Publishers that take the time to understand and optimize sophisticated tools have the greatest potential to drive revenue in programmatic advertising environments. But their success hinges on greater collaboration and communication with ad agencies and clients.

According to a new Forrester report commissioned by Casale Media/Index Exchange, agencies and clients do not effectively articulate their goals and objectives, making it difficult for publishers to meet those goals, improve performance and maximize the true value of their inventories. “Publishers must take the lead on innovating the next phase of programmatic, because the buy side is continuing to move quickly and will not wait for them to figure it out,” noted Alex Gardner, vice president of Platform Solutions at Index Exchange.

Index Exchange, a division of ad technology firm Casale Media, markets a bid management technology designed to help publishers and suppliers to sell their ad impressions in real time. You can read the full report at the end of this story.

Interesting, But …

The study, Greater Transparency is Critical to Programmatic Success for Publishers, is based on a small sample. The research is based on interviews at 13 digital content provider organizations in the US with senior publishing executives who are responsible for generating revenue through ad sales. The interviews took place between August and October of 2014 and evaluated the current state of programmatic selling among publishers. 

The study concludes that a lack of trust and transparency is hindering publishers from using data and strategies to deliver successful campaigns for brands. "Transparency leads to maximum results for marketers. When publishers have insights and knowledge into marketers’ goals, they can optimize their strategies to deliver the best performance," Forrester researchers state.

While there's nothing earth shattering in the report — and the finding that more transparency is essential is hardly surprising since Index Exchange, one of the report sponsors, markets a technology designed to do just that — it is interesting in the larger context of programmatic itself.

Programmatic is generating a lot of buzz. In fact, some 349 members of the 100-year-old Association National Advertisers recently voted programmatic as the marketing word of the year.

By all indications, programmatic buying has taken root in the display advertising world and is already making rapid inroads into video inventory.  

Forrester predicts that the digital advertising market will experience an 11 percent compounded annual growth rate through 2019. Display will keep pace with that overall market growth, and will account for close to $34 billion in 2019.

Programmatic, which Forrester estimates currently accounts for 27 percent of display on a volume basis, will become increasingly important. By 2019, an estimated 40 percent will be exchange-sold, which includes both the open auction and a full array of private marketplace transactions.

Richard Joyce, a senior Forrester analyst serving marketing leadership professionals, blogged last month that while programmatic methods and techniques are still at an early stage, more marketers are "driving their digital media buying practices forward by combining rich customer data with algorithmically driven buying platforms to make digital advertising dollars more effective in reaching target audiences."

What's Pushing Programmatic?

Forrester cites several key trends that point to a strong future for programmatic and a more sophisticated future for media buying in general.

  1. Budget increases: Brand budgets are not only migrating to digital but also increasingly focused on programmatic spending. P&G, for instance, wants to buy at least 70 percent of its digital ads programmatically.
  2. Personalized messaging: Data-driven media buying and selling is ushering in an era of true one-to-one, personalized marketing and addressable media. This will compel marketers to experiment, test and learn, and will inevitably lead to greater digital ad budgets.
  3. Demand for cross-channel experiences: Publishers and marketers are gaining insights into consumer expectations on a device-specific basis and creating products that answer consumer needs and interests.
  4. Growth in programmatic TV: Marketing leaders have upped the ante for programmatic and sellers have taken notice, specifically across video and TV. Look for a new generation of ad tech focused on programmatic TV.

Too Little Trust, Transparency?

The study claims both the buy and sell sides are being hurt by a lack of transparency. Specifically, Forrester noted that:

  • It costs publishers revenue. "Marketers judge campaign success or lack thereof based on publisher performance against a set of criteria. They typically don’t share those criteria with the publisher. Without that essential insight, publishers cannot adjust campaign execution strategies to achieve the necessary goals, which often results in diminished performance. And the result of that is lower CPMs the next time around."
  • It results in less than optimal performance for marketers. "Marketers set out to be as effective and efficient as possible. They aim for success with every initiative. But because they deny publishers’ critical insight into campaign goals that would influence execution strategies, the result is often underperformance. 

The report quotes an anonymous national publishing executive, who complains: “If we don’t perform and we really don’t know why, we aren’t given an opportunity to improve packages or targeting."

Insight from the Buy Side

Ali Plonchak, director of digital strategy and integration at New York City-based Crossmedia, said full transparency is great — in theory. "Ideally, when you are buying and selling media, it is a partnership and everyone involved is as transparent as possible to get the client the best results. This should include the goals of the overall campaign, the key performance indicators (KPIs) and the timeline for evaluation and optimizations."

However, there are certain realities to recognize, especially when programmatic is involved.

The buy side doesn't always talk to the sell side: Many buys are controlled through the buy side via demand side platforms (DSPs), the tool a buyer uses to target and buy programmatically.

For example if I wanted to run 10 million impressions targeting organic food purchasers in California I can do that without speaking to a publisher because publishers put that inventory on an open exchange, accessible through a DSP. When the campaign is running I'll look at site-by-site results. If one site doesn't perform well, that might sway a decision to use them programmatically again. I might cut it out of my buy right then — without even sharing that information with the publisher or asking for 'help' to address those goals."

In addition, she noted, "an open exchange buy, an advertiser isn't generally running enough impressions on any one site for the publisher to 'care' to 'help.'"

There are some instances where a buyer connects with publishers to set up a buy programmatically. That happens when a buyer wants to guarantee a certain number of impressions on a site, access inventory that is not released on an open exchange or use targeting that a publisher specifically needs to set up.

In those instances, a buyer still often uses a DSP to run the buy, she noted. There's just a connection set up via technology, which requires a conversation between the buyer and seller. But it's not flawless, she said.

In these situations, I still see a major disconnect in knowledge between the sales team who speaks with buyers and their account team who actually sets up a buy. It's frustrating when a sales executive can't explain or answer certain questions."

Looking Ahead 

Forrester researchers are blunt. In fact, they claim:

The black box approach to the process of buying and selling digital advertising is a vicious circle of suspicion and distrust and is not serving the best interests of either advertisers or publishers. The lack of transparency on the part of buyers means that the publisher is ill-equipped to adjust campaign strategy to deliver the best results to advertisers. The result is inefficiency and a lower ROI."

In short, there should be more conversations programmatically between buyers and sellers to benefit the client. But the situation needs to lend itself to actually making changes and optimizations throughout the buy.

In addition, there has to be greater focus on education about technologies, the capabilities of various platforms and the process of goal setting. This will help get everyone on the same page and manage success expectations.

The report suggests that each party in the programmatic environment take steps to improve trust and transparency:

  • Publishers: Build relationships on a one-to-one basis with marketers. "Overcoming distrust requires face-to-face conversations with those marketers who are or could become your best customers."
  • Marketers: Share your targeting criteria and KPIs with your vendors and publishers. "It is in the best interests of the success of your ad campaigns and your overall ROI that your targeting and campaign KPIs are shared with all your publishing partners."
  • Publisher vendors: Aggregate the insights you amass across your practice and all that you hear and learn in your transactions across the ecosystem, and share it with your clients. "It’s in your best interests that your publisher clients conduct their business in the smartest possible fashion and maximize their revenues. They will be better equipped to make informed decisions about pricing, partnering and new product development if you help to keep them fully up to speed and on top of industry innovation, trends, and taboos."
  • Marketer vendors and agencies: Abandon resistance. "Recognize the inevitable, adjust your business practices, and enforce transparency that will lead to greater success for your marketer clients."