AdReady has created a simple six-step process that advertisers of all sizes can leverage to master Programmatic Direct:

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2 AdReady has created a simple six-step process that advertisers of all sizes can leverage to master Programmatic Direct: 1

3 INTRODUCTION In the digital advertising world, programmatic has been a buzzword for years. When it was introduced in 2009, programmatic was synonymous with real-time bidding (RTB), referring to the automated auction of ad inventory on a per-impression basis. While RTB vastly improved the efficiency and scale of digital media buying, it also limited some of the control from advertisers over where their ads would run. As programmatic buying has matured into a significant part of the display advertising landscape, the market has evolved beyond the open auction to address some of these control and transparency concerns. From this evolution emerged Programmatic Direct, a process by which advertisers can engage a specific publisher in an automated environment. DIRECT IS ALSO KNOWN AS AUTOMATED GUARANTEED, GUARANTEED, PREMIUM & RESERVED WHAT IS DIRECT? This type of transaction most closely mirrors a traditional digital direct sale. The deal is negotiated directly between buyer and seller, the inventory and pricing are guaranteed, and the campaign runs at the same priority as other direct deals in the ad server. The programmatic element of the transaction that differentiates it from a traditional direct sale is the automation of the RFP and campaign trafficking process. Negotiation through to fulfillment can be, should the publisher desire, completed within the technology platform providing the automated reserve functionality. IAB As the industry buzzes about automated direct buying, much of the focus has been on the Supply Side with the largest publishers mapping their inventory and building/acquiring automation technology. The challenges and opportunities facing the Demand Side are discussed less often. Direct buys were often too expensive and time consuming for smaller advertisers to access, and those who did executed programmatic and off-line direct strategies in silo. Programmatic Direct removes these barriers, allowing advertisers to bundle the efficiency of automation with the quality and reliability of direct deals. Programmatic direct opportunities are definitely not reserved for large brand advertisers with huge budgets, says Jeff Hirsch, President of CPXi. By applying lessons learned first in an RTB environment, marketers of all sizes can leverage the ROI benefits of Programmatic Direct relationships with significantly lower barriers to entry. This special report will examine how advertisers can maximize their opportunity within the burgeoning Programmatic Direct market by making automation technology work for them. 2

4 WHY IS THIS IMPORTANT? While sophisticated digital advertisers have been leveraging programmatic buying methods for years, a large percentage of marketers are only just becoming comfortable with the automated world in which we currently live. In 2013, programmatic accounted for only 24% of all US digital display ad spend. By 2016, emarketer estimates that programmatic will lead the display advertising industry at 63% of a digital ad spend (over $20 billion). 2 Emerging automation trends and transaction methods will drive a significant portion of the growth of programmatic in the coming years. Not too long ago, in 2013, RTB accounted for 98% of programmatic ad spend (see Figure 1). Acronyms like RTB are now being replaced by PMP (private marketplaces) and DMP (data management platforms) as brand advertisers want to leverage automation technology to access premium inventory via more direct relationships with publishers. Figure 1: US Programmatic Direct Digital Display Ad Spending Souce: emarketer, October 2014 DIRECT IS GROWING AT A TREMENDOUS RATE, AND IS EXPECTED TO ACCOUNT FOR 42% OF ALL AD SPEND BY 2016 Note: Includes all programmatic ads that are transacted as blocks of inventory using a non-auction-based approach via an API; includes advertising that appears on desktop/laptop computers as well as mobile phones and tablets. Programmatic Direct is poised to see exponential growth in the coming years. In 2014, Programmatic Direct accounted for only a small fraction of the $10 billion spend for programmatic advertising in the United States. This percentage is expected to skyrocket, growing to 26% of programmatic spend in 2015 and 42% in Clearly this is the moment for forward looking players to start leveraging this rapidly growing strategy. In the next few years, more buyers and sellers are expected to automate direct buys and benefit from the technological advances and infrastructure improvements created during the early years of programmatic. We are seeing more and more publishers who want the higher CPMs from Programmatic Direct and private 3

5 marketplaces, says Jonathan Slavin, Chief Revenue Officer of CPXi and head of the company s programmatic division, brealtime. Demand clients are also lining up to access quality inventory that was previously off limits unless they were willing to pay high premiums for direct buys. Programmatic direct is a win-win scenario. Large brand advertisers who had previously avoided RTB due to its lack of guarantees will now adopt Programmatic Direct as a low-risk entry point into the world of programmatic. Similarly, advertisers with more modest budgets will experience increased opportunity by having access to premium inventory sources without spending the time and resources needed to participate in lengthy, manual RFP and I/O processes. Regardless of size, technological sophistication, or marketing budget, advertisers will need to enter the Programmatic Direct market in the near term, and it is important that marketers have the right tools in their kit to make the transition as easy and seamless as possible. SIX STEP GUIDE TO EFFICIENCY THROUGH AUTOMATION It is no longer necessary to spend countless hours and valuable budget on executing lengthy direct buys, or else be left out of the direct buying world all together. Leveraging a simple process and the right tools, you can easily enter the Programmatic Direct market without breaking the bank. STEP 1: ASK QUESTIONS When evaluating potential Programmatic Direct vendors, you need to make sure to ask the right questions. The automated buying market is extremely complex and technical. To ensure transparency between you and your vendor, you need to become empowered and educate yourself about how the partner executes Programmatic Direct buys. Some questions you can ask during the RFP process include: WHAT IS YOUR PUBLISHER INTEGRATION PROCESS? Programmatic direct integrations can take a variety of forms; some vendors have direct integrations with publishers via APIs that automate every layer of the buying process, while others are able to integrate with publishers on a one-off basis in a semi-automated fashion. You should ask vendors about their integration processes to know whether significant development cost and workflow alterations will be required to add a publisher you would like to target. 4

6 WHAT ARE MY DATA OPTIONS? All programmatic buying enables the use of various data sources to inform targeting and optimization. In addition to third party data sets and the advertiser s own data, Programmatic Direct also enables the use of a publisher s first-party data to enhance contextual relevance and audience targeting. It is important that a vendor be able to access and ingest a variety of data sets into their executions. WHAT ARE YOUR REPORTING CAPABILITIES? As with any vendor you work with, you need to have a deep understanding of your Programmatic Direct partner s reporting capabilities. In order to identify which metrics to track and report on, you should be transparent about your KPIs and goals. For example, will you need attribution tracking or any advanced analytics? Through an open conversation around your goals and a potential vendor s capabilities, you will have an easier time identifying the right match. And don t forget to ask for a demo of the vendor s platform! WHAT TYPES OF AD UNITS ARE AVAILABLE THROUGH YOUR PLATFORM? Some programmatic platforms are known for being experts in only one specific ad type (standard display, mobile, video, native, etc.) while others are more agnostic in their inventory access. When it comes to Programmatic Direct, it is essential that you do research into the websites you may want to advertise on in order to understand their available inventory types. The last thing you want is to find the perfect publisher partner for your brand, only to learn that the majority of their inventory is off limits because your chosen vendor is not able to access it. DO YOU OFFER CREATIVE? Even if you have access to the right inventory through a chosen platform, you also need to take the creative process into account. As we will show, testing, iteration and optimization of creative is a pre-requisite to achieving optimal campaign performance. If you don t account for creative production in your budget, you can find that creative agencies may limit your potential ROI. Many vendors offer programmatic creative services to automate the mechanics of the creative process and save you money. Once your campaign is running, it is essential that you remain in close communication with your partner throughout the entire campaign process. Programmatic direct improves the efficiencies of traditional direct buying process so things should run smoothly. But if you have questions or want clarification, don t hesitate to ask! STEP 2: LEVERAGE TARGETED CREATIVE One of the largest benefits of programmatic advertising is the ability to target unique audiences in real time. In order to capitalize on this capability, though, advertisers need to ensure that they are able to reach each user with a relevant message. 5

7 According to a recent study by Digiday and Celtra, 91% of respondents think that adapting creative messages based on temporal, geographic, and demographic factors is important. 4 Once your target audiences are identified, you must create a messaging hook that will resonate to encourage interaction and engagement. But there s a problem many advertisers run into building creative is expensive. Celtra and Digiday report that 66% of marketers are prevented from achieving true creative scale due to lack of creative resources, and 58% have insufficient operational resources. 5 A creative agency may charge as much as $10-$20K for a set of high-impact flash banners. This cost typically comes as a percentage of the advertiser s overall campaign budget. 6 So for a $100K budget, one set of banners can reduce the amount of spend used to reach potential consumers by 10%. Then take into account the idea that to drastically improve campaign performance, it is suggested that you have various versions of each ad tailored to each target audience. The money spent on creative production can easily skyrocket. This is an even bigger problem when advertisers are trying to purchase inventory via Programmatic Direct channels, which tend to be more expensive that traditional RTB. By automating the creative production process, advertisers and agencies can save time on tedious resizing and reformatting tasks and focus solely on getting their message right. Within minutes, programmatic creative platforms are able to combine your various creative assets into a full suite of ads that can be used across media and devices. STEP 3: TEST, TEST, TEST Having a variety of ads and knowing when and where to use them are two very different things. Google recommends creating at least 3-4 variations of each ad, testing different messages and imagery to see which resonate best with your customers. 7 RTB provides an ideal testing environment, as it is generally the least expensive buying method. For instance, among AdReady clients, average CPMs on the open exchange are approximately 76% lower than average CPMs for inventory purchased via direct buying methods. Data and analysis are everywhere in the digital advertising process, and some advertisers can fall into data overload. But if you have access to the right technology through programmatic buying platforms, you can gain valuable insights without drowning in pivot tables. In addition to testing performance by placement and 6

8 audience segment, by leveraging programmatic creative in Step 2 you can derive insights around which creative elements align with each target audience without needing to conduct time-intensive, cost-prohibitive focus groups. STEP 4: EXPAND AD SIZE SELECTION Once the message is finalized, it is also important to build out the right sizes that will maximize your opportunity across premium publisher sites. Many marketers, particularly those with smaller advertising or digital budgets, will create only a single 300x250 ad (or maybe add in a 160x600 or 728x90) so that they can access the most inventory for the least creative development cost. However, many premium sites have placements beyond these top three sizes that may have less competition and/ or lower rates (see Figure 2). Figure 2: Available Ad Sizes by Select Publishers Source: Kantar Media SRDS, February 2015 MANY TOP PUBLISHERS ARE EXPANDING AD SIZE SELECTION BEYOND THE TOP 3, ENABLING ADVERTISERS TO TAKE ADVANTAGE OF LESS POPULAR SIZES IF THEY HAVE THE CREATIVE ASSETS TO COMPETE Programmatic creative allows marketers to leverage pre-made or custom ad templates that automatically generate various ad sizes by using a single creative asset library. This allows advertisers to compete more effectively for Programmatic Direct buys. Additionally, emarketer found that some non-traditional ad sizes actually have better viewability rates worldwide, with the 300x250 at the bottom of the list (see Figure 3). 10 STEP 5: CHOOSE YOUR DIRECT PUBLISHERS Once the creative messages are tested and finalized and the ads are built out in a variety of high-performing sizes, it is time to roll out campaigns on direct publisher sites with Programmatic Direct. 7

9 Figure 3: Viewability Rates of Digital Display Ads Worldwide, by Size Source: Google, November 2014 AD SIZES OUTSIDE THE TRADITIONAL TOP THREE ACTUALLY HAVE BETTER VIEWABILITY RATES WORLDWIDE, WITH THE 300x250 TRAILING THE PACK WITH ONLY A 41% VIEWABILITY RATE To succeed in Programmatic Direct, you have to work with your account manager to identify a publisher hit list based on your brand needs and campaign goals. There are a variety of criteria to consider when choosing a group of websites that will deliver optimal results for your Programmatic Direct campaign, including: Audience: You can choose publishers based on your target audience. Insights gained through RTB testing can help identify the segments that work best for your campaign, such as demographic, behavioral characteristics, device usage, geo-location, and more. This information can help you identify publishers with a similar audience, and Programmatic Direct can ensure efficient access to premium inventory on those sites. Engagement Data: You may decide to use RTB to optimize toward a particular audience and rely on direct buys to align with specific sites. Publisher engagement data can ensure that your ads are appearing alongside content with which consumers are actively interacting. Some engagement metrics to consider include: unique visitors, page views per visitor and bounce rate (the percentage of users who look at only one page before leaving the site). There are a number of free sources that provide this engagement information. Brand Perception: Programmatic direct buys can be very helpful for branding campaigns. It is important to identify the characteristics of your target audience, and then extrapolate a list of publishers with whom you would like to associate 8

10 your brand image. For example, if you want to align your brand with financial expertise, you may choose to advertise on a credible, business-oriented publisher like The Wall Street Journal. Alternatively, if you want to be in touch with a more alternative, youthful audience, VICE may be a better choice of publisher. STEP 6: TRACK RESULTS AGAINST APPROPRIATE METRICS Once a campaign is in progress, the final step is to measure performance across media types and sources, and to optimize accordingly. By rolling everything up into a single dashboard or interface, it is easy to identify best-performing elements and optimize campaigns accordingly. However, it is important to remember that you are not always comparing apples to apples. Different ad buying strategies have different metrics associated with them: Real-Time Bidding: RTB has traditionally been used to generate conversions from the right audiences. Audience insights are important to identify which users are converting against which messages at which times. Often, transactional metrics such as click through rate are used track for these campaigns, as well as cost-per metrics such as CPM, CPC and CPA. Programmatic Direct: Direct publisher buys are often leveraged for branding goals. Presence on specific publisher sites can have a large impact on the associations consumers make with your brand; it s about being in the right places. Often for branding campaigns, it is important to track post-impression engagement and brand lift over a longer tracking cycle. You have to make sure that you are not using your RTB metrics as the measure for success in Programmatic Direct campaigns. Having a firm grasp on the different strategies you are using will position you to drive maximum results. CONCLUSION As with all trends in the history of the digital advertising industry, the technological changes that come from the rise of Programmatic Direct will revolutionize the way advertisers buy inventory across the web. These changes are happening whether you are prepared or not, but it is easy to become a Programmatic Direct pro with the six step process outlined in this report. In order to get the most out of Programmatic Direct, you need to be curious about the unique benefits this strategy provides. We have removed the barriers to entry that many advertisers face, so you will be positioned to succeed in this new market, regardless of your budget, team structure or experience in programmatic. 9

11 PRESENTED BY: AdReady provides best-in-class programmatic technology and managed media services to brands, agencies and marketers. Our clients are able to drive efficient and effective digital ad campaigns across display, mobile, video and social platforms. AdReady is a division of digital media holding company, CPXi. For more information, visit CPXi is a digital media holding company, providing technology, services and processes that make digital more efficient and effective. Distinct divisions evolve in parallel with emerging digital media capabilities to meet the myriad of challenges faced by marketers and content providers. CPXi is a privately held company. For more information, visit 1 Programmatic and Automation - The Publisher s Perspective, IAB, 2013, 2 US Programmatic Ad Spend Tops $10 Billion This Year, to Double by 2016, emarketer, 2014, 3 ibid 4 The Rise of Creative in a Programmatic World, Celtra and Digiday, 2015, p ibid, p Revising the Display Creative Process: Democrotizing Design and Connecting Teams, PaperG Blog, 2014, 7 Google Support, 8 The Importance of Being Seen: Viewability Insights for Digital Marketers and Publishers, Google, November 2014, 10