100% Automated Programmatic Selling Not Yet Possible

Posted by admin on August 20

In AdExchanger this week, Alex Magnin asked "How Much Is Your Direct Sales Team Really Worth?" His argument makes the point that programmatic inherently has a low cost of sales and while publishers enjoy higher CPMs from Direct Sales, they should re-examine their cost structure and optimize towards a more automated sales process oriented around yield.

He concludes with:
The digital media sellers of the future will look much more like all-hats creative, technology and strategy ninjas than the bag-and-media-kit carriers of the past. Understanding direct sales yield in a world of custom units, branded content creation, microsite builds, influencer contracts, social media spending, data buys and technology integrations will be harder than ever.
But it is also more important than ever, because in it is the difference between a prosperous new media company and one stuck in the past.

He makes some great points. Especially the true CPM approach to understanding the profit created by a sales rep - it's definitely not as marginally profitably as it seems - if a site can sell, execute and fill ads at volume programmatically.

However, there are some road blocks to the non-direct selling utopia that media companies can hope for. For publishers to command higher CPMs programmatically and "live" off of programmatic, they need to deliver on a few points:

1. They need to develop premium content to attract not only ample traffic, but a specific niche traffic in which an aligned brand is willing to pay for.
2. They need to understand their audience and garner valuable first-party data and insights
3. They need to share those insights, non-PII, with SSP and Buyers in order to command higher premiums

A lot of this responsibility is then transferred to the SSP. The SSP is like the listing agent for your home, if you're selling it. What is that agent's job? Get you a higher price. The agent must understand the nuances of your property and its surrounding area and sell, sell, sell. There is nothing automated to efficient about it. SSP's are not doing this. SSP's are contributors to the commoditization of programmatic advertising, because they are not "selling" the differentiators of a publication's audience nor are they segmenting the audience in meaningful ways. Because of this lack of a first party effort, DMP's pick up the slack with 3rd party data.

If publishers (and SSP's) want to earn CPM's high enough to justify ending their direct sales efforts, they will have to stop sharing in the deliverable of their ads. In other words, they will have to share enough data and insights with DSP's and media buyers to share less of the revenue with DMP.

There is a lot of talk about automating sales and even the demise of so-called 'value added resellers' and 'retargeters' in programmatic; until publishers execute on strategic campaign design and first party data optimization for advertisers, this won't happen. And in the context of yield that was well pointed out in the article.

The final road block is more of a summary as to why automated selling has yet to take off. Everything I've described pertains to the publishers' need to define rich attributes of the audience that are marketable. To 'differentiate' which means to communicate facets of the product that buyers will pay a premium for.

The challenge with this is that advertising is not sold in a market with perfect information. The marketable attributes of audiences vary between buyers. Much like real estate, where houses require 'selling' and cars require 'selling' there is no automated platform in existence that can accurately communicate in an efficient market, enough of the meaningful differentiators to align with premium buyers and command more profit.

As marketing technology improves, and publishers and SSP's do a better job of selling differentiated advertising campaigns, automated CPM's will rise. Whether they will outpace the premiums commanded by human reps remains to be seen. But realistic, sustainable, and adequately profitable automated selling for anyone but the most premium of publishers (ESPN, WSJ, etc.) could be a decade away. Prediction: You will see houses sell online (to consumers) before automated programmatic becomes the norm.

Topics: Automated Sales, Direct Sales

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