Post-GDPR, The Financial Times sees private deals rise from 5% to 70% of programmatic ad revenue

While for many publishers, the General Data Protection Regulation represented an inconvenient, potential threat to programmatic ad revenues, for the Financial Times it has led to a revenue boon.

The FT took a pretty strict business approach to GDPR. For its digital ads business that meant not taking any chances with data leakage on the open exchange. As such, it turned off the ability to buy its inventory on the open exchange and chose instead to dial up its efforts to capitalize on private deals, specifically programmatic-guaranteed deals. It also cut its ad tech partners to 20. Before it didn’t have a cap on the number of partners.

In 2017 programmatic-guaranteed and automated-guaranteed deals accounted for just 4% of programmatic ad revenue. By 2018 they accounted for 40%, and today they account for 70% of overall programmatic revenue, according to the FT. It’s also seen overall programmatic ad revenue has grown 9% over the last year.

Granted, the FT was never reliant on open-exchange revenue, so dropping it didn’t pose the risk it would to many other publishers. But it still represented quite a strategy shift for the FT internally, according to Jessica Barrett, global head of programmatic for the FT. “Our programmatic strategy has changed drastically since GDPR took effect,” said Barrett.

Since it switched off OMP inventory, the FT focused hard on private marketplace, programmatic guaranteed and automated guaranteed deals. But over the last year, demand for PMP deals has tapered off, with far more interest from buyers on programmatic-guaranteed deals, according to Barrett. In fact, PMPs used to account for 70% of programmatic revenue; now that’s flipped, so PG deals represent 70% and PMPs roughly 30%.

With a strong subscriptions-based business model, the FT hasn’t relied on programmatic ad revenue as much as many publishers. To date, revenue from programmatically booked and executed campaigns remains a small slither of the FT’s overall ad revenue, accounting for approximately 5%, according to the publisher. That still represents a decent seven-figure contribution to revenue and therefore is an important focus that it plans to grow, according to Barrett.

The FT expects that growth to come from programmatic-guaranteed revenues, along with plans to significantly reduce operational inefficiencies.

Guaranteed deals seem to be the programmatic advertising deal-type du jour for publishers post-GDPR. This method of ad buying, in which an advertiser can match its first-party data with relevant publisher audience data on an automated basis but pre-agree terms at a fixed price, had previously been slow to gain traction because the technology was still relatively nascent among demand-side platforms and supply-side platforms. But ad-buyer demand increased for it post the GDPR.

“Post-GDPR a lot of buyers are asking, for legal reasons, how you collect and segment your data,” added Barrett. “Lots of publishers will say they have first-party data available, but no one was quite clear on who those people were. Whereas we’re able to show that, for instance, a CEO has declared themselves specifically as such on our site [thanks to subscriptions data].”

Publishers are facing data-privacy headwinds, thanks to GDPR and the drive from browsers to stamp out third-party cookies, with both Apple and Mozilla pushing anti-tracking strategies.

That’s led a lot of publishers to dial up their attempts to leverage their first-party data commercially in order to prepare for the eventual demise of the third-party cookie. Media buyers have invested a lot more in programmatic-guaranteed deals since GDPR was rolled out last May given the pressures of GDPR.

“Having direct programmatic buys with premium content publishers allows for high-quality first-party data overlays and more granularity of spend management and reporting,” said Chris Camacho, chief performance officer for Europe, Middle East and Africa at Mindshare.

Major publishers often talk wistfully of shutting off open-exchange inventory, given they can make higher premiums on private deals while also being able to guarantee brand safety and other client targets more easily. But it’s easier said than done, when there is so much agency demand for OMP.

Media buying agencies will likely remain keen to capitalize on the opportunities — like cheaper CPMs — allowed on the open exchange. For clients that have high-performance targets, this is particularly important. “Typically [clients] are better placed buying these types of titles on the open exchange as that still offers them better value for money given the lower clearing CPMs,” added Camacho.

By cutting out operational inefficiencies, the FT hopes to make programmatic ad revenue — comprising private marketplace, programmatic and automated guaranteed deals — account for a far larger part of the overall digital ad pie in future. If all goes to plan, then that could take it to approximately 20% within the next two years, a good hike from the current 5%.

A core way it plans to do so is by reducing operational efficiencies by automating all its sub-£5,000 ($6,200) ad deals. So far it has done this for around 10% of all deals within that price parameter, and plans to roll out the automation tech and standardize it across all those deal sizes in 2020. Those are laborious resource-wise to set up, and so the FT has implemented tech from Adslot — a platform that automates premium direct buys — that removes a lot of the manual processes sales teams had to use to set up such deals. Over 100 people at the FT have been trained on how to use the Adslot tech globally. By the end of 2020, the FT plans to have automated all such deals, which account for 30% of all its traditional-direct campaigns.

The FT’s programmatic growth is proportionate to the demand of clients trying to target valuable audiences and ensure brand-safe ad environments, according to Paul Kasamias, managing partner at Starcom.

“In a broader context where programmatic is moving to the ‘first-look’ model, it is essential to highlight the importance of maintaining a good relationship with this publisher [the FT] in order to keep negotiating the best possible deals for our clients,” he added.

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