Want Better Programmatic Prices? Share More Data With Buyers

JoshuaKoran“Data Driven Thinking” is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Joshua Koran, Senior Vice President of Product Management at Turn.

The industry has settled on a hot new buzz phrase: programmatic direct. This certainly describes what the industry is trying to do – automate the publishers’ direct sales channel – and represents a definite improvement over “programmatic premium,” which mistakenly emphasizes quality over transparency. Now that we’ve pinned down the vocabulary, though, it’s time to start working on a more substantive problem.

To really unlock buyer spending, we need to solve what I call the discoverability challenge. As you know, programmatic direct helps publishers sell more of their premium inventory at a reduced cost while also giving buyers better access to that inventory. It can also unlock incremental revenues for sellers by enabling them to command premium prices from far more advertisers. But while some – myself included – have been declaring that marketers should be paying more attention to programmatic direct, nobody has yet been able to show how it can help advertisers discover the subset of publisher offers that will reach the audience they want.

It all comes down to this discoverability factor, which is the key to making programmatic direct work for the entire media ecosystem. Enabling buyers to discover their audience across all the publisher offers would reduce buyers’ risk. Those buyers would, in turn, be willing to pay higher prices – good news for publishers – because they would no longer have to discount for the previously unknowable amount of “wastage” and would improve their ROI.

In other words, bridging the information gap between buyers and sellers would enable publishers to unlock the value of top bidders for their inventory. Right now, buyers have two basic options: purchase inventory via direct sales or via programmatic means. But when a buyer works with a publisher’s direct salesperson, that salesperson is the one making recommendations about what should be bought, with an incomplete picture of how the seller’s inventory maps to the buyer’s target audiences. When a buyer uses a programmatic platform, they must do all the work and assume the risk. Neither option is perfect.

Once sellers make it easier for buyers to find the audiences they want – that is, once they enable discoverability – their inventory will be able to command top dollar. Advertisers will be able to more easily sift through the range of publisher offers, using their own data, to find the offers that make the most sense for them.

Some smart companies have gotten us part of the way there. Rubicon’s Revv interface allows buyers to negotiate for the full range of inventory packages publishers have developed, which is an important step. But before they can negotiate, advertisers need to find the inventory they want to negotiate for.

Advertisers must be able to comparison shop, just as you might shop for a new flat-screen TV – tick off options A, B and C, and compare the features of each to find the best value. Buyers want to be able to find the inventory offers that best meet their specific campaign needs while minimizing the risk of making an inappropriate buy.

This is definitely doable, but it would require a commitment from publishers to disclose a certain amount of metadata about the inventory they're making available via programmatic direct. To help encourage this sharing, of course, it behooves buyers to work with platforms that guarantee not to leak publishers’ data or use it to target other publishers’ inventory.

But publishers need to let down their guard and share more information about their inventory so that buyers can find offers that work for them. Once they do, the whole process will get streamlined: Armed with data, advertisers will be prepared – even eager – to pay the true value for the inventory that best meets their needs; they could uncover new site sections that they previously might not have thought of buying and that publishers wouldn’t have thought to recommend.

By solving the programmatic direct discovery challenge, publishers will be able to reach a broader customer base and improve the yield on their inventory. Advertisers will eliminate risk, reduce waste and find the audiences that matter to them. That’s surely a prize worth pursuing.

Follow Turn (@TurnPlatform) and AdExchanger (@adexchanger) on Twitter.

5 Comments

  1. Good article, Joshua, well written. One challenge seems to be who shares data first. For example, you say "But publishers need to let down their guard and share more information about their inventory so that buyers can find offers that work for them." We hear from our publishers almost the exact opposite: advertisers should share what they are looking for with publishers, so the publishers can find inventory that will work for them. Either way, the side that has the data has pricing power, so the other side is unwilling to give up that advantage. Any thoughts on how to bridge this gap?

    -ts-

    Reply
  2. I'd echo Tom's comments and add, if we're really talking quid pro quo all in the service of growing the industry, then sharing conversions/leads/sales - whatever the campaign goal actually is can help the sell side be a better partner. We all know the click is a bankrupt metric but since sellers are rarely ever given access to this info, they are forced to rely on click optimization or feedback from the buyer which usually takes the form of 'it's not working here, move some $ over there' or worse, 'you're cancelled'. We already have a lot of transparency, voluntary and involuntary - sharing conversion data would be a win for all parties.

    Reply
  3. Hi Tom,

    Great question. No matter which direct the data goes, publishers always have control over the floor prices they set. The challenge for buyers is that publisher systems are not set up to enable 1000's of advertisers to send dozens of segments and change the definitions of these custom segments instantaneously. DMPs enable this, but it doesn't make technical sense to send rapidly changing information of custom segments to every publisher. Since publishers run their business according to a contextual dimension, the proposed solution is to help reduce risk to buyers by understanding the overlap of their custom segments with each publisher's packages of inventory. This removes the risk to buyers, hence they no longer need to discount the price they pay to account for this risk, and thus increases the yield for publishers. Another benefit I learned from one of the largest publishers is that via this form of automation it unlocks additional competition for the same inventory, since direct sales teams cannot afford to work with smaller advertisers, which further increases yield for publishers.

    Best,
    Joshua

    Reply
  4. Despite the conflicts (mostly over-exaggerated) of the programatic marketplace, it has been a great boon to both media buyers and sellers: publishers can expose all inventory for bid, buyers can purchase what they want. Whether buying a new home or an ad impression, no shopper wants to buy a sight unseen -- access to data so that the individual watching the screen is not anonymous is imperative. Unbiased, trusted platforms that sit in the middle of the sellers and buyers must exist and will be the solution to the supply-side fears and the transparency demands of the buyers. Certainly non-trivial, especially with some of the nascent marketing channels (social, addressable TV), but not an unsolvable problem. If things were easy, it would be no fun.

    Jason Burke
    Head of Product, clypd
    @clypd

    Reply

Add a comment

XHTML: You can use these tags: <a href="" title=""> <abbr title=""> <acronym title=""> <b> <blockquote cite=""> <cite> <code> <del datetime=""> <em> <i> <q cite=""> <s> <strike> <strong>