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The Cold, Hard Truth

Deep Dives with Choueiri Group

The Cold, Hard Truth

Daniel Young, Yield, Inventory & Programmatic Director at DMS, explains how the regional marketing industry gets programmatic wrong, and he tells it like it is.

How has the understanding of programmatic advertising evolved?

It’s now beyond just a fad. Globally, it’s probably a lot more widely accepted for what it is – a way to facilitate the buying and selling ads in a far more seamless and streamlined way. Unfortunately, in the region, it is still used as a mechanism for, often, murkiness and a lack of transparency. And it’s still a way for agencies to capture margins. Essentially, programmatic, from the technology standpoint, should aid and facilitate what we’re doing, making our lives easier by eliminating a lot of the manual, heavy-lifting processes involved in getting campaigns live and directed to the right user with the right message. However, although it has picked up massively, the technology is having the old processes imposed on it.

Instead of having a simplified setup and optimizing holistically the campaign across a consolidated media view, often, everything is still being set up in a very fragmented manner. You still see manual line items, almost as if they’ve been prepared for old-style reporting. To the point that agencies are imposing naming conventions of line items on publishers. The mentality is: This is what we’ve got; this is the process that we’ve had; this is what we need you to do.

Is this due to a reluctance to change or a lack of education?

Both. There’s partially a reluctance and partially an inability. In many ways, the agency still sees the programmatic team as a black box; the programmatic team see themselves as a margin-maker and a money-maker for the agency. So, when something gets planned and sold a certain way from a client, it then gets thrown to the programmatic team to execute with the processes, viewpoints and outputs expected and predefined. Traders may now have more support, more headcount than before, but they don’t have the ability to make an independent decision. There’s a lack of understanding from the people above them who are expecting something that they’ve always had and nothing more. These people are not taking the time to understand the true operational process and the power that can be obtained by a truly programmatic execution.

Where do you place the blame within the ecosystem?

It’s one of those things where everyone blames someone else. The agencies say that’s what the client wants. The clients are sometimes lacking understanding of what is truly possible, of what are the implications of them screwing down the price. The publishers say that the agency is not pushing back, not listening, or has its own agenda. Of course they do. Everyone’s running their business. If there’s money to be had, no one wants to rock the boat and no one wants to push back for fear of missing out, because there is such an abundance of inventory. Everyone’s to blame and no one is really taking the time to assess.

This is quite typical of this industry in general. How does the programmatic technology enhance this state of play?

The adoption of programmatic is going quicker because of some of this, but then it’s also going quicker in the wrong areas. Some people still use it as this black box that is cheap or doesn’t need much thinking, like a plug & play. Clients feel that they could actually do it themself, so why do they need the agency? The agencies feel that they can just buy the space themselves, so why would they need to talk to the publisher? There’s this misnomer around what programmatic truly is. Yes, you can get seamless buys at a cheap rate, but that’s not where the biggest benefit is. Programmatic tools are being leveraged because programmatic is being pigeonholed as quick and cheap.

How to best approach programmatic advertising, then?

Consider the buying methods available programmatically, each being best for particular situations.  Programmatic Guaranteed, for example, is best used in situations when you need to lock in or secure scarce or hard-to-reach inventory – perhaps video, certain high impact, unique creatives or even custom audiences. For this, you can expect to pay a premium. It may not, however, be ideal for a buyer who values a bit more flexibility and ability to optimize. That would be better delivered on a Preferred Deal.  This method allows for a fixed rate, eliminating any rate fluctuations – which is great for planning, but also give the buyer far more control. Auctions within PMP could also enable this but without the security of a fixed CPM; there is however the prospect of capitalizing on opportunities price-wise, if the supply exceeds demand. The risk here, and in the open auction, is the volatility of pricing, pacing or delivery, as well as the lack of specific, safe, or even sufficient inventory that meets particular buying guidelines (viewability, completion, frequency, etc).

Ultimately, the best approach would be a combination, most likely of PG and PD (could incorporate auction buys too).  This way, a trader/buyer can carve out a portion of a budget to secure specific, hard to reach inventory on a PG campaign, and use the remainder to optimize the overall performance (whether that is reach, frequency, eCPM, viewable CPM, impression goals, etc.) through leveraging the increased control, flexibility, and fluidity of non-guaranteed transaction types. Not to mention the buyer-specific optimization tools that they have at their disposal and centralized/complete view of the campaign. Both of which are limited on the sell side, which only sees the portion of activity present on their sites, and unfortunately often lacks the same algorithmic optimization tools.

If this kind of approach was built into things at the beginning of the planning process, then it would no doubt be beneficial for all parties involved and aid in the overall healthy growth of programmatic and the industry in general.

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