Programmatic Guaranteed: The Promises And Perils

paulbannisterThe Sell Sider” is a column written for the sell side of the digital media community.

Today’s column is written by Paul Bannister, co-founder and executive vice president at CafeMedia.

One of the most desired outcomes of programmatic advertising is the ability to reserve inventory for a guaranteed buy.

Getting guaranteed access to brand-safe, premium inventory while also being able to overlay first- and third-party data, apply campaign-level frequency caps and choose which impressions to buy is an attractive proposition for any buyer. Sellers also see more ways to guarantee future revenue as a positive development.

That said, several complexities make the promise of programmatic guaranteed hard to achieve. Partly, the programmatic guaranteed solutions available today are very much in their infancy – more promise than reality. There can also be an overreliance on technology in general – just because a solution seems great doesn’t mean that buyers and sellers can step back from the execution.

First, I am defining programmatic guaranteed as the use of RTB protocol to select and buy impressions, with an overlaid guarantee of delivery or spend. Reserving inventory and issuing the IO via sales automation is a connected concept but not what I'm referring to here.

The fundamental benefit in a programmatic guaranteed deal versus a standard direct deal is also its greatest challenge: The buyer incorporates audience targeting data and decides which impressions to buy. In a standard direct deal, the publisher owns or licenses any audience data and dictates when the ad server should deliver an impression. Moving that control to the buy side is a great thing in theory, but in reality it creates a large disconnect between the inventory owner and buyer.

Publishers always want to ensure that guaranteed deals deliver in full. Because the seller no longer controls what data, filters, frequency caps and other targeting parameters will be used during the campaign, the process of forecasting delivery and determining the guarantee becomes more of a wild guess. This inability to accurately forecast delivery can either leave publishers massively underselling inventory or, more likely, heavily overselling due to targeting parameters they may be unaware of or can’t account for.

Pricing is often a compounding factor in programmatic direct deals. There is still a strong perception that programmatic buying should be cheap. That's false to begin with, but doubly false for programmatic direct deals. Buyers get the same protections and guarantees of direct deals with the additional benefit of complete control over what they are buying.

However, due to the market perception that programmatic pricing must be efficient, programmatic guaranteed deals are often negotiated at lower rates than direct deals, making them even harder to deliver. Pricing for top-of-the-waterfall access sets up a deal for success, as it values the inventory as the true first-look access that a buyer is getting.

The Road To Success

To make programmatic guaranteed a reality, communication is key for buyers and sellers. Buyers need to be extremely upfront about every targeting parameter they will overlay so sellers can accurately forecast and guarantee a realistic number. No filter is too small and no third-party data source too irrelevant to mention. From brand safety thresholds and frequency capping to viewability rates and standards, every element of the buy should be documented and discussed in advance.

During the campaign, an open dialogue is critical to make sure both buyers and sellers are fully aware of how the deal is pacing, any issues that have come up or changes in the targeting requirements. As KPIs are evaluated, the buyer and seller should continue to collaborate on any changes they should collectively make to guarantee success. Just as in a direct deal, a kick-off call and clear KPI and targeting documentation is critical.

Maximizing scale is also key to ensuring that a programmatic guaranteed deal delivers in full. Making sure that each targeting requirement is only applied on one side is a major strategy that can help increase scale. This doesn't mean that all targeting must be done by buyer or seller; for each parameter, the buyer and seller should determine who is responsible. If a buyer wants to use purchase-based targeting data, for example, the seller should not apply redundant targeting. If the seller's inventory is, by default, highly viewable, the buyer should not apply any viewability filters.

Another tactic to set up programmatic guaranteed deals for success is a tiered program. A buyer can create separate strategies within a campaign with reduced levels of targeting. The buyer prioritizes delivery toward the top, most strictly targeted tiers, but ensures that the campaign delivers in full by supplementing with more relaxed tiers. For example, the top-tier strategy might include purchase-based targeting, demographic targeting, a tight frequency cap and very high viewability requirements. A second tier might remove the purchase-based targeting, and the lowest tier might only have the viewability requirements. This approach gives both sides more levers to help keep the campaign pacing on track.

Tech Solutions

A number of technology companies have developed platforms that claim to solve for all or some of these issues.

Many are not full-stack solutions in the sense that they only solve for the issues on the publisher side or buyer side. But without the ad server, supply-side platform and demand-side platform completely in sync, a technical solution will often fail to deliver on its promise.

Even in a fully integrated solution, such as what Google is moving toward with DFP-AdX-DBM, the technology won't live up to expectations unless communication is strong and all parties are invested in success. Plus, without a move to a flat tax for ad tech, buyers and sellers will be hard pressed to see worth in giving up 20% to 30% of the deal value to third parties.

Programmatic guaranteed has great potential to keep pushing the industry forward and give buyers and sellers more ways to optimize for their needs. But it's important for us to move forward with our eyes open to the potential challenges so we can collectively solve for them and help programmatic guaranteed live up to its promise.

Follow Paul Bannister (@pbannist), CafeMedia (@CafeMedia) and AdExchanger (@adexchanger) on Twitter.

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