Programmatic ad buying is simply defined as the purchasing and fulfilment of digital advertising through technology. The promise of programmatic ad buying is to create efficiency which leads to lower costs, which can then be translated to improved performance and return on investment.
Has this concept of “efficiency” driven the convoluted view that programmatic is a channel siloed for driving performance through cheap media, regardless of the quality and type of inventory and different forms of execution such as Programmatic Guaranteed (PG), and Private Market Places (PMP)?
This question arises as publishers face CPM warfare in the world of programmatic. As soon as their ‘premium’ inventory is set to be executed via PMP and/or PG, pushbacks for lower CPMs occur when the exact same inventory offered as a direct IO is accepted without question.
To shed light on the question of whether programmatic is equated with cheap media and quick returns, this article explores differing viewpoints starting with what counts as ‘premium’ inventory, how publishers establish themselves as premium and how to drive our industry to focus on the “value” rather than “CPM”.
WHAT IS PREMIUM INVENTORY?
The definition of premiumness varies across buyers but the consensus is that premium inventory equates to that which garners targeted demand. Generating such demand can be driven by different factors.
As there is a plethora of inventory available on the internet it could come from scarcity despite greater demand. This could be organic scarcity driven by limited inventory or even artificial in which the inventory available for purchase is restricted.
Additionally, demand could come from the added value that the inventory comes with. This includes pairing the inventory with the publisher’s first party data, packaging the inventory with special formats, or other off-the-shelf solutions.
Quality can also equate to premium inventory. Factors that indicate quality may include viewability scores, brand safety, low fraud, and the content that the ad is delivered against.
WHAT CAN PUBLISHERS DO TO CONTROL THE VALUE OF THEIR INVENTORY?
Controlling the value of inventory seems to be synonymous with how sellers are presenting their inventory in the market.
This includes maintaining homogeneity across the offers via direct IO sales versus programmatic (PMPs/PG). This might mean not having the waterfall setup where programmatic only gets access to remnant inventory and incentivising sales teams to push programmatic buys and offer the same across direct and programmatic.
Moreover, publishers should productize their offerings and have clear distinctions between them. This could be done on the basis of value added such as data (first party login info) or quality (high viewability). By packaging their inventory this way, the publishers could better control the value conversation beginning with what is accessible via open exchange, PMP, and PG.
HOW DO WE AS AN INDUSTRY DRIVE THE ‘VALUE’ OVER ‘CPM’ CONVERSATION?
All parties, buyers and sellers, can drive this conversation by ensuring that their clients are maximizing the value of inventory while transacting programmatically. This would mainly start by educating their buyers on what ‘value’ is and how to achieve this.
Buyers should educate their clients on the benefits of enabling programmatic against just focusing on being cost efficient. This includes showcasing the fact that programmatic unlocks more technological points. It attaches different metrics to an impression which results in more ways to evaluate the quality of the impression. Additionally, beyond just performance, other considerations such as brand building need to be taken into account.
Sellers, on the other hand, should make an effort to educate clients on the value of programmatic even when it’s easy to just sell at a higher price with a direct IO. This could include the value or type of inventory that is being made accessible through open exchange versus PMPs versus PGs.
Programmatic buying is intended to drive cost efficiency in buying quality inventory. Fundamentally there is a need for all parties to align or define what “quality” inventory means to them, how to evaluate it, and how to curate it as it pertains to programmatic. The definition of “quality” differs from marketers, buyers, and publishers. Publishers should be able to position their “premium” status from a content/audience perspective, but also work with buyers on inventory that meets buyers definitions such as scale, viewability, brand safety etc.
Moreover, the viewpoints above provide initiatives on how to shift the conversation away from CPMs to focusing on value. This discussion is a great indicator that although there might not be straightforward and conclusive solutions, there are continual areas for improvement, growth, knowledge sharing and education as we delve into the issues at hand in our industry.