Programmatic Insights

Why Programmatic Needs to Revert Back to the Old Boy’s Club (Not Literally) in 2018

By January 26, 2018 February 22nd, 2018 No Comments

In 2012, adoption of Programmatic Media Buying was still in its infancy. From my perspective, CPM’s were declining on most publishers, Social Networks created a new source of ad inventory, Ad Networks were failing, more inventory was being launched to exchanges and many Sales Reps were challenged with balancing the sales of upfront buys (direct reservation buying) vs. programmatic buying. Mostly agencies and some brands were starting to dip their toes in the programmatic waters. Luckily, I was fortunate to be part of one of them at Scottrade. No, not the Scottrade Center where the Blues play, but the online discount brokerage.

At the time, we worked with over 25 publishers and had a healthy eight figure online ad spend; So, you can imagine how delighted they were when we told them we were moving a portion of our budgets to programmatic. Our message was clear, get on board or get left behind. Sales reps were probably thinking, “shift our entire revenue model? Well, not so fast!”

Our Paid Media Manager had been at Scottrade for years and he built personal relationships with most of the top 20 publishers in our vertical. So, when he proposed the idea of moving budgets to Programmatic, he came to the partnership with a few principles in exchange for an initial test:

  1. Transparency – We will let you know what’s working and what’s not. We will not pull budget because something isn’t working, we will have a conversation to find the efficiencies, together. Additionally, we share our reporting and let you know how your inventory compares to other partners – Not many brands did that at the time.
  2. Trust – We will test a finite budget over a finite timeframe. In return for the proposed spend, we want full transparency into where we are running, what price our bids are clearing at, and more insight into the auctions (pricing floors, ceilings, etc.). We also asked for insight into categorical findings that might help drive our buying, or bidding, strategies.
  3. First Look – To start, we wanted first right of refusal for impressions that we deemed as valuable and we were willing to pay more for those users. That’s when we grabbed their attention.

As our Return on Ad Spend (ROAS) improved over the year, programmatic slowly became another staple in our buying strategy and publisher teams became more comfortable with how to monetize nearly 100% of their inventory, while also increasing yields – this sort of return actually flew in the face of the perception at the time, as most publishers thought the programmatic era would only catalyze a race to the bottom for inventory pricing.

Unfortunately, the last year has presented challenges in the space and some brands began picking up a megaphone to communicate their frustration for partners to help fix the supply chain. In my experience, the problem with that strategy is you leave everyone out to dry and there’s no accountability at the partner level, which creates a lack of trust among your partners and vendors. Then again, not everyone is holding a nine-figure pocket book with ad spend, which is exactly why the “little guy” may be better served playing ball and working with vendors instead of lashing out.

In 2018, we are expecting more agencies and brands to combat this problem by taking control of their media buying contracts or request more transparency into their dCPM’s (ad Tech + Media + Service Fees).  Additionally, look for brands and trading desks to begin building relationships with SSP’s that show more favorability towards transparency, load rates, viewability, etc.

Optimizing the Supply Chain:
The ANA has already started doing their part by building an eco-system of publishers who have signed on with this type of ethos. “Trust, safety, and transparency have dominated the digital media conversation in recent years,” ANA CEO Bob Liodice said in announcing the initiative.  “The supply chain’s complexity and opacity net digital advertisers as little as 30 to 40 cents of working media for every dollar spent. Digital ROI has become harder and harder to achieve. The ANA’s mission is to reverse this troubling trend and elevate digital working media to 70 cents or higher.  Doing so will convert $20 billion into working media.”

We are still finding better efficiencies than the days of Run of Site direct buys, but the key to any technology is to understand the purpose of the stack. Brands and the ANA will be more likely to succeed if they build deep partnerships that are fulfilled with open communication and a test, learn and adjust approach, like the early days of programmatic with sales reps leading the  on-boarding phase of programmatic-partnership. There’s too much money at stake and there will always be industry predators that don’t care about the long-term effects, to not approach this industry with partnership in mind.

Author: Bryan Dodson, Client Strategist @ Coegi

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