Is programmatic advertising a better opportunity than direct sales?

By Mark Challinor

INMA

London, United Kingdom

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Spurred by a recent INMA Master Class discussion, this week I want to highlight the differences between programmatic and direct sales in respect of the advantages and disadvantages. I know many will read this with a knowledge of programmatic. But from my own industry conversations, I have tried to simply present the facts on these differences, which are perhaps not obvious to some and need your consideration.

Later in this newsletter, I will also cover my take on the media buying process, as a follow-up to my recent Webinar with Torstar, which presented some of the ways we can get on the radar of agency media planners and buyers. I think you’ll find it an interesting topic that affects most, if not all, of us all in the advertising space. 

Which is better for news publishers: programmatic or direct sales?

One of the topics we covered in our recent INMA Advertising Master Class was programmatic advertising — a hot top topic inside ad sales departments across the world now. It’s emerged onto the scene in recent years, but there is still much mystery around whether it is a long-term sustainable and most profitable way of selling your advertising inventory. 

In the digital space, standard methods of selling (via sales team direct), is where digital ads are traded manually by ad buyers and publishers. Whereas programmatic is where digital ads are traded in an automated manner, in real time. “Direct programmatic” is based on a fixed price agreement, whereas with the real time bidding (RTB) variant, highest bidder wins, often done in milliseconds.

While the time from print ad to digital ad was long — 209 years! — the space between digital ad and programmatic was just 15.
While the time from print ad to digital ad was long — 209 years! — the space between digital ad and programmatic was just 15.

Digital ads first came on the scene on 1994, and it took 15 years (in 2009) before programmatic first began. Programmatic advertising gave publishers an alternative way to sell via ad exchanges with the ability to sell high volume, lower-cost digital ads with the knock on of being able to either reduce or shift human selling resource. Less salespeople. The placement of a DSP and SSP at either end aids the process.

DSP v SSP: the difference

A DSP (demand side platform) lets advertisers buy across several different ad exchanges at the same time, whereas an SSP (supply side platform) lets publishers sell their ad inventory across different ad exchanges. An easy way to think about it is that DSPs are for advertisers, SSPs are for publishers.

There are many platform options that get the advertiser in front of the audience it seeks.
There are many platform options that get the advertiser in front of the audience it seeks.

Since then, programmatic hasn’t (yet, at least) proved to be the holy grail replacement in terms of providing similar revenue streams than the traditional, sales teams direct way. But it’s become a valuable piece of the revenue jigsaw.

Benefits of programmatic advertising

Programmatic advertising uses computer software to sell digital display ads and has enabled media companies to reduce a significant amount of manual, administrative work from its sales teams. Manipulating data, bespoke algorithms, and open auctions have also aided sales teams to be able to reduce the number of e-mails, calls (phone and personal visits), and the sometimes tedious and drawn out negotiations with agency ad buyers. 

The result has allowed publishers to shift their efforts on delivering expertly targeted/optimised advertising campaigns, as well to create a better customer experience through a more first-class, quality customer service level.

Programmatic helps the advertisers, too. Programmatic enables agency media buyers, for instance, to easily buy impressions over a range of multi-channel, multi-publisher Web sites, and reach a bigger/wider range of people whilst still representing highly targeted audience(s).

It’s true that programmatic still requires some time and resource from the publisher, i.e, the human element remains important to set up, monitor, and expertly comment on in the reporting stage. But it is seen by many as a more important use of resource.

Benefits of direct advertising sales

In my last newsletter, you maybe recall my comments around Futurist Gerd Leonhard’s view on human insights being important in the future. This was based on his view that everything that can be automated will be. So what becomes important are the things that can’t be automated, namely things like insights, experiences, storytelling, ethics, diversity, etc. 

In advertising specifically, the human sales element remains core in media organisations and should complement programmatic via a continued, direct sales approach. This is especially important when it comes to big budget spending and large brand campaigns. It remains important to keep “close” your most important client relationships, and direct ad sales still ticks the box. 

Omni channel and guaranteed inventory?

Agencies who buy direct can run personalised, custom campaigns across omni channels and tap into a guaranteed inventory for an agreed price on specific Web sites (or take their chance with RTB) — but whoever uses it is still guaranteed a specify audience. (With RTB, price can change rapidly where the general laws of auctioneering kick in).

Confidence in these guarantees is a big plus when it comes to things like brand safety — itself a key issue for both advertisers and publishing companies.

Of course, “going direct” means sales team need to spend much of their time and effort delivering and pleasing advertiser needs and wants. They must spend time negotiating, for instance, as well as dealing with the constant, accompanying e-mails, calls, etc. (as mentioned earlier).

Human error and discrepancies

All the above is not to mention the thorny subject of human error, which can sometimes creep in, and the arguments over “discrepancies.”

I spent much time in my career inside one of the big UK publishers, where an internal weekly ad sales meeting ended every week with a review on where we were with these discrepancies. (This is essentially a serious look who said and agreed what, with whom and by which method, in terms of ad campaign contracts … versus what the advertiser/agency counter view is, which could be a discrepancy of hundreds of thousands of pounds.) It was always baffling to me how such large sums could be contested after supposed cast-iron and assumed unambiguous contracts where already in place. (Programmatic, of course, eliminates that. There is an electronic trail that both parties see, and there is no argument later).

So, while all of advertisers, without question, should receive excellent customer service (it should go without saying), levels of service should nevertheless be appropriate to each advertiser. (It probably takes the same amount of effort to process a small client order as it does a large one).

Also, with programmatic, media buying becomes more effective when the right strategic targeting and algorithms are applied. That’s, of course, if all is set up correctly in the first place.

The programmatic advertising dilemma

So, you can see the dilemma. Which model is right?

In the end, it will all come down to you as an individual publisher. How are your sales teams structured? How reliable is that structure to pivot to new ways of working? How is your revenue curve moving (direct v programmatic)? What’s the opinion/preferences of your advertisers and agencies of programmatic?

Self-service: an alternative opportunity for publishers

One alternative is to offer your clients a self-service solution (particularly relevant for smaller campaigns and minor advertisers). Advertisers here are able to launch campaigns automatically optimised in real time and be able to review performance as it progresses, in a smaller but still impactful scale, whilst allowing your sales teams to focus on the bigger, perhaps more complicated clients that ultimately generate more revenue for the company.

Both models living in harmony?

It seems to me that sales teams will be an essential part of the selling process for the long-term future. What they actually sell over time may change (see below in this newsletter). But, as programmatic changes and morphs over time (into who knows what presently … maybe more honed private auctions via Real Time Bidding, special category deals, specific advertiser-centric campaigns, etc.), we need to fully understand how programmatic selling versus direct fit in and morph too, and how the two very different models can work in tandem.

With real time bidding (RTB), the highest bidder wins, often in milliseconds.
With real time bidding (RTB), the highest bidder wins, often in milliseconds.

What we also don’t know yet is if the revenue model around programmatic can replace the traditional revenue stream. But it seems both models have their place for some time to come.

Further reading:

Insights into the media buying process

In our recent Advertising Initiative Meet-Up, I was joined by Michael Beckerman, chief client officer at Torstar in Toronto, Canada. Mike is a veteran of the media buying world, having been a leading light on both sides of the fence, from within agency-land and publisher over many years.

I enjoyed chatting both privately and on the Meet-Up with Mike and picked up some invaluable insights to share with you. Much of what Mike said resonated with me, having been leading the charge at many media pitches in my time inside the UK ad sales landscape. Here is what I found particularly useful from Mike’s presentation, with my own thoughts overlaid. 

Be in love with your brand

Mike said that one of his most important roles is to make sure everyone on his sales team is “wildly courageous and wildly transparent.” So refreshing to hear this in an era where transparency is more and more important as we deal with our customer both in a B2B (and B2C capacity). He also said he takes “getting a no to be as good as a maybe.” I told him I’d love to be a fly on the wall in one of his pitches.

His passion came across strongly in the Meet-Up and cemented what I have always believed: that we have to be in love with our brand and what we offer. If we don’t, the client won’t either. 

Michael Beckerman, chief client officer at Torstar in Toronto, says the sales process is about helping the buyer buy.
Michael Beckerman, chief client officer at Torstar in Toronto, says the sales process is about helping the buyer buy.

Mike used the line, “The sales process is all about helping the buyer to buy.” How true. Most sales processes and collateral are based around helping the seller sell, but (media) companies need to focus more on the buyer’s needs. We need to understand what the client wants.

Live polls to INMA members: a shocking statistic? 

What Mike said was echoed in a live poll we conducted in the Meet-Up. Over 60% of Meet-Up attendees (INMA members) reckoned the market didn’t understand our ad offerings, and a similar number thought we didn’t understand our client offerings either. This lack of understanding was highlighted as the main factor why we don’t win certain amounts of business from agencies. 

We have a lot to do still. 

Education is key

When I worked at The Telegraph newspaper in London as mobile platforms director, I lead many pitches to agencies on behalf of the ad sales area. It was at a time when we were trying to push “mobile” as a premium channel and not just an add-on to their existing client media schedules. 

What I discovered very quickly was here was an environment where we had to present to:

  • Mainly young media planners and buyers, fresh from university, with no substantial media experience.
  • A bunch of people who had probably just had all the other media companies in the office, presenting in a similar fashion, with their own rate cards. We were all considered “just the next boring meeting they politely had to attend.” 

So, I decided to turn it on its head. 

Entertain, engage, inform

Firstly, understand what interests those young professionals. Maybe an entertaining pitch that would engage them? Maybe with a prize on the day (pre-promoted to them)? Maybe with an important leave behind on the (media) industry with they are to work with? I had INMA experience and, as all members have, a fantastic resource to draw on and build up the presentation well in advance. 

In my case, I was positioned by The Telegraph as the “mobile expert” (to be fair, I did have quite a bit of experience in this area; which areas can you elevate your people to?) who had been preaching the mobile gospel “before the iPhone was even invented.”

It was all positioned by The Telegraph (not me, as an individual of course) that I was coming to talk (in my “informed position”) about how they can better understand the rise of mobile, its place in the media landscape, and how they can better incorporate it into their media planning and buyer process. 

Not a mention of rate cards ... 

… which, of course, I subtly interweaved (somewhat) on the day but importantly left them with one, dressed as something else, at the end of my presentation.

I always presented humorously but with a message. I even sometimes included a little magic/illusion (something I am familiar with) at the end, with some audience participation, to entertain as well as inform. Again, with a message and to award a prize, which I have to say was always well received as a “bit of fun” and was definitely lacking from the normal publisher meetings. (Key word: normal! Never be normal! Aim to bring an element of surprise and/or delight!)

Take the time to understand their needs 

It was all very effective, and it was appreciated. I took the time to research some of the likely attendees in advance and the agency itself and what it was doing well in the market, what its challenges were, etc., to find out what they thought was important.

I even went for drinks with one or two planners, on my own time post work, to get to know them socially and better understand them. The knowledge gained, I used wisely in my presentations. 

Finally, and perhaps most importantly, everything was positioned overall in such a way that it was going to be a big deal/event. So, with all this, it was common for the whole agency to show up for it and not just one or two poor souls who were nominated to attend and receive our latest ad package and rates.

Results matter 

The results spoke for themselves, too. Our mobile revenue (at the time when mobile was a new concept) went from 5% to 16% to 30%+ of our digital revenue in three years. 

Back to Torstar’s perspective, Mike Beckerman said: “We start with the persona and understand who the buyer is. Understand them not just demographically, but attitudinally, behaviourally, and techno-graphically. Understand their wants and desires.

“Once we understand who that persona is, then we can walk through the customer journey to make sure we’ve got the right content, at the right time, on the right channel, to build that relationship between your brand and your target audience.” 

He added that enjoyment of one’s job and the energy brought to the process are vital: “Nothing great is ever accomplished without enthusiasm. You are battling for their attention; you’re battling for their share of wallet. You’ve got to make that meeting the best part of their day. So go in with that attitude, project that to your prospects, and make sure your sales staff is projecting that.

“If we show up with a bunch of tactics, trying to sell products from our toolbox, in the absence of understanding their business strategy and objectives, we’re going to be booted out the door.” 

Quite! Great advice from the Canadian news media market. Advice we can all follow. 

Mike concluded his presentation at the Meet-Up with a phrase I heard Mark Field at Reach plc (Mirror newspapers, London, UK) also use in our recent Advertising Master Class:

“Capture hearts and minds” — “be bold, courageous, and have fun. It’s an amazing time of life, it’s an amazing industry we work in. I hope you wake up with a sense of pride in terms of what it is you do.”

We should all be inspired.

Read more on the Torstar Meet-Up here

How to get involved with the Advertising Initiative 

This is the newsletter for the INMA Advertising Initiative and represents just one of several ways you can get involved and communicate with your global peers in the media advertising community. 

The basic premise of this initiative is to look at how we rejuvenate data and research-backed media advertising sales for what will we think be a resurgent post-pandemic market. Our aim is to provide actionable, unique insights, thought leadership, and education into future media advertising opportunities for CEOs, senior managements, and sales teams. 

There will be many ways for you to connect with us in this initiative:

  • Newsletters: Get bi-weekly Advertising Initiative newsletters in your inbox. Sign up here
  • Meet-Ups: Join your advertising peers for practical members-only upcoming Meet-Ups where we can discuss the latest trends and case studies in our industry.
  • Master Classes: Link to the best advertising minds, exchange ideas at deep-dive Master Classes. Watch out for news of our next one, which is scheduled to take place in February.
  • Also, look out for over the coming months for reports, presentations at INMA conferences, and we will also be offering private briefings for corporate members.

I hope to see you getting involved in one or more of the above channels. We will only be as strong as the community we serve. So, I personally encourage you to contact me at mark.challinor@inma.org  or on Twitter (@challinor) with any thoughts, comments, or suggestions, and I promise to get back to you.

About Mark Challinor

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