Canadian advertisers who buy direct from publishers using programmatic methods have access to three times more inventory than advertisers bidding on open exchanges, according to a new study from eMarketer. The study identified programmatic direct as a major driving factor for growing programmatic ad spend.
EMarketer estimated that, in total, programmatic ad spend made up 15% of all digital display spending in 2013. Not including programmatic direct, RTB spend grew 96.3% in 2013 to $55.4 million. EMarketer forecasts annual growth levels at roughly half that for the next 4 years, with spend reaching $258.2M in 2017.
Canadian CPMs are still low compared to larger programmatic markets, which eMarketer sees as another big factor driving growth.
Programmatic direct has been gaining steam as an alternative to real-time bidding on open exchanges. The primary difference is that in programmatic direct, advertisers pay a CPM they’ve negotiated with the publisher, rather than bidding on impressions against other advertisers. Programmatic direct provides a middle way between traditional, hand-picked direct placements and the wild west of open exchanges; advertisers have a relationship with the publisher, but still have the tools to execute large scale, targeted buys, leveraging customer data and third party tech solutions.
A well-publicized example of programmatic direct was AOL’s programmatic upfront in the fall, where advertisers signed up-front agreements for negotiated bulk rates and were given access to AOL’s premium inventory and integrated ad-buying platform.
“Increasingly, in our view, programmatic will be a market space that’s defined by programmatic direct, where you’re taking humans out of the low-value tasks in the relationship between marketers, agencies and publishers,” said AOL Canada general manager Joe Strolz. “The future of the programmatic space is not about remnant, and it’s not about RTB necessarily, which is more of a tactic or a buying methodology. It’s more about workflow efficiency.”
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It may not be a surprise that publishers prefer direct sales to open-market bidding, since direct tends to mean premium inventory and higher CPMs, as well as more control over the quality of ads that run on their sites. EMarketer says that Canada has a higher proportion of direct buys compared to other international markets largely as a result of major media companies’ preferences.
But it also says that because programmatic buying in Canada is being driven by a small number of major advertisers who have budgets for premium inventory, publishers have had more leeway to reserve inventory for direct sales.
“We’re definitely seeing in Canada that the needle is moved by major marketers,” Andrew Casale, senior vice-president of strategy at Casale Media, told eMarketer. “It’s not moved by local. It’s not moved by pure direct response. The companies spending money are big marketers with huge budgets.”
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