Talk the Talk: Sound Like a TV and Digital Native

I’ve decided to launch a series of posts to define important terms and outline why they are important to you and your business. First in the series, let’s start with one of the hottest trends in advertising today, “Programmatic Advertising.”

In October, 2014 eMarketer conducted a study where they predicted that “US programmatic digital display ad spending will grow 137.1% to eclipse $10 billion this year, accounting for 45.0% of the US digital display advertising market.” Okay, so what exactly is Programmatic Advertising and why should you care?

• Programmatic Digital Advertising:Programmatic advertising uses high-speed auction technology to manage the purchase of digital advertising such as banners, video ads and mobile ads across inventory from thousands of publishers who have placed their open inventory on an exchange. It works much like auctions for search keywords.  
• Programmatic TV Advertising: Less technology driven and less automated than programmatic digital advertising, programmatic TV advertising uses audience based viewing information to spot buy commercials instead of simply relying on GRPs. This type of buying enables advertisers to find key audiences in less competitive or less intuitive places.
• Exchange:The Exchange is the auction market or meeting place of publishers and advertisers who are bidding to place their ads on available inventory. Google, Yahoo and Facebook all operate very large exchanges with billions of available ad impressions and thousands of active advertisers.
• Real Time Bidding (RTB):RTB is the process of buying and selling ads in real-time, literally as a user is visiting a website and the page is loading. RTB indicates that prices and placements are dynamic and will go to the highest bid by advertisers on the exchange just like an auction.
• Programmatic Direct or Automated Guaranteed: Programmatic direct is a way to automate direct ad buys using programmatic technology but to still ensure that the advertiser gets the prices and placements that they want. This allows publishers and advertisers to secure guaranteed Upfront commitments on price and inventory. This also allows publishers the ability to automate the Insertion Order (IO) process.

Programmatic direct and other offerings that help direct sales are where publishers can gain the most value. There is a widespread fear and mistrust of “automation” on the sales side, but in reality it’s what enables salespeople to put their best foot forward and spend their time on high-ROI activities.

To keep pace with the future of digital sales, publishers should take a holistic look at their inventory and consider an integrated approach to automating their advertising business. This means ensuring that their direct and programmatic sales not only coexist, but also intertwine. In our recent Client Advisory Board panel we discussed how publishers are innovating to increase profits. We found that respondents currently earn less than 20% of revenue from programmatic but 64% estimate that programmatic will account for 20% to 40% of revenue one year from now.

The opinions and points of view expressed in this commentary are exclusively the views of the author and do not necessarily represent the views of MediaVillage management or associated bloggers.