Last week we began our discussion of the impact of brand spend on the programmatic space with a look at data and analytics and how this continued shift is placing increased emphasis on innovation in these areas. But the power of brand spend is impacting more than just data and analytics. The pace of developments in data, measurement, and workflow efficiency tools in digital media buying by major advertisers is having far-reaching impact on the evolution of programmatic tools and solutions for publishers.
When Japanese company Dentsu Aegis was asked about its M&A activity in late 2016—first taking a majority stake in Merkle, a US-based performance marketing agency, and then acquiring programmatic shop Accordant Media—CEO Jerry Buhlmann said, “Programmatic is the way of working in the future and we’ll continue to invest in people who have the skills and technology to support that.” This investment is a key part of Dentsu’s growth plan, and Buhlmann said he envisions the company “approaching 100% programmatic by 2020.”
Other major players are making a similar investment in programmatic proficiency. As of January 2017, more than a quarter of Havas Group’s 20,000 employees had taken a new certification program called “100% Programmatic,” run through the company’s online education platform, Havas University. Of those that completed the course, 96% reported feeling more confident when discussing programmatic. “Programmatic is the new reality,” said Alfonso Rodes Vila, deputy CEO of Havas Group, chairman of Havas Group Spain, and CEO of Havas Media Group. “Whatever our role is, we must understand audiences, addressable content and personalized messages.” Andrew Benett, global CEO of Havas Worldwide and Havas Creative Group, echoed his sentiment: “Programmatic is more than media. It reflects a total change in our industry […] We have always used audience data and personalized messaging to drive creative solutions, and now we can do that through automation to achieve scale.”
Part II: Ad Decisioning & Ad Serving
With eMarketer’s prediction that 67% of the nearly $33 billion advertisers spent on digital display advertising in 2016 in the U.S. alone flowed via programmatic pipes, increasing to 72% by the end of 2017, it’s clear that publishers need more than just advanced data and analytics tools to navigate the industry-wide change Benett describes above.
In reality, publishers need an entire advertising stack that is capable of meeting the real-time, dynamic pricing and data driven buying of programmatic, for example, and one that also can provide them with a holistic view across all of their inventory—both programmatic and non-programmatic —in order to make smart decisions and optimize inventory. Unfortunately, most publishers that engage in programmatic advertising today have opted to retrofit their ad tech stacks, originally designed and built for direct sold campaigns, to support more than one type of transaction. Large publishers, for example, use a variety of point-solutions to monetize their inventory—from selling premium ads via programmatic guaranteed deals executed by an SSP to setting up private marketplaces with a handful of buyers for RTB-based access to other ad space and, in some cases, also leaning on open markets to monetize unsold inventory, either via a waterfall or using a header bidding setup.
The problem with this scenario is multifold. While the number of programmatic solutions and tech vendors available today is unprecedented, each new opportunity and capability tends to come with a new piece of technology that must be integrated into their existing infrastructure. Even as far back as September 2015, more than 70% of US publishing professionals surveyed by AdMonsters used six or more ad tech partners (nearly 25% relied on 11 or more)—and the number of ad tech solutions and vendors available has only continued to grow in the interim.
Most ad servers used by publishers today were developed for direct, non-programmatic, deals. As a result, header bidding and later wrappers and container tags were developed as reactive attempts to deal with the immense growth of programmatic channels and the inefficiencies of retrofitting traditional ad stacks to deal with the new, real-time demands being places on legacy ad servers.
The Legacy Ad Server Problem
As brands become savvier about programmatic buying, publishers need to invest in future-proofing their business for further programmatic growth. Combined with our enterprise-grade solutions for data and analytics, flexible integration options, holistic inventory management and demand channel optimization, our Unified Ad Server solves for all the challenges publishers face when clinging to legacy solutions like Google’s DFP ad server.
Interestingly, it appears that now even Google is beginning to recognize the importance of these features, if recent developments around EBDA (Exchange Bidding in Dynamic Allocation) are any indication. Arguably, ad decisioning tactics like header bidding arose in large part because publishers were unhappy that Google gave its own DoubleClick Ad Exchange (AdX) an advantaged position within the DFP ad server’s auction dynamics across publisher inventory, essentially giving itself a preferential bidding position, impeding competition and stifling eCPM rates.
What Does This Mean for Publishers?
Publishers have a difficult decision to make: during a transitionary period throughout the publishing industry with constrained revenue streams, they’re faced with having to move beyond their dependency on legacy technologies and over reliance on an increasingly unbalanced relationship with Google.
That’s why we developed a unified ad server, specifically designed and built for the demands of monetizing and optimizing both programmatic and non-programmatic sales channels with a single view across publishers’ complete inventory, regardless of screen, format or channel. Perhaps most importantly, however, publishers need to put their support behind independent solutions offered by companies that don’t have a vested interest in the auction and aren’t competing against their own publishers or giving themselves an unfair advantage over demand partners.
Check back for the final installation of “The Impact of Programmatic Brand Spend” blog series, which will examine the future of programmatic buying and selling that we like to call the “Biddable IO,” a new tactic emerging as a result of increased brand spend in programmatic. To find out more about PubMatic’s Unified Ad Server, visit www.pubmatic.com/products/unified-ad-server.