Bringing premium publishers and advertisers together through programmatic private marketplaces
This article was originally published on the Personagraph blog on December 2nd, 2015
In 1995 the first ad server was launched by FocaLink Media Services which proved to be the dawn of major innovations in advertising technology as ad serving increasingly became a job for algorithms. Today, advertisers and publishers no longer have to discuss and negotiate every single ad campaign, the SSPs, DSPs, ad networks and a plethora of other adtech services automated the majority of the human labour of direct selling. This is called programmatic advertising. However, many of the premium publishers – a fuzzy definition but essentially meaning publishers of high quality and high value content – were long unconvinced of the advantages of automating their ad inventory sales process because of fears of low CPMs, especially on mobile where a universal tracking cookie is not available.
First banner ad from AT&T on HotWired.com
The inevitability of programmatic
But today it seems no one can avoid programmatic anymore, which is a good thing. The fact is that selling ad inventory directly is hopelessly cumbersome and fails to take advantage of numerous advantages in terms of targeting and optimization. What we see now is that more and more premium (mobile) publishers start to adopt programmatic through so called private marketplaces (PMP).
In PMPs premium publishers and advertisers can come together to mutually benefit from the advantages of programmatic advertising. Publishers can set floor prices, blacklist/whitelist brands, regulate supply, and offer better targeting and transparency capabilities through unique first party data. Advertisers can be sure their ads are shown on high quality outlets (ensuring brand safety), buy inventory enriched with data on the per impression level, and can do so without having to pick up the phone once, saving tremendous amounts of work hours.
PMPs and mobile video advertising
Private marketplaces are an especially big opportunity for mobile video advertising. Mobile video ads will take around half of total online video ad spend by 2018. In 2014, Opera Mediaworks saw 12.8% of impressions on mobile coming from video ads while it provided 55% of total revenue. What makes mobile video special is that soon brand advertisers are forced to reach their younger audiences on mobile as they increasingly ditch watching traditional TV for consuming content on mobile devices. Brand advertisers are big spenders and even a small shift in ad spend from TV to mobile means massive growth for the latter. However, so far brand advertisers have been reluctant because of a lack of targeting and universal measurement capabilities. Clearly mobile video has the highest revenue potential for publishers, but only if they can offer the right data. Adopting data programmatic platforms are therefore a necessity for premium publishers to benefit from this shift and PMPs reduce risk for both parties, slowly easing them into programmatic and RTB.
What to expect
At one point in the not so distant future not even the biggest premium publishers can get away with selling their inventory directly anymore. Buying ad inventory based on per impression level data will become the norm for advertisers, forcing all publishers to deliver. Fears for low CPMs are largely ungrounded, especially in private marketplaces where publishers can regulate their inventory to a very large extent. A strong case can be made for CPMs actually increasing when more premium inventory is offered programmatically because it will finally offer brand advertisers with a wide enough reach of premium ad inventory to make it worthwhile to spend more resources here. When brand advertisers get the hang of programmatic mobile (video) advertising we can expect a large influx of ad dollars, driving up eCPMs in the process. Furthermore, the scale at which these advertisers usually operates allows for significant cost reductions for publishers as they auction off large pools of inventory at once.