Product Or Pipe?
Programmatic is just a pipe when buyers use it to access the same inventory at the same price.
But when publishers start doing reach extension, slicing up their audience or sprinkling in first-party data, programmatic becomes a product – which in turn requires dedicated sales expertise.
At Hulu, programmatic is just a form of execution, in part because Hulu sells in-demand digital video. Programmatic has never been a way for direct-response buyers to squeeze out efficiencies.
“We have major upfront commitments with most of the holding companies,” Fleming said. “We don’t care what bucket the money comes from, it’s more [about] how you want to buy us.”
Hulu prices its inventory the same regardless of how it’s bought, Fleming said. And advertisers see consistent quality no matter the execution, in part because Hulu only charges for completed views.
Wenner Media comes down on the “pipes” side too.
“Our private marketplaces are the same products as direct: our video inventory, our highest-impact placements and our most viewable inventory,” said Blythe Brock, director of programmatic at Wenner Media. “The way a buyer wants to execute is up to them.”
Pandora also “sells programmatic as an execution tactic,” said Jeremy Randol, VP of programmatic sales strategy at the audio platform.
But at Live Nation Entertainment, programmatic is a unique product sold by a dedicated sales team.
“Programmatic is a separate sales channel we have to productize, staff and resource against,” said Finnegan, who joined Live Nation two years ago to launch a programmatic offering around its unique data.
Live Nation’s data lets advertisers reach people according to musical taste, both on its properties and across the web.
Live Nation also uses programmatic to offer flexible pricing.
“There are different strategies and different budgets allocated for different goals,” said Finnegan, an agency vet who logged time at Xaxis. A client with a remarketing goal might need a different rate or access to inventory than one with a branding goal.
The Economist’s first-party data has also turned programmatic into a product.
The Economist sells out of its on-site inventory most of the year, but uses programmatic to offer flexible pricing via audience extension.
“We created a sliding scale for percentage delivered to Economist.com versus audience extension,” Zitz said. “It’s a lower entry point for clients, and if they have a small audience we can use that to improve frequencies of exposure.”
Time Inc. sees programmatic both ways.
“As a product, it’s about the level of targeting and reach that buyers want,” said Kavata Mbondo, VP of digital revenue strategy and operations for Time Inc. “As the tech is evolving, [programmatic] is also becoming an execution mechanism. The tech allows us to do sponsorships like March Madness with Microsoft.”
While data can productize programmatic, Mbondo sees the biggest players in the industry, Facebook and Google, requiring ads to be bought through their pipes.
“When it comes to how revenue is moving through the broader market, it’s all flowing through the Facebooks and Googles” she said. “They transact through software, and those are the places we look as an indicator of where things are going. Our goal is to deliver to a market buying through Facebook, Google and Hulu."
The Shifting Organizational Structure of Programmatic
Private marketplace deals that used to be passed off to programmatic salespeople are increasingly being handled by direct sellers. As direct sellers take on more and more programmatic deals, programmatic salespeople start to look more like sales consultants or sales engineers, and less like a separate sales force.
Hulu is the poster child for full integration. All salespeople sell everything.
“We have extremely strong leadership, and [ad sales SVP] Peter Naylor from the get-go said he wanted this to be about automation, not a separate sales force or option,” said Fleming, who heads up advanced TV at Hulu.
Fleming considers himself a consultant to the sellers, not a seller: “I’m helping the existing sales team understand the vernacular, positioning and our efforts on advanced TV. On the flip side, I’m helping pick all the tech partners we are going to leverage for advanced TV.”
In contrast, Pandora and Live Nation view their programmatic sales teams as standalone specialists who can put together deals based on their differentiated technical knowledge.
Other integrated teams, like those at Time Inc., Wenner Media and The Economist, fall somewhere in between. They rely on programmatic sellers to lead conversations with certain brands and agencies, while assisting on others.
To adapt in a rapidly shifting space, programmatic salespeople tend to wear many hats: educating the main sales team, choosing tech partners and initiating sales relationships themselves. Because of that, they often have different job history than direct sellers.
Randol prefers to hire people with “a mindset that is focused on data and audience and [who] understand how ad-serving systems and DSPs work.” He’s hired his programmatic team from trading desks, DSPs and data-heavy ad networks.
Sales, he can teach, but programmatic is much more difficult to master. That said, many programmatic sellers started selling digital.
One reason the programmatic sales role encompasses so many facets is that it grew out of a yield optimization role. Publishers used to cut deals with ad networks, which later shifted to deals with SSPs and trading desks.
Then, the creation of private marketplaces allowed publishers to go brand direct.
“The shift we took at NBC and Pandora was positioning programmatic as an execution tactic through private exchange deals,” recalled Pandora’s Randol, who worked for NBCUniversal as programmatic began to take off in 2010.
This evolution initially put direct sellers on guard. As programmatic teams moved from indirect to direct relationships with buyers, they worried programmatic would cannibalize their direct business – and compensation.
Both integrated and standalone teams usually create a comp structure that won’t punish a direct seller if a deal moves to a programmatic execution. Those that didn’t learned the hard way that it created bad incentives that harmed relationships – and overall revenue.
“We recognized needing to solve that early on,” Randol said. “We operate under a shadow budget. Both the programmatic specialists and traditional brand sellers are comped on programmatic revenue. A dollar is a dollar.”
The responsibility for the sale, Randol said, no longer sits with the back-office ops people: “It’s with the SVPs of marketing, CMOs and senior agency folks.”
Since many publishers now serve the same clients both through programmatic and direct, Wenner Media set up a tracking system to manage client accounts with both programmatic and direct sales components. Brock described it as a “cheat sheet with five different lanes” that determines who should be the main point of contact, based on factors like how the deal originated.
The Future In Flux
Because programmatic deals often require technical conversations not all salespeople are prepared to have yet, Wenner’s Brock doesn’t see programmatic roles fading away soon, even though private marketplaces resemble direct deals.
But Zitz predicts aggressive change.
“I see my role being dissolved as programmatic becomes more mainstream, and most of my skills to be taught to the ad ops and sales team over the next few years,” she said. “They’ll become the experts. You’re not going to need a dedicated person figuring that out.”
When that happens, Zitz – who serves as director of global data solutions as well as programmatic – sees moving into a more business development or product development role.
Pandora’s Randol sees the need for a programmatic sales team, but envisions a future where selling programmatic might become the status quo.
“A few hundred of our sellers are cool with [programmatic],” he said. “Our brand sellers who cover programmatic-centric client have learned the space well. But we see a lot of value in having subject matter experts, people who understand the intricacies.
“There could be a day where the programmatic team is sucked up into the broader sales organization, but I’m not sure we are there yet. Time will tell.”