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Programmatic Premium: Where We Stand

Programmatic buying is on the rise, and the debate about programmatic premium is in full force. While programmatic premium is one of the hottest terms in the digital advertising space, there’s little (if any) agreement on what it means, whether it’s the hottest thing in 2013, whether it’s overrated, or whether it’s not here yet.

We’ve parsed through the points, counterpoints, definitions, and debates. Here’s everything you need to know:

Experts Weigh In 

Virtually every article on programmatic premium puts forward a slightly different definition, and every stance depends on different assumptions. Here are a few of the most noteworthy soundbites from industry experts:

Programmatic premium channels are new automated access points to publisher inventory where the pub is getting paid more because the advertiser is getting more value – viewability, preferential treatment or ‘premium placement.’ – Mario Diez, CEO of QuadrantOne

Programmatic premium is a direction, it’s a desire – it’s also not particularly scalable or profitable right now. – Doug Weaver, CEO and Founder of Upstream Group

I’m fully sold on programmatic premium in theory. It’s something as an end marketer I’ve been pushing for, mainly because of all of the operational efficiency it creates. It lowers the cost of media buying, essentially reducing the amount of time needed to execute a site direct buy. – Sara Livingston, Manager of Digital Marketing at Seamless

What Do We Agree On?

Programmatic premium is a means of bridging the gap between the super-premium inventory that’s still only accessible via a publishers’ direct sales team and RTB. Right now, there is certainly inventory that can be classified as premium currently available on the exchanges—if we define premium as brand safe, well-lit, inventory that isn’t overcrowded. That said, the majority of premium and super-premium inventory on the highest-demand sites is only available through direct sales teams. Programmatic premium is a means of automating much of the buy/sell process, allowing advertisers to purchase impressions in real time while maintaining the high cost and clout of premium inventory.

Both the buy side and the sell side have much to gain from the increased efficiency that can come with programmatic buying. As early as 2011, three-quarters of advertisers said they would gladly increase their RTB spends, if only they could limit their programmatic buys to premium publishers.

On the publisher side, programmatic premium doesn’t eliminate the need for a sales team, but it can decrease the cost of doing business, allowing the sales team to focus on higher-priority, custom solutions for their most valuable brand partners.

Private Exchanges and the Path to Programmatic Premium

A few years ago, private marketplaces emerged as one possible solution to filling the gap between premium and programmatic. A private marketplace is essentially an invite only exchange that allows for publishers to maintain more control by whitelisting specific advertisers and setting relatively high price floors. Publishers are also able to cultivate and maintain relationships with their advertisers, and advertisers can ensure they’re appearing on their desired sites.

Business Insider has added private exchanges to their mix with strong results, and has told AdExchanger that it’s been successful thus far for advertisers who aren’t interested in unique ad units or custom solutions.

Other advertisers and publishers have seen success with the private exchange model, and it certainly does seek to solve the problem of automating the buying process. That said, there are some key differences between the programmatic premium of the future and the private exchanges of today.

The Programmatic Promised Land

Private exchanges ultimately operate the same way traditional exchanges work—they’re just more expensive and exclusive. The inventory is still treated as any exchange inventory would be, meaning there is still no guarantee of fill, run rate, or reach. A true programmatic premium solution will address all this issues, allowing advertisers guaranteed placements at prices that are fair and logical, but still lucrative for publishers.

Secondly, the ability to bid on private exchanges has by and large been extremely limited by the across-the-board restrictions imposed. This is one of the primary reasons that bid volume remains so low.

Workable solutions must address publisher concerns, meet advertiser needs, and be easy to scale.

Despite the upsides of RTB, publishers are still hesitant to open up the exchanges. A Casale Media study in late 2012 found that roughly 80% of publishers worry that RTB could lead to the commoditization of their inventory. The report also finds that private exchanges, while they alleviate publisher concerns, still aren’t a scalable solution for brand advertisers. The next move? “There does appear to be an opportunity to meet in the middle with private marketplaces through the introduction of more human contact into this environment.” They may be using the moniker private marketplaces, but the suggestion certainly aligns with our definition of programmatic premium.

When it comes to programmatic premium, we’re not entirely there yet, but there’s clear demand on both sides for more efficient means of buying premium inventory online. Some solutions, like isocket and Shiny Ads, have already emerged to fill this gap, and we can only expect their solutions to become more sophisticated over time.