The Future of Programmatic: Building a Better Programmatic Advertising Business

We recently surveyed more than 85 premium digital publishing executives from top publishers regarding the state of their programmatic advertising business and the results were clear – programmatic is here to stay despite major problems and minor revenue. Eighty-one percent of the publishers we surveyed are currently using some form of programmatic advertising, including open exchanges and private auctions. While they consider programmatic the future of their business, they admit there are some hurdles to cross – specifically around heavy manual labor, low CPMs and low revenue.

Join us on February 9th for a live discussion with a panel of leading publishers about their concerns and plans for the future of digital advertising. Be sure to download and review the whitepaper as well.

HOW DO WE SELL THIS?

If you are a publisher wondering, ‘How do I sell programmatic most profitably?’ you’re not alone. Our survey uncovered that 35% of publishers have their digital sellers sell private and guaranteed programmatic, but have a separate team that manages RTB.  But other publishers like CBS put resources into training their sellers to sell both RTB and premium programmatic because their advertisers prefer it that way. Per Dennis Colon, Vice President of Ad Operations and Strategy at CBS Interactive, “It’s all one sales strategy. It’s part of the standard offering. We’re moving to a place where we’re not replacing sales, we’re empowering them with a new revenue stream.” While empowering the sales team is important, there’s a drawback. Our survey results showed that only 15% of sellers are empowered to put multichannel deals together using a streamlined technology. That means these deals are a chore to put together, requiring coordination across other teams and technologies and taking time away from active selling.

WHERE’S MY MONEY?

Our research uncovered that half of the publishers we surveyed are making less than 5% of their digital advertising revenue from programmatic. While that includes the 20% who haven’t tried programmatic yet, it still is a very low number. It’s the premium publishers who are truly suffering as they struggle to offer programmatic but have to bear the costs and growing pains that come with it. It also doesn’t help that publishers are at the end of the line in the programmatic payout, earning whatever programmatic revenue that isn’t being taken by agency trading desks, Google, Facebook, and other major technology middle men.

PROGRAMMATIC MEANS AUTOMATION BUT IT’S NOT AUTOMATIC?

For most publishers, programmatic RTB does not yield the same eCPMs as direct sold inventory. Many reasons factor into this, including variability, lack of guarantees and limited customization. Custom programmatic deals can include viewability and audience targeting but creating and executing these deals are incredibly cumbersome. It involves more technologies and the increasing complexities are coupled with decreased CPMs. Jeff Burkett, Sr. Director Sales Operations and Product Strategy at The Washington Post noted “Premium and automated guaranteed have a lot of promise for our industry, but there is so much more work needed in order to accomplish the true goal of efficiency and automation. Today, many programmatic IOs still require the same amount of manual work as business through the traditional channels.” As you see, managing these complexities are not so simple.

WHAT’S WITH THE HEADER BIDDING CRAZE?

According to our survey, only 10% of publishers are implementing header bidding. Publishers are hoping that header bidding can solve some of their issues. In theory, header bidding increases CPMs by increasing competition and could also mitigate some manual labor of managing a waterfall. But today neither of those things is true. Few publishers have automated header bidding to be optimized and still have most of their programmatic revenue in a waterfall. It also is incredibly cumbersome to manage, takes a long time to implement and slows down publisher websites.

WHAT SHOULD I TAKE AWAY FROM THIS?

With the coming advancement of programmatic RTB and premium programmatic across not only digital, but also TV, publishers have an opportunity to improve what has become a very complex digital advertising business. While the industry works to provide better technology and process, publishers must make their voices heard to ensure that the resulting ecosystem works in their favor, minimizing manual labor and encouraging fair and transparent optimization.