Advertisers and publishers alike look for the most efficient, profitable and simple solution that would let them achieve their goals and earn more revenue. In search of a better option, market players turn to programmatic direct, one of the widespread methods of media buying. But is it really better for achieving exceptional results? Let’s dive into this media buying method and find out how it compares with real-time auctions in open marketplaces.
What is programmatic direct?
There are several terms synonymous with programmatic direct advertising: programmatic premium, programmatic guaranteed, programmatic reserved or automated guaranteed. They are all equally used to denote the method of media buying when advertisers agree to purchase inventory directly from selected publishers at fixed CPM rates. This involves both automated purchases (using programmatic technology) and direct negotiations between partners (as well as in traditional media buying).
Essentially, programmatic direct uses the same automation mechanisms as RTB marketplaces to ensure direct ad sales. The difference is that it tries to increase the efficiency of media buying and lessen overhead costs that the standard human interactions entail with the help of technology. Programmatic direct should not be confused with private marketplaces. In the latter case, there are several participants that trade inventory with each other. Whereas programmatic guaranteed implies that two partners negotiate and agree on the inventory purchase within this partnership.
Demand partners look for premium inventory that would bring them a highly engaged audience and more paying customers. Supply partners, on the other hand, are concerned with selling inventory at higher prices with higher fill rates. This is what programmatic direct advertising promises to deliver. There are several important advantages that automated guaranteed can provide.
- Yield optimization
For publishers, guaranteed contracts can provide better fill rates and higher yield. When advertisers buy inventory in advance, publishers can sell remnant traffic from the placements that weren’t sold and optimize the revenue.
- Control over inventory
Both advertisers and publishers get more opportunities to control the process and outcome of media buying. They know exactly who is selling and purchasing inventory, so there are less concerns of fraudulent activities or brand safety. Publishers can work on integrating creatives into the website design and UX, while advertisers can be sure that their ads will not be served in an unsafe environment.
- Data insights
Advertisers get better understanding of the value of the traffic with programmatic guaranteed, because publishers can provide deeper insights about the audience behaviour and user profiles. Publishers, in their turn, can measure revenue they receive in a more efficient way.
At the same time, programmatic direct advertising is not a perfect solution for a number of reasons.
- No guarantees
With all the assumed certainty that programmatic direct should provide, in reality, there are no guarantees for publishers that all their inventory will be sold. More often than not, publishers end up with remnant traffic they didn’t sell directly that they have to sell by other methods.
- High entry threshold
Automated guaranteed is suitable for big brands that operate large budgets. Smaller brands simply won’t have enough funds to purchase inventory directly from premium publishers. In the same way, only top publishers can be sure that they will get the full benefit from reserved inventory. Smaller, less prestigious websites and apps are unlikely to find direct partners, who would want to pay higher prices for their inventory.
- Not enough flexibility
The demand for mobile and video content increases, but top publishers cannot keep up and satisfy the need for better performing ad placements. Advertisers can rarely find premium publishers that offer all types of content to place a variety of ad formats. Therefore, advertisers look for more options on private marketplaces and RTB exchanges.
- Higher price for advertisers
On average, advertisers pay higher prices for the inventory they agree to buy in advance, compared to private marketplaces and open exchanges.
Programmatic direct advertising or real-time bidding?
The main question that advertisers ask is whether programmatic guaranteed is really worth additional time and money? The answer is — yes it is. However, mostly for big brands that have large budgets dedicated to advertising, which let them purchase premium inventory from top publishers.
For smaller advertisers, programmatic direct cannot be the only method of choice. Simply because it is unlikely that the demand for inventory will be satisfied by one, or even several direct publishers. The same goes for publishers that don’t have worldwide reach and acclaim. The chances that they will successfully sell all their inventory at all times only to direct partners are scarce.
Automated guaranteed advertising is great in theory, with its promise of transparency, better data reports for advertisers and publishers and in general, more simple and straightforward interaction without intermediaries.
But in reality, premium inventory is not always available through premium direct, and sometimes advertisers pay more for the same quality as they would get in open exchanges. It is possible to find premium partners even through RTB marketplaces. Finding reliable intermediaries can mitigate many concerns about the quality and transparency of partnership.
In the end, brands and publishers that prefer to operate via direct negotiations still have to turn to RTB marketplaces to buy and sell inventory in the amount they need.
Working by the programmatic direct method is still a privilege of big brands and top publishers. For others, it’s just one of the techniques to get better quality inventory at guaranteed volumes. Both demand and supply partners can find it beneficial, but the state of the market is such as to make programmatic direct work best alongside other solutions, such as RTB marketplaces.
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