Editor’s note: This is one of 11 case studies featured as part of INMA’s strategic report “Programmatic Advertising Opportunities for Publishers,” released in September.

When The Globe and Mail began exploring programmatic advertising early in this decade, one thing quickly became clear: “The market had adopted the open auction concept. And from what we could tell, the outcome was pretty much a chase to the bottom,” recalls Steve Melles, director of Globe Alliance and the media company’s business development.

“The buy side was using data to understand the value of an impression, but the publishers didn’t have any sense of value.”

The commoditisation of inventory in open exchanges led the Canadian media company to resist putting its own impressions into open auctions beyond limited remnant sales.

“We determined that no one in our market should be able to say they can buy our advertising except ourselves,” Melles says. Instead, he says, “we wanted to allow our best clients and advertisers — those who purchased premium opportunities —to buy for the first time our non-guaranteed inventory at preferential rates.” 

So, in 2012, The Globe and Mail created a private exchange as an extension of its direct sales efforts, allowing selected advertisers to purchase inventory at prices negotiated as part of broader direct sales agreements. 

Doing so has allowed the company to help temper downward price pressure on direct sales.

“Our best clients may be asking us to reduce prices in the premium space,” Melles says. “This allows us to say that we’re not going to — and we might even increase them. But in the private exchange, you can buy unfettered inventory that brings down the average impression to the price that you want.”

Programmatic sales have seen steady growth — and what Melles calls “appropriate growth.” That’s because executives have carefully monitored ratios of premium to programmatic sales to ensure clients aren’t making wholesale migrations towards programmatic inventory.

“We haven’t seen a trend on a micro level,” Melles says. “If one client is down in terms of premium and up in terms of programmatic, it may not be because they have decided to pull out of direct advertising purchases. It may be performance buys vs. brand buys.”

Programmatic, Melles says, gives The Globe and Mail the opportunity to talk to advertisers through the entire lifecycle of brand marketing campaigns, allowing them to shift the mix of advertising depending on what stage they’re in.

Eventually, 50% of digital media will be transacted programmatically, Melles believes: “It needs to be a core competency,” he says, urging media companies to focus on identifying demand sources for their inventories, maintaining transparency with partners and customers, and protecting their data to ensure that it doesn’t fall into third-party hands. 

“At the end of the day, we saw this as technology to close the gap,” Melles says. “We want to have direct relationships with advertisers and to engage them directly.”