Early this year, ESPN, USA Today and Hulu said they refused to sell online display ads through programmatic sales channels. Just seven months later, all of them do.
Whether publishers like it or not, programmatic ad buying has reached a point of no return. Media owners might be eager to limit the use of technology in their ad sales processes, but the the fact of the matter is their clients aren’t. At the end of the day, publishers will sell how buyers want to buy. The market has voted: Buyers want to buy this way.
Brands and agencies continue to buy more of their ad inventory through machine-based systems, and the trend shows no signs of slowing. When it comes to standardized ad inventory, publishers now have little choice but to jump on the programmatic bandwagon. The question has moved from an “if” to a “how.”
“Publishers will realize in the next 12 months that not having a programmatic sell strategy will severely impede their ability to compete,” Barry Lowenthal, president of Media Kitchen.
For example, currently Lowenthal’s agency buys around 20 percent of its media through automated systems, but it wants to see that number grow significantly. It’s actively pushing publishers to make more inventory available to it through automated systems, so it doesn’t have to strike individual direct deals.
The hubbub AOL created last week with its programmatic upfront, along with its promise to make more choice ad slots available to machine buying, signaled a shift in the market. Even WPP chief executive Martin Sorrell emphasized the growing importance of programmatic buying during his time on stage at Advertising Week last week, describing it as “American capitalism at work.”
Publishers have always been nervous about ad sales technology, and understandably so. They worry that automated trading will undermine their direct sales efforts and drive down their inventory prices. In some cases, it has. Both Yahoo and The New York Times have blamed their declining ad revenues on it in recent months.
But now even the most skeptical publishers are coming to terms with the inevitable. Six months after it said it wouldn’t work with any third parties, USA Today has made millions of its impressions available across a range of ad exchanges. After repeatedly saying it would only sell its ads through its direct sales force, ESPN has rolled out a private exchange. Even Hulu, which claims it sells out of inventory using its direct sales teams, is testing programmatic selling with agency partner GroupM.
Having initially distanced itself from automated sales, the New York Times performed something of a U-turn four months ago and hired a programmatic advertising director, Matt Prohaska. The Times recognized that it was not only missing out on an opportunity in programmatic selling but that it was falling behind the market. A big part of his job is to help the organization “catch up,” Prohaska said at Digiday’s Programmatic Breakfast last month.
“The tipping point was reached a while ago in my opinion,” said Todd Sawicki, digital media veteran and current Zemanta president. “That is, if you want to maximize revenue.”
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The rise of automated trading doesn’t mean there won’t be opportunities for publishers to sell custom programs and integrations, of course. And direct sales forces will always be necessary to broker those. It’s no coincidence that the rise of native ad formats, custom content and sponsored posts has coincided with the growth of programmatic ad trading – publishers are seeking ways to get out of the display ad game altogether.
But when it comes to standardized ads, the programmatic horse has already bolted. It’s little use for publishers to try to shut the stable door now.
According to Martin van deer Meij, head of revenue at Dutch newspaper De Telegraaf, publishers need to do whatever they can to remain relevant to advertisers. “Everything that’s standardized will be traded automatically someday,” he said.
The writing is already on the wall. It’s only a matter of time before all publishers can read it.
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