Programmatic Advantages And Disadvantages
The survey asked publishers to cite the advantages and disadvantages of programmatic. The top three disadvantages stated across all publishers were commoditization of product, publisher lack of expertise and undermining of direct relationships.
Smaller publishers (under $1 million in revenue) were most concerned about commoditizing product, and also were more likely to be concerned about programmatic lowering CPMs. The biggest concern for publishers with more than $10 million in annual revenue was lack of transparency. They were also significantly more concerned about its ability to undermine direct relationships.
“For many of us who have been in the industry for decades, there is a sense that we’re losing touch with our most important customers, that it’s going to alienate us from the way we made deals over lunch for the past 50 years,” Ammerman said of the results. “I would argue that technology is facilitating these transactions and making it work more smoothly. We’ll still need direct communication with clients.”
When it came to advantages of programmatic, most cited increased overall revenue, followed by better access to quality advertisers and cost savings. Larger publishers cited these advantages in greater numbers than smaller publishers, who were more likely to respond “none of the above” to these advantages.
Ammerman said the advantages of programmatic related to inventory quality are very real.
“There’s no doubt that Fortune 500 companies are increasingly using programmatic,” he said. “If you’re small a small publisher, and have not had access to Target, P&G, automotive inventory, programmatic opens up the opportunity for those ads to run on your niche content.”
Most publishers are still dipping their toes into programmatic waters: More than a third had zero programmatic revenue. The next biggest group had 1% to 10% of revenue coming from programmatic.
But when Ammerman evaluated the results by publisher size, he saw that most of those with zero revenue from programmatic were smaller publishers. Among larger publishers, programmatic contributed much more to revenue.
However, 73% of publishers surveyed expect programmatic revenue to increase next year.
The survey also asked publishers to share programmatic CPMs, which led to varied results. Ammerman noted he didn’t specific to publishers how to account for video CPMs, for example, which may have skewed responses. Fifty-eight percent of publishers said their average CPM was $3 or less.
“The big takeaway is that the bulge in the python peaks in the $2 range, and that’s very consistent with what I hear industrywide,” Ammerman explained. “The largest volume of programmatic is being traded in the $2 range, but there is inventory trading at the $4 to $6 and $10 to $12 CPM range.”
Programmatic By Publisher Size
Most publishers who sell programmatically don’t have anyone dedicated to programmatic sales, the survey found. But in one subgroup, publishers with more than $10 million in revenue, 100% had an employee dedicated to programmatic, signaling a large gap.
“What’s holding them back is this lack of expertise,” Ammerman said. “It’s, ‘I don’t understand it, and I don’t know where to hire people who understand it and are experienced in programmatic as a discipline.’ That’s one of the reasons you see organizations not having a management person assigned to it.”
Even small organizations need to have a point person on programmatic, even if it’s just one of their roles. “Someone in the less than $1 million-sized business needs to be tasked with the responsibility. It’s kind of like a 12-step recovery program: The first step is admitting you have a problem.”
In fact, some small publishers may sell inventory programmatically but not know it, since unsold inventory may be outsourced to third parties for sale, Ammerman said.
But contrast, all of the largest publishers employed dedicated managers – like a VP of sales – to oversee programmatic. Mid-level publishers (with between $1 million to $10 million in revenue) were more likely to have an ad ops manager as their programmatic point person instead of a manager or salesperson.
Getting more employees involved in programmatic, and having ownership over it, should be a priority, Ammerman said. He encourages publishers to learn for themselves now, while everyone is still muddling through.
“Right now, there’s no points taken off for asking silly questions,” Ammerman said. It’s okay to be where many are: “[K]nowing the general parameters, but getting lost when it comes down to the details of trading tactics, building automated guaranteed opportunities and managing private marketplaces.”
“As data and automation take root in the marketplace, we need to play in the space or get left behind,” Ammerman said. “I think people need to get over their fear, and plunge in now.”