Programmatic advertising has completely revolutionized the industry. It has facilitated the online ad buying and selling process, making it more efficient and easier. The fact that advertisers and publishers can now access ad exchanges or other tools to do business instead of negotiating directly is what makes programmatic advertising so popular. Indeed, it’s been estimated that up to 88% of digital display ad dollars in the U.S. will be exchanged programmatically by 2021.
In this ecosystem, it seems one area of digital advertising keeps growing at a rapid rate — programmatic direct. Today, programmatic direct accounts for the greatest share of programmatic ad spending. In fact, direct deals accounted for 58% in 2018. In the U.S, one in every two dollars spent programmatically runs through a direct deal.
What we see now is an increasing number of buyers and sellers who are embracing the direct deal. This is because it gives them more control of traditional reservations, higher ad yield, and it also comes with efficiency, targeting, and reach of programmatic buying. What more could we want?
Despite the increasing popularity of direct deals, some buyers and sellers still confuse programmatic direct with private marketplace and other available methods. That’s why we’ve decided to examine this deal type, its benefits, and more.
So, what is programmatic direct?
Programmatic direct is a media-buying process that is similar to the historical method whereby salespeople and advertisers used to meet to negotiate prices and strike a deal. With this approach, an ad transaction occurs directly between a publisher and an advertiser, facilitated by some programmatic ad buying system.
Basically, the word “programmatic” points out that the buying and selling of an ad inventory will take place using software in an automated manner. The word “direct” signals that the publisher and the advertiser will make all deals directly, i.e. without any involvement from a middleman.
Furthermore, programmatic direct automates direct ad buys for specific campaigns. The buyer accepts an offer from the publisher to purchase the inventory directly at an agreed price.
For instance, a fitness publisher might put the aerobic sections of their website up for sale. A health advertiser looking to reach aerobic enthusiasts may want to buy ads on these sections. However, the advertiser seeks to reach only women and run the campaign in Canada. The buyer and seller need programmatic direct in order to provide the targeting and additional options to reach the specified audience.
Now that we know the programmatic direct definition, let’s see how exactly the process unfolds!
Programmatic direct offers direct-sold, guaranteed inventory that many advertisers are after. With this deal, the advertiser purchases a fixed CPM. This means that they agree to pay a predetermined CPM. But how does programmatic direct work? The media-buying process follows these steps:
And that’s basically the process involved in this deal. Premium inventory is often sold through programmatic direct which is coming from renowned publishers (think The Washington Post and The New York Times). These sellers don’t offer a certain percentage of their ad space on the open market because they can request a premium price, which increases their ad revenue.
Programmatic direct is quite useful for publishers and advertisers because it ensures premium ad spaces are filled. This deal is becoming increasingly popular in the programmatic advertising landscape because of various advantages it brings to the table:
The online advertising landscape offers many opportunities to publishers and advertisers looking to earn a steady revenue or expand the reach of their ads. Programmatic direct is especially helpful for those premium publishers who want to bypass real-time auctions and deliver their ad space directly to advertisers.
Programmatic direct enables the buyer and the seller to work directly in the advertising ecosystem. They negotiate the price and agree on various terms before they set up advertising campaigns. How is this different from real-time bidding (RTB)? The best way to understand this is to look at the definition of RTB.
RTB is an auction-based bidding method in which a number of advertisers compete against each other to display ads on the websites of publishers. It is the most popular way of buying online media, serving billions of ads to users on a daily basis.
Unlike programmatic direct where the publisher and the advertisers have a one-on-one interaction, real-time bidding gathers a wide range of advertisers who are trying to place the highest bid in order to purchase an ad space.
Now, if you’re just starting out in the online advertising world, it might seem difficult to make heads or tails with all the available deals. That’s why we’ll help you understand how private marketplaces are different from programmatic direct deals.
Also known as a PMP or private auctions, a private marketplace is something of an invite-only variation of the real-time bidding method. Unlike open auctions, PMPs gather a select number of advertisers who are bidding against one another to purchase a premium ad inventory. This method is typically used by major publishers like Forbes or The Wall Street Journal.
In the private marketplace setting, there are no middlemen such as ad exchanges or supply-side platforms. This enables advertisers to have more control over where they advertise. PMPs benefit both publishers and advertisers. The latter get paid premium rates for their ad space, while the former get preferential access to this space before it is offered in open auctions.
Their invite-only approach is the primary thing that sets private marketplaces apart from programmatic direct.
Sometimes people confuse programmatic direct with programmatic guaranteed because they have similar names. While they are not completely wrong, you should look at programmatic guaranteed as a type of programmatic deal that comes with certain rules.
Namely, programmatic direct may entail guaranteed and non-guaranteed deals. Programmatic guaranteed is a method that allows advertisers to reserve a fixed number of impressions at a fixed price. Publishers basically vouch that they will deliver a specified amount of volumes when agreeing to this deal.
Once they strike a deal, the publisher’s ad server sends a request to the advertiser’s demand-side platform (DSP) along with the deal ID. The agreed-upon price and the impressions are visible in the DSP.