Where are we on the path to programmatic perfection?

We’re closer than ever before to a model that allows both buyers and sellers to get what they really want without compromising on quality, security or efficiency, writes OpenX’s Richard Kidd

“Are we nearly there yet?”

That dreaded phrase implying a never-ending journey is a question both buyers and sellers have asked ever since programmatic began to revolutionise the digital advertising industry a decade ago.

Real-time bidding (RTB) and open exchanges brought unprecedented scale and efficiency – as well as impression-level audience targeting – to digital advertising. But the process wasn’t perfect – buyers wanted increased inventory certainty, and sellers needed revenue security.

For years the quest for a solution that combines the best of RTB with the security of direct deals has driven the evolution of programmatic, resulting in multiple programmatic direct models that apply varying degrees of automation to direct transactions.

In fact eMarketer’s latest predictions show programmatic direct is now overtaking RTB, expected to account for 56% of programmatic display spend this year.

Programmatic will reach perfection when buyers and sellers no longer have to make comprises on quality, security or efficiency, and consumers are served the right ad at the right time. So where are we now in the evolution of programmatic and how far do we still need to go to reach the journey’s end?

The first two incarnations of programmatic direct were private marketplaces (PMPs) and automated guaranteed:

Private marketplaces enable publishers to make their premium data-enriched inventory available to a select group of buyers through a private auction, either with or without RTB, ensuring higher revenues for the seller and exclusive access to enhanced inventory for the buyer. But scale remains an issue, especially compared to the open exchange, and neither inventory nor revenues are guaranteed.

Automated guaranteed uses technology to manage one-to-one, fixed price deals between sellers and buyers, which maintains revenue and inventory security. But the human input this process requires often lacks the flexibility of true programmatic, and doesn’t deliver the benefits of impression-level targeting through audience data, meaning there are often better tools available for publishers looking to meet buyer goals.

The latest evolution of programmatic direct – real-time guaranteed – is a convergence of the two previous models, designed to let both buyers and sellers have their programmatic cake and eat it too.

Real-time guaranteed uses the RTB mechanism to bring speed and efficiency, while guaranteeing inventory on the buy side and revenue on the sell side. Because it syncs the buyer’s audience with publisher inventory, it also allows precise audience targeting at impression level.

Operating in real-time, this model provides buyers with more flexibility and choice – giving them access to premium programmatic inventory previously only available directly – and it also allows them increased control over execution. They can take a differentiated approach to buying inventory on a guaranteed basis, executing campaigns via their own DSPs and implementing frequency caps across multiple direct buys.

As the next evolution in programmatic, real-time guaranteed finally combines RTB efficiency, audience targeting, and secure trading in a way that has previously never been possible.

So are we nearly there yet?

Real-time guaranteed is a milestone on the programmatic journey, and both publishers and advertisers who avoid this crucial pitstop are undoubtedly missing out on the benefits it brings. But its current form is still not the final destination, there are a number of phases to come as programmatic continues to evolve.

The need to address the user experience and make the process simpler and more accessible for all is becoming increasingly important across all participants in the ecosystem. Even real-time guaranteed still requires some manual processes but this need can be eliminated by a robust deal transaction user interface that makes it easier to trade programmatically.

Ultimately for publishers, programmatic should be as simple as placing a tag, and for buyers it should be a matter of selecting the exact inventory they want.

Secondly, the industry must tackle the current limitations and inaccuracies of forecasting technology. Most current tools only deliver expected volumes based on activity during the previous 30 days, which can be unrepresentative of seasonal changes or campaigns that run for longer or shorter periods.

To prevent forecasting causing tension between sellers and the buyers who are spending sizable budgets with them, flexible solutions are required. Fortunately, new tools are emerging that automatically incorporate seasonal trends, and use up to one year of historical data for increased accuracy.

We have come a long way on the programmatic journey, and with real-time guaranteed we’re closer than ever before to a model that allows both buyers and sellers to get what they really want without compromising on quality, security or efficiency.

So, are we nearly there yet? In a continually evolving ecosystem, I’m not sure we ever will be, but programmatic will rightfully keep rising to every challenge.

Richard Kidd is ‎VP head of business development at OpenX