Advertising Technology

Defining Programmatic Guaranteed: The Problems with RTB for Premium Inventory

By Roy Pereira, Founder and CEO of  Shiny Ads, a self-serve advertising platform for digital publishers.

There is little doubt that real-time bidding (RTB) entered the mainstream in 2012. eMarketer reported that RTB ad spending grew 98% from 2011 to almost $2 billion dollars in the U.S. With a market this hot, it’s not surprising that more vendors want to make it even hotter.

But is the industry making a mistake by using RTB platforms for all types of inventory? A different technology is needed to sell premium inventory. A programmatic guaranteed platform must combine automation with publisher controls to address these needs.

RTB clearly has its strengths when it comes to buying and selling individual ad impressions in real-time. It creates efficiencies and increased targeting capabilities for the advertisers so that they can reach the audience while optimizing their spend.

However, RTB is driving down CPMs as supply increases and premium inventory is treated the same as ad space on lower value websites. This is great for advertisers, ad networks and smaller websites but not so good for premium publishers.

That’s why some publishers continue to express reservations about implementing RTB for premium inventory so the majority is non-guaranteed. And while publishers struggle with falling CPMs, brand advertisers want a certain number of impressions and control the sites where the ads are displayed for their campaigns.

Guaranteed inventory on premium sites allows marketers to plan and execute their campaigns while premium publishers can sell inventory at higher CPMs since they control the price. It sounds like a win-win but the premium inventory buying and selling processes is extremely inefficient with many steps involved in buying an ad campaign not to mention the fact that it’s also a non-real-time event.

While numbers vary, some publishers associate as much as $10,000 in costs to service a premium advertising campaign because it’s largely manual. There is the initial interaction by phone with the sales person to place the order and the finance person handles the paperwork by fax. Then, to get started, the ad operations person runs the campaign using spreadsheets to manage multiple creative changes and report on performance metrics to optimize the campaign.

It’s clear that purchasing premium (guaranteed, class-1) inventory needs to be automated and that’s why vendors have tried to push RTB and then private marketplaces to fill this gap. But, a programmatic guaranteed platform must manage all aspects of a premium ad campaign, including:

  • End-to-end automation of inventory forecasts, line item changes, creative insertion and modification, campaign management and monitoring;
  • Guarantee the inventory that the campaign demands through direct integration into the “last-mile” ad server;
  • Complete control over pricing, targeting and packaging of premium inventory for the publisher; and
  • Ownership of the relationship and data by the publisher since advertisers see and interact with the publisher’s brand through a white-labeled interface.

By automating the steps of this process in real-time, a programmatic guaranteed solution can help the publisher realize time and cost-savings. Publishers can sell more premium inventory without using ad exchanges, RTB platforms or private marketplaces, while keeping their premium inventory priced at class 1 rates.

An end-to-end programmatic guaranteed solution is about creating efficiencies in the sales process and optimizing the steps so that the publisher is not paying too much to take these orders. But it’s not about replacing the ad sales team; it’s about allowing direct sales to focus on the more complex ad sales while ad ops can process more sales without more work.

Think of programmatic guaranteed solutions as the automated teller machine (ATM) of premium inventory sales. The ATM is designed to automate standard banking transactions so that the teller can focus on face-to-face interactions. That’s what’s going to happen with guaranteed, class 1 inventory.

A programmatic guaranteed solution will automate the standard transactions so the direct sales team can do what they do best – the larger, custom ad sales that involve more touch points and face time with clients. At the same time, ad ops and finance can process more transactions more efficiently.

Does programmatic guaranteed sound like something an RTB platform can do? RTB platforms are ideal for remnant inventory as they efficiently find the pricing sweet spot based on supply and demand, driving revenues lower for publisher’s class-1 inventory. Luxury brands control the pricing and distribution for their products; for example, Porsche wouldn’t sell their cars for an unknown price at an auction. So why would premium publishers sell their top inventory on an exchange?

Programmatic guaranteed automates the sales process for guaranteed inventory AND gives the publisher complete control.  It helps the ad sales team close more deals so the publisher generates more revenues. It’s a unique set of technologies designed to address the inefficiencies in premium advertising today.