Programmatic direct (noun)
also referred to as: RTB direct, automated direct, automated insertion order
What it means
Programmatic direct is a type of programmatic media buying in which media buyers negotiate deals with sellers up-front, but execute using programmatic technology. This method maintains the traditional, relationship-based media buying model, but incorporates the impression-by-impression targeting and advanced measurement that programmatic offers.
Programmatic direct deals typically give buyers “first-look” access to premium publisher inventory, meaning the buyer has a chance to purchase the publisher’s best impressions before they are auctioned on a public exchange. Using real-time audience targeting algorithms, buyers are able to identify and selectively purchase impressions that are delivered within their target audience. As in other forms of programmatic buying, real-time targeting ensures more of the campaign is seen by the right audience and reduces wasted spend on out-of-target ads. However, unlike other forms of programmatic, buying direct typically means paying a negotiated price on all impressions, rather than bidding against other buyers.
On a mechanical level, there are two dominant forms of direct buying: direct publisher integrations and exchange-mediated preferred deals. Direct publisher integration means the buyer’s DSP connects directly with the publisher selling the inventory, with no intermediaries in between. This is the shortest supply chain possible, and provides the most transparency and control for the buyer. However it can be difficult and time-consuming to “connect the pipes.”
The second option is to use the existing infrastructure of a third-party ad exchange. Some exchanges provide special “private rooms” for direct deals – using a unique Deal ID tied to a publisher’s inventory, the buyer is able to purchase impressions up for auction at a negotiated price, before other buyers can place bids. In some cases, Deal IDs can give preferred access to a small group of buyers, who bid against one another in a private pre-auction.
What it means to you
Though the ability to target individuals using audience data is attractive, many buyers are wary of programmatic because of the distance it creates between buyers and sellers. When buyers don’t have a direct relationship with sellers – and may not even know who the sellers are – there’s no one to guarantee the quality of the media they’re buying, and the risk of ads ending up where they shouldn’t is heightened.
Programmatic direct is a compromise that offers the safety of a face-to-face buyer-seller relationship, and the advanced targeting, measurement and data collection capabilities of programmatic buying. It is the choice method for buying and selling premium inventory – sensitive, high quality placements like homepage banners and commercials on online TV. In fact many publishers, finding that “programmatic” has become associated with low-quality inventory, do not distinguish programmatic direct from traditional direct, and instead describe programmatic automation as a feature or add-on to traditional bulk media deals. This may be one of the reasons that programmatic direct is not well known or understood by marketers and media.
However, the added quality and security comes at a price (literally). Because programmatic direct offers exclusive access to the best inventory, it’s usually more expensive than buying on remnant RTB exchanges. Thus while programmatic direct may be appealing to brand advertisers (who are most interested in advertising next to premium content and most sensitive to brand risk), it is less appealing to performance marketers, who are looking to drive conversions at the lowest cost-per-action.
Where you can see it in the marketplace
Likely the most conspicuous example of programmatic direct in the market is AOL’s programmatic up-front, which the company launched in 2013 to sell its online video content. AOL’s up-front operates similar to an up-front in TV: media agencies and clients negotiate contracts with the company to buy media at preferred rates. The difference is that buyers don’t need to specify exactly which media they want to buy, but can instead commit to making a large spend, and use algorithms to make decisions about specific placements in real-time. Many digital media publishers offer similarly structured deals at the Digital Content NewFronts each Spring.
Sell-side companies like AppNexus, Rubicon, and YieldEx also offer capabilities for executing programmatic direct deals. In some cases, like AppNexus’ Twixt, these capabilities are limited to automating IOs between buyers and sellers, to streamline the negotiating process. Other products, like Rubicon’s mobile-focused 49bc, offer a solution that buyers can use to integrate with publisher inventory for targeting and execution.
Although it is not openly advertised, many exchanges can provide Deal IDs for preferred deals and private auctions. For example, the Casale Media Index Exchange and Google’s DoubleClick exchange are Deal ID enabled. However, many supply-side companies that provide Deal IDs have yet to develop an easily accessible user interface for creating and using Deal IDs, or an API for integrating Deal ID management into the buyer’s DSP. As such Deal ID technology is still early in its development.
