense for you, the publisher.
What publishers need to understand is that these types of tools can be used to put the power back in your hands so that you control what you are willing to accept from advertisers and at what rates. There are many tricks that publishers can leverage to make sure that they are making the most out of programmatic buying to ensure that it’s working to your advantage – things like various ad formats depending on CPMs (display, video, mobile), setting floor prices and tracking fill rates, and whether you use programmatic as your only monetization engine or whether it is coupled with direct sales.
Outlined below are some key considerations to keep in mind as you build out your programmatic strategy:
1) Scoping and Strategy: What do you want to get out of programmatic? Are you looking for a 100 percent fill solution? Understand how to set up your inventory for programmatic: Are you offering up packages of media bundled with your first-party data? Do you have a property-wide floor? If you’re using multiple SSPs/exchanges, how are you splitting your inventory (who sees your impression first)? Are direct sales efforts competing with programmatic efforts?
2) Education: This needs to happen both internally within your direct sales team and externally with your advertisers. The easiest thing to do to avoid channel conflict is follow the IAB guidelines. I’m a big fan of the crawl-walk-run approach – start with the first step and see the result. Repeat if it works. At the end of the day, you will need to educate your sales force and change the way they look at their approach to sales. This isn’t an overnight process but it will be worth it as more and more buyers and advertisers allocate larger percentages of their budgets to programmatic-only channels. If you don’t have a direct sales force, engaging in programmatic is a great way to go – by leveraging programmatic technologies you can open up your inventory to advertisers and buyers that would otherwise have no means of targeting you.
3) Execution: A successful execution plan is really about the optimal marriage of business strategy and technology. Once you’ve outlined your strategy and educated your internal teams, it is important to choose the technology that will be able to address your needs in the best way. Earlier, I mentioned the industry is moving toward standardization – from the technology perspective, yes; however, similar to how you are looking to merge business objectives and technology objectives, so are your programmatic providers. Finding one whose business model fits well with yours is crucial. For example, if you don’t have the resources to allocate to internal yield management, you should select a provider that comes with a fully baked services offering instead of a self-serve platform.
As with most things, a solid strategy outweighs a more tactical approach in the long run. While the industry has been deep in the weeds on implementation specifics and tactical minutiae, we’ve been doing it at the expense of crafting strategies around real-time advertising as a whole. This is a necessary step to bring true, longer-term value to the programmatic ecosystem. Data-savvy publishers can lead the way here. Those who don’t will remain in the world of dwindling CPMs and “race-to-the-bottom” conversations.