P is for Programmatic
In our latest addition to the A-Z of adtech, our Programmatic wiz, Paul Gubbins, breaks down and simplifies the different types of programmatic advertising. If you need a short and sweet guide to programmatic, you’ve come to the right place!
Why are there so many types of programmatic advertising?
With more flavours than Baskin Robbins, it is easy to understand how marketers and publishers get overwhelmed with the variety of programmatic buying and selling models available. It used to be straight forward. Buyers negotiated price and volume of impressions to be served directly with the publisher and cemented this commitment via a signed insertion order (or IO).
During the first generation of programmatic, publishers sent their unsold inventory to supply-side platforms (SSPs) and exchanges to increase sell-through rates beyond what their direct sales teams could achieve. This captured incremental demand by exposing their site traffic to demand-side platforms (DSPs). Back then these were just cookie hunters; the idea of ‘context’ wasn’t a thing.
This practice from publishers to adopt sell-side tech encouraged SSPs to build a new model for selling, referred to as the ‘Private Marketplace’. The PMP buying model found more air time in the press and on agency trading floors but it wasn’t without its challenges. PMPs enabled buyers to broker deals with publishers directly. They then used SSPs as the pipes in which to deliver their campaigns in a data-driven and programmatic way via their licensed DSPs.
However, there were no commitments from publishers to send a certain amount of traffic to any given PMP. This frustrated buyers as many campaigns would struggle to deliver in full and they never had delivery issues when booking via the IO. Many buyers felt that inventory being sent to PMPs was a lower priority in a publisher’s ad server than that allocated to a direct sales team.
Finally, publishers often felt short-changed due to an under-delivery from the buy-side. Because DSPs were designed to buy audience, not context, demand often fell short. This resulted in many bidders pointing at deal IDs but passing up on incoming bid requests due to the lack of an audience match.
Step forward Automated Guaranteed (AG), hailed as the next evolution of the PMP. Cast your mind back two years, before the noise of AI, header bidding and GDPR, everybody was releasing PR around AG.
Here was a new way of automating publishers direct sales processes, empowering those on the buy-side with a more efficient way to book media. But AG didn’t get the traction or adoption its PR hailed, due to one key factor: it is not programmatic. It’s actually a great initiative that enables buyers to reserve inventory on a planned site in an automated way.
Unruly’s view is that programmatic means ad buys transacted via the OpenRTB protocol with an ability to harness data at the impression level, not simply the process of automation.
Programmatic guaranteed (PG) is the relatively new kid on the block (some call it PMP’G’ or the biddable IO). PG enables programmatic buyers to device ID or cookie match an audience with a publisher prior to flight dates and, crucially, pre-agree a fixed price so long as the publisher sends the correct ID on their bid request via SSP/exchange to the buyer’s DSP.
PG gets people excited because it enables buyers to deal with publishers directly like the traditional PMP. Publishers feel a level of confidence around demand commitment more like their favoured IO from yesteryear. PG enables a buyer to get the same priority in a publisher’s ad server and most importantly, the buy can be transacted in a data-driven and programmatic way via the OpenRTB protocol (in English, via their DSPs).
Publishers know programmatic demand will drive their future revenues, but there is no way they will let a buying mechanic erode their yield. Buyers know that top tier publisher supply and data costs, and programmatic execution does not translate to cheaper CPMs.
Unruly predicts that PG will become the default buying model for the majority of brand spend in display and video advertising. AG will move on to conquer DOOH and other areas that are born out of the explosive growth in IoT / OTT that don’t require the same depth of impression-level granularity that programmatic brings to display PG.
One thing is for sure; in the future of ad buying, programmatic is guaranteed!