Let’s Call It What It Is: Programmatic Direct

john-ramey-ddt“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 John Ramey, CEO of isocket

At the AdExchanger Programmatic I/O conference in San Francisco last week, while people schmoozed at the rooftop after-party, an unofficial meeting was held down the hall.

Leaders from isocket, Rare Crowds, AppNexus, Yieldex, ShinyAds, Adslot and Legolas Media set aside their competitive instincts and got together to talk about the different terminology being thrown around in the “programmatic” space. The group’s goal was to settle on some standards that would move the industry forward.

Everyone easily agreed that “programmatic premium,” although quickly generating industry buzz, is a vague term that generates more confusion than understanding. As the companies primarily driving this new space, the group decided that “programmatic direct” better captures the innovation actually taking place, and they all agreed to stick with this lingo.

Why do we need consensus?

Around 2011, chatter started building about a new form of programmatic piping to do direct, straight-to-publisher, guaranteed ad campaigns – the types of campaigns traditionally bought with RFPs, IOs and too much slow manual work. It was time to bring more technology to that grossly outdated process, automating the pieces humans shouldn’t be spending time on so they can focus more on planning, selling and customized campaigns.

This layer of differentiated inventory, the business needs and models supporting it, and the technology to transact it needed to be fundamentally different than what already existed (otherwise why create something new?) so distinctions needed to be drawn between this new space and RTB/private exchanges – which are, after all, supplied with non-guaranteed inventory from the bottom of a publisher’s ad server and sold in an auction.

From 2012 into 2013, this new space started heating up, and naturally it needed a name. The word “premium” was often used to distinguish the inventory from what’s available in the spot markets. For a lot of people, “programmatic premium” just sounded better. The alliteration rolled off the tongue.

But problems arose. Critics understandably poked holes in the word, claiming the definition was too squishy and that one man’s trash is another man’s treasure. Then, because of the vague definition, some remnant tech providers started using the label even though they’re clearly not in the same space. People spent more time debating the term’s meaning than focusing on the bona fide differences between this new layer of programmatic business and RTB/private exchanges.

So the label “premium” needed to go. What is actually happening in these deals? Direct, straight-to-specific-publisher orders. Guaranteed reserved inventory. Those words are much more solid and accurate.

But what about “programmatic?”

For many years the word programmatic wholly meant real-time bidding, not because of some constraint in the technical definition but because RTB was the only form of programmatic trading and thus became synonymous with programmatic. Because RTB is almost always used on lower-quality, non-reserved inventory, programmatic also became synonymous with remnant.

But programmatic simply means machines talking to each other through APIs. It benefits no one to complicate things for the sake of marketing lingo. Programmatic is what this new space is, and programmatic is the best label.

Below each of the participants weighs in on why “Programmatic Direct” was the right choice.

John Ramey, Founder CEO of isocket

“From Day One the word ‘premium’ always made us wince a little. Words like ‘direct’ and ‘guaranteed’ are much clearer. Frankly, I can’t wait until things progress to the point where instead of saying ‘programmatic direct sales’ we just say ‘direct sales.’ People use technology today in direct sales, but we don’t have to specify ‘faxed direct sales’ or ‘Excel-driven direct sales.’ Shouldn’t emailing contracts and creatives back and forth be the minority now?”

Tom Shields, Co-Founder CSO of Yieldex

“The industry has long understood that direct sales is fundamentally different from the bidded ecosystem. We’ve heard consistently from our dozens of top 100 customers that terms like ‘programmatic’ and ‘premium’ are too confusing, and while we previously advocated ‘automated direct,’ we are happy to help adopt ‘programmatic direct’ as a consistent, well-defined term in our industry. At Yieldex, we work with direct sales teams on some of these key differences: guaranteed impressions which require accurate forecasting, and guaranteed pricing which requires solid supply and demand knowledge, as we help to bring the efficiency of RTB to the direct sales process.”

Eric Picard, Founder CEO of Rare Crowds

“Programmatic premium as a term causes too much confusion, especially as RTB inventory sources keep adding more inventory that most agree is ‘premium quality.’ The right way to describe this different channel from RTB is ‘programmatic direct,’ reflecting an automated, integrated buying and selling channel directly connected to the primary publisher ad server. These systems get direct access to a publisher’s ad inventory; this is a guaranteed, ‘premium’ and non-remnant inventory channel that offers the buyer direct access and the publisher lower cost of sales while maintaining the primary value of their sales team, managing the customer relationship and negotiating price.”

Jonathon Shaevitz, CEO of Legolas Media

“Our goal at Legolas Media is to help educate buyers and sellers on the differences between all the technology solutions coming into the market. This agreement upon ‘programmatic direct’ as the nomenclature for this new channel will help alleviate some of the confusion. The biggest challenge is to help the industry recognize that programmatic does not mean RTB; it only means the automation of the transactions. As publishers and advertisers better understand how programmatic direct delivers unique value by providing quality impressions with certainty in price, volume and delivery through a programmatic technology layer, the market will expand accordingly.”

Raj Chauhan, President of Adslot

“At the end of the day, defining that a deal is direct and whether it is guaranteed or non-guaranteed is the true line in the sand.”

Roy Pereira, Founder CEO of ShinyAds

“Programmatic direct at its core is about removing inefficiencies from buying and selling class-1 inventory directly by the advertiser and publisher. While that inventory can be categorized as premium, reserved, guaranteed, first-look, direct sold or class-1, the term ‘direct’ is meant to represent the notion that that inventory is being handled directly on the publisher’s ad server, and that that transaction happens direct from the advertiser to the publisher with minimal interference. Shiny Ads and other ad-tech vendors formed a group to define this industry term as it best describes how publishers can use automation to make the selling process simpler, while advertisers can buy inventory direct on sites with the same guarantees they would get when dealing with the publishers’ ad sales team.”

Andy Atherton, AppNexus

“I have previously advocated in favor of ‘programmatic reserve,’ so ‘programmatic direct’ is actually my second choice. It’s a fairly close second though, and the benefits of a) finally burying the word ‘premium’ and, more importantly, b) getting the consensus required to consistently call this important new market the same thing put ‘programmatic direct’ over the top.”

Joe Pych, NextMark

“For many people today, the word ‘programmatic’ connotes real-time bidding on remnant inventory in exchanges because RTB has historically been the only buying method with end-to-end process automation. That’s changing now with technical breakthroughs that are enabling end-to-end process automation of direct sales. You’ll soon have two types of streamlined sales: programmatic direct and programmatic RTB. Although very different buying methods, both bring sorely needed efficiency to the buying process and neatly complement one another.”

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  1. Not a bad attempt to name the category, but when you actually have to talk to people, negotiate pricing, navigate price floors, consider channel conflict and all those non-programatic things from seven years ago, programatic anything seems to be the wrong tag. We package this inventory class as Private Deals or Preferred Deals (blame Google for naming it). Programatic is just how the sausage is made, and we know how much buyers care about that.

    • Ben Trenda

      Eric, you are correct: what you describe would not be programmatic. But what you describe is not what we’re talking about. What you’re describing is actually a form of RTB, is still fundamentally remnant inventory, and is ironically much less efficient than programmatic direct.

  2. Aaron Kechley

    When it comes to exchange-cleared inventory, I challenge why the term “direct” makes sense. In these cases an exchange will act as a middle man and will claim 10-20% of the deal–there is nothing direct about that!

    • That’s actually the point Aaron. isocket and this space is anything but exchange-cleared. We only do straight-to-specific-publisher guaranteed deals. Not an auction. These programmatic pipes are like the fancy new fax machine sitting in the sales team office.

  3. Makes perfect sense when you look at the definition of programatic being of, having, advocating, resembling, or following a plan, policy, or program. Private Deals or Preferred Deals just sounds a bit black box and back room. Programmatic Direct seems to best represent how publishers and advertisers can both leverage automation to gain efficiencies.

    Great to see industry leaders coming together and try to bring some clarity to what is an (unnecessarily) overly complicated space. Bring on Don Draper and the machine…..

  4. Ben, Private Exchanges are getting traction on premium inventory with incredible velocity. Over the past six months, the layer of differentiated inventory that is not hitting the exchanges has slowly disappeared. The inventory is no longer coming from the bottom of the ad server waterfall, it’s coming from the top as well. There is home page inventory from top five publishers hitting these markets… would anyone argue that’s not premium?

    • We’ve publicly said PE’s are a good thing and have a place in the world (and many of the folks on our team built the original ones). But they are not going to accomplish the idea of direct sales the way originally hyped. It’s great there is better inventory coming into the PE environment – but is it guaranteed? No.

      Remember, the point of this story was to get away from the fuzziness of the word premium and focus on the mechanics. Guaranteed, order driven transactions from an RFP/IO are different than those through a PE.

      That’s why X+1 buys through us too 😉

  5. Kristine Welker

    Interesting discussion …. I am not debating the purpose, passion or even the need for the consensus – in fact I agree with most of what was discussed. But, where is the publisher’s voice in all of this, were they part of the “group” that came together – after all it is our inventory and audience. Happy to join the next group discussion …. Kristine Welker

    • Fair question Kristine. It was more of a vendor thing – the new entrants were trying to put their own spin on it / make their own TLA’s and it was causing confusion.

      Most of our senior team are former publishers and that’s who we’ve served in this space for years, so it was definitely baked in and guided by all our publishers experiences.

      Always welcome to join though!

      • Denise Colella

        Kristine, you are absolutely right. Vendors should spend less time on what three letter acronym will get the RFP and more time on solving for publisher’s problems,be it workflow or revenue. Ultimately our clients will decide what, if any, box each vendor fits in.

    • Good question, Kristine. To be honest, at Yieldex we talked to a few of our publisher clients and they basically said they don’t care what we call it as long as we are all consistent. So that’s what we went for. And getting the naming thing out of the way lets us all focus on providing actual value by both finding new revenue for you and decreasing your costs.

  6. Chris Karl

    If a Premium Publisher wants to drive revenue on their terms while accepting advertiser data on a guaranteed basis, pushing their audience data to the buyer, enabling a premium auction, and introducing session depth as a variable in the buy, I think it’s fair to call this type of media buying and selling “programmatic”. If a Publisher is enabling a fixed price buy on a guaranteed basis via a pipe, I think it’s appropriate to call that a media buy… not a programmatic buy. I don’t think any of the conversation above has created any clarity on what we are calling “programmatic direct”. It’s too early to create standards when the technology and business models being deployed by many companies are so widely differentiated.