Programmatic advertising has completely revolutionized the industry by making the ad buying and selling process much more efficient and easier. However, programmatic advertising includes more than just fully-automated auctions. Programmatic direct advertising has been experiencing an increase in popularity among both advertisers and publishers. But what is programmatic direct exactly and how does it work?
What Is Programmatic Direct?
Programmatic direct is a form of programmatic ad trading. It includes deals made directly (hence the name) between an advertiser and a publisher with the facilitation of a programmatic advertising platform.
In a way, programmatic direct advertising is similar to old-school ad selling. Advertisers and ad space owners meet, negotiate conditions and prices, and sign contracts. The main difference, however, is that programmatic advertising is much more efficient and automated.
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How Does Programmatic Direct Work?
So how does this process actually look behind the scenes? Usually, a publisher and an advertiser establish contact through an ad network, and the publisher offers a piece or package of ad inventory for a certain CPM. The advertiser may accept the offer or renegotiate the conditions until both parties reach an agreement. Upon striking a deal, the advertiser proceeds to run their ad campaign programmatically using the publisher’s ad space.
Let’s apply this to an example. The publisher is a gardening blog looking to sell ad space on their website. The advertiser, a florist’s shop, wants to reach a target audience of people interested in gardening. The publisher may reach out to the advertiser or vice versa, and they eventually strike a deal. As a result of this deal, the publisher monetizes the blog and generates ad revenue, while the advertiser gains access to premium ad inventory and a precisely-targeted audience.
Read More: What Is Programmatic Video Advertising
Programmatic Direct vs. Programmatic Guaranteed
The advertising industry is riddled with somewhat vague terminology, and programmatic direct is no exception. Many use the terms programmatic direct and programmatic guaranteed interchangeably, but this isn’t entirely correct. While the two terms are connected, they denote different things. Namely, programmatic guaranteed can be considered a subtype of programmatic direct where advertisers can reserve a fixed number of impressions at a fixed price. In other words, the publisher guarantees a certain number of impressions and a certain CPM.
Programmatic Direct vs. Real-Time Bidding
Another important distinction to make is between programmatic direct and real-time bidding (RTB). While programmatic direct enables the publisher and the advertiser to work directly, RTB is an auction-based bidding method in which multiple advertisers have to compete for an impression. Unlike with programmatic direct, there is no real one-on-one interaction.
Programmatic Direct vs. PMP
A private marketplace, also known as PMP, is basically an invite-only version of RTB. There are still multiple advertisers bidding for the same piece of ad inventory, but these are a select group of bidders picked by the publisher. In a way, private marketplaces are a combination of programmatic direct and RTB.
Pros and Cons of Programmatic Direct for Publishers
Programmatic direct is a useful tool for publishers to sell premium inventory at higher prices. On the other hand, it is far more time-consuming than a regular real-time auction. Here’s a quick overview of the drawbacks and benefits of programmatic direct for publishers.
Pros:
- Premium Rates — Since direct deals are mainly reserved for premium inventory, this also means premium CPMs. In other words, publishers can negotiate much higher prices for their ad space and bring in higher ad yield.
- Better Control — Direct buying allows publishers better insights and a higher level of control over things such as audience targeting, impression and revenue tracking, and so on.
- High Transparency — Direct deals also allow for a higher level of transparency, especially in terms of bot traffic and other forms of ad fraud.
- Automation — Although programmatic direct is a lengthier process than fully-automated auctions, it is still more automated, within the programmatic direct platform, than traditional advertising deals.
Cons:
- Not for everybody — Since direct deals are designed for premium inventory, it goes without saying that only premium publishers can really benefit from them.
- More time-consuming — Negotiating a direct contract with an advertiser is a multi-step process that can take anywhere from a few hours to a few days. By contrast, an RTB auction takes place within moments.
- Not a good standalone strategy — Unless you’re a highly sought-after publisher, odds are that you will not be able to sell all of your inventory through direct deals. You will still have to supplement your efforts with auctions.
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Direct deals are a great way for premium publishers to take their ad monetization strategy to a whole new level. However, for all of that non-premium ad inventory, real-time auctions are still your best bet. With TargetVideo, you get access to high-quality demand from Google, Amazon, and more. Simply set up, track, and optimize your header bidding stack through our CMS or let our dedicated ad ops team do it for you with Managed Ads.
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