Demystifying Programmatic: A Guide For Premium Publishers

richardjalichandrasellsiderThe Sell-Sider” is a column written by the sell side of the digital media community.

Today’s column is written by Richard Jalichandra, CEO at iSocket.

Programmatic media buying, from RTB to fixed-price reserved, is quickly becoming the way of the future.

It’s clear why buyers are interested in programmatic —increased efficiency and lower costs — but there are major efficiency and cost-saving benefits for publishers too.

That said, even when the need for programmatic is clear, the programmatic options available to premium publishers are not always so easy to navigate.

Bringing it back to basics, there are five categories of ad selling available to premium publishers, four of which are programmatic. Here’s an overview of all five, with a look at why you might want to use them, Keep in mind that many publishers use some combination of these methods, if not all five.

1. Manual Direct Sales

We’re all familiar with this method of ad sales. Your sales team responds to RFPs, sends out IOs and your ad ops team manually traffics a deal once it’s agreed upon. This method has a high overhead cost, but is still where the majority of spending lives.

Why is manual direct employed so frequently? It allows you to create unique packages for different partners, while giving you guarantees and predictability for revenue.

2. Automated Fixed Price, Reserved

This method of sales has the most in common with manual direct. Sales are executed directly between a single buyer and seller, inventory is well defined and guaranteed and prices are fixed. The difference is in the execution. While an automated reserved buy deal might still be negotiated over the phone between a publisher’s sales rep and a media buyer, the actual ad serving is executed programmatically once the digital proposal is executed into a digital insertion order.

This category is often referred to as programmatic direct, or programmatic reserved, but the basic premise is the same, whatever you call it: an automated way to sell reserved inventory directly to a buyer. The key difference between this and other programmatic sales method is that the tech stack here includes a direct integration into your ad server. This means that no pre-allocation inventory is necessary, unlike private and public marketplaces. You always have full control over who buys and at what price, and once a buy is made, the inventory is reserved just as it would be with any direct sale. With that control, there is no risk of channel conflict and, increasingly, technology is actually being purpose-built to help sales and ad operations people automate their workflows.

Why automated reserved? It preserves benefits of direct buying, while lowering overhead costs.

3. Fixed Price, Unreserved Via Deal ID

Deal ID is another programmatic mechanism that lets you programmatically execute fixed-price deals with a given buyer, on a nonguaranteed basis. What does that mean? Deal ID buys are still technically auctions, but you can encode specific buyer information into the exchange, which lets you set specific pricing and inventory access for every one of your buyers. Unlike automated reserved, there’s no guarantee with deal IDs — you commit to a price, and provide access to inventory, but there’s no mechanism for securing an upfront commitment from a buyer before a deal is executed.

Why deal ID? With buyers clamoring for programmatic access, many publishers have had to get creative with ways to provide access, without eroding control over who can buy which inventory at which price. Deal IDs are one way to let buyers access inventory programmatically, while preserving price and inventory controls. Campaigns still need to be manually added into the ad server, unlike automated reserved, which is directly integrated.

4. Private Exchanges

Private exchanges, like Deal ID, rely on a bid protocol and limited participation, but unlike Deal ID, prices are variable and unfixed. A typical private exchange involves one publisher, but can be a group of publishers, with restrictions on buyer access and price floors. Once invited to the exchange, buyers still enter and auction, with the highest bid winning, provided the bids are above a floor.

For many publishers, private exchanges are a useful layer between directly sold inventory and inventory that’s sold on the open exchange, without limitations. And with that, we reach our final method.

5. Open Exchanges

Open exchanges are what we typically think of when talking about RTB — nonfixed, unreserved biddable inventory, without price floors or limits on buyer access. This method of sales is what you’re probably using your SSP for, and in general, this is the easiest way to monetize whatever inventory isn’t sold directly or via a deal ID.

Adoption of programmatic strategies has thus far been led by the buy side, with many publishers hesitant to start selling programmatically. But there are dramatic efficiency gains to be made on the sell side as well, and programmatic doesn’t have to be a four-letter word if you have the right strategies in place.

Follow Richard Jalichandra (@jalichandra), iSocket (@iSocket) and AdExchanger (@adexchanger) on Twitter.

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