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by • 21 May, 2018 • How to Use Data, The CMO ToolkitComments (0)48

Programmatic Playbook: Programmatic Direct Deals, 101

Buyers (advertisers) and sellers (publishers) are both setting up programmatic direct deals; it is the fastest growing area of the digital advertising world.

Publishers use programmatic direct because it gives them more control over which advertisers are purchasing their inventory. Advertisers also like it because it gives them transparency to see which inventory they are looking to buy from the publishers.

In essence, programmatic direct deals are pre-negotiated deals between the advertiser and the publisher. This is solely executed through automation. A challenge for publishers is to use the right kind of programmatic direct for deals in order to get full value for their best placements. Some types of deals include: automated guaranteed, preferred deals, and private exchanges.

A publisher will use automated guaranteed deals when working with an advertiser who is asking for specific placement and audience with low risk, at a negotiated price.

On the other hand, if a advertiser is looking for their own audience in a premium context, then a private exchange will make more sense for both the advertiser and publisher. In a private exchange, the publisher is willing to pay a risk premium with significantly higher CPMs.

Another form of programmatic direct is preferred deal. Many publishers are avoiding this because the price is fixed, thus, there is not upside potential for the publisher. Many “smart” publishers are converting their preferred deals into either private exchanges or automated guaranteed deals.

The fundamental difference between private exchanges and automated guaranteed deals is the risk acceptable. Sellers seek to reduce risk on their revenue stream so they manage the mix of deals they do (60-80% from predictable sources like guaranteed deals, and the remainder from the “spot” market where there is both upside potential and downside risk).

Some questions a seller should be asking when negotiating with a buyer (advertiser) include:

  1. Is the inventory they want highly sold through or scarce?
  2. Does the buyer want predictability and forecasting on delivery?
  3. Are the audience targets based on publisher data or geo-targeting?
  4. Is the buyer contextually related to the site (endemic)?
  5. Does the buyer have a brand objective vs. a direct-response objective?

If answers to these questions are a “yes,” then the seller (publisher) should be negotiating an automated guaranteed deal.
Publishers who will prosper are ones who know how to manage their risk and to best pick programmatic deal types.

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