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MBPT Spotlight: Programmatic Buying Is a Fundamental Industry Shift—But Where Is It Headed?

11/13/2013 02:38:42 PM Eastern

Is there a more controversial topic than programmatic buying in the digital ad space today? Its potential effects on, and value proposition for, publishers and brands have been debated ad nauseam by the full range of stakeholders for at least the last few years. Everyone has an opinion, and many in the industry are passionate about their beliefs. At this point, however, it is difficult to dispute the notion that real-time bidding and automated buying have fundamentally reshaped the way digital ad inventory is transacted.
 
There’s every reason to believe that programmatic buying will continue to work well for many in the industry, while others (especially premium publishers and some elite brands) will continue to have major concerns. And there’s no doubt that improving tools and technology will place more speed and power in the hands of buyers and sellers alike.
 
So, at the risk of beating the proverbial dead horse, it’s worth examining where we are today, why we are there, and the potential strategic impacts for publishers. To many in the pro-programmatic camp (most notably, those in the ad tech community), publishers appear to be a bunch of slow-moving, change-resistant, innovation-fearing dinosaurs that are unwilling to adapt their business models to support newfangled platforms. Why, oh why, won’t these content providers open up the flow of new revenue? After all, it often doesn’t require all the bureaucracy and administrative stuff—like individual insertion orders, campaign kickoff calls, media plan negotiation, spec sheets, human ad tag QA and delivery reconciliation. Industry conference agendas are filled with sessions designed to convince publishers that they would achieve higher CPMs and see better-quality creative if they would simply embrace programmatic direct with open arms.
 
Yes, some publishers seem slow to the party, but many—especially premium publishers—are involved in the very worthwhile task of figuring out the optimal approach for programmatic. It’s well known that premium publishers have concerns about selling through “discount channels,” even if it’s only remnant inventory they’re selling. Publishers are brands, too.
 
For purposes of this discussion, let’s define “premium publishers” as content owners who manage broad portfolios of websites, produce professionally curated content and have a significant video presence as part of a larger television contingent. After all, if we are going to see a tectonic shift of tens of billions of brand dollars from TV to digital, it will likely start with the publishers who produce video content consistent with the programming marketers are accustomed to on broadcast and cable TV channels.
 
A successful programmatic strategy for a premium publisher may be to identify non-core advertisers and audiences without creating channel conflict. For instance, let’s say you’re a major business daily, with a core target of affluent 50-year-old males, with a significant sub-segment of female professionals with slightly lower household incomes. Programmatic capabilities can help address the advertisers seeking the second target. Publishers need programmatic tools that work in their complete ad stack so they can better understand their current and future business from all sources.
 
It’s Not Just the Revenue
And it’s not just that publishers are missing out on revenue; an even more important step for publishers may be to participate in the industry dialogues so that their objectives and concerns can help shape the development of the programmatic marketplace. Without a seat at the table, publishers will remain challenged by overall process fragmentation and incompatible technology and may be forced into a reactive position in dealing with programmatic offerings that seem unfavorable to their interests. Without active publisher involvement, these same issues will plague the entire industry.
 
The bottom line is that the programmatic controversy is likely to endure as long as significant industry stakeholders must identify their strategic priorities even as they navigate a great deal for market turbulence and technological change. In other words, it will be with us for quite a while. Surely, understanding will come before resolution—that is, when all stakeholders recognize each other’s needs and objectives around programmatic, the more likely we will see gains in efficiency, scalability and adoption across the industry.
 
Infinitive is a consultancy that offers services in assorted areas, including digital advertising and digital analytics. Catanzaro has extensive experience in the online media industry and in digital ad operations. Prior to joining Infinitive, he held positions at MTV Networks and Warner Bros.

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