Google Says Programmatic Direct Is Due for a Rise in 2017

Programmatic direct isn't a new thing. In fact, two or three years ago it was being touted as the future of buying and selling digital media. And for a time, those who did the touting looked foolish because programmatic direct never really became a "thing." But like header bidding, which had been around for years before finally taking off with publishers near the end of 2015, programmatic direct seems poised for a lift in 2017 thanks to renewed interest by agencies and publishers. The concept behind programmatic direct is simple: While the open ocean of digital advertising is often bought in real time, sometimes digital media buyers want to lock up particular ad inventory, especially video, on premium websites such as The New York Times ahead of time. They may want to lock in a decent price on ads they know they'll want, or just to make sure they've got the right placements for a campaign they're planning. And buying via programmatic ad tech can, in theory, make it easier to find and assemble certain consumer targets across publishers than buying with one publisher at a time. The holiday season -- a time when brands unload ad dollars specifically earmarked to reach consumers who are in a shopping state of mind -- provided a good reason for agencies to use the technology. Google said the number of video ad impressions served monthly through programmatic direct on its platforms have doubled from January 2016 through September 2016. The number of programmatic direct deals by retail advertisers executed on its DoubleClick Ad Exchange grew 2.8 times from the fourth quarter of 2014 to the fourth quarter of 2015. Although 2016 has yet to close, Sean Downey, VP of platforms at Google, told Ad Age he expects the company to see a year-over-year increase of 150% to 200% for the same time this year. "You're starting to see statistics from us saying 90 of the Ad Age 100 are using programmatic direct," Mr. Downey said. "We think as the market grows and matures that this will become table stakes for any strong marketer or agency who is trying to achieve their goals." The advance of programmatic direct reminds Michael Kuntz, senior VP of digital revenue at USA Today Network, of the growth in mobile advertising. "I can think back to five or six years ago when people were saying, 'This is going to be the year of mobile,' and that never happened," he said. "And finally, it exploded." Although Mr. Kuntz declined to share specific numbers, he said in the last six to nine months USA Today has seen "a really big upswing" in programmatic direct deals. "Frankly, the technology has now caught up to the demand," he said. "And now we can bring richer, more high impact media opportunities to our clients via programmatic direct buying channels. I think that has absolutely caused a migration away from the open exchange." But there are other factors, too. Ad blocking, fraud and the risk of appearing on a fake-news site are nonexistent or less prevalent in programmatic direct deals, Mr. Kuntz said. "I think lots of clients have woken up and they're saying, 'We understand there are efficiencies in buying through an open exchange, but I'm not so confident my ads are showing up in the right environment," Mr. Kuntz said. "I think the pendulum is starting to move away from just buying the right eyeballs in real time to, 'Yeah, we want to do that, but we also want to make sure our ads are showing up on the right content and in an environment we're comfortable with.'" Meanwhile, agencies and trading desks have helped breathe new life into programmatic direct deals. "Where we think there is a lot of power is the fact we are bringing our data and our advertiser's data to the table and saying, 'These are the audiences we want to deliver and find within your environments,'" said Erica Schmidt, managing director at Cadreon North America. "That is a key sea change and it is very different from working with publishers directly." Although Ms. Schmidt agreed that programmatic direct seems poised for success next year, she did pump the brakes. "I absolutely think this will be big in 2017, but we are in early stages," she said. "It is a philosophical change when you are going direct and there is going to be an adjustment period." Vin Paolozzi, senior VP of marketplace development and investment at Magna Global, said he's most excited about now having the ability to pass a client's audience data through Google so it can forecast how much of that audience a publisher can truly reach across its inventory. "We had some of that ability in the private marketplace, but it lacked scale," Mr. Paolozzi said. "Now we can forecast and buy as much as we need -- especially when it comes to the holidays … If you think about the opportunity with Google, to be able to match and scale those audiences, that is a powerful connection to have." Very few technology companies can compete with Google when it comes to the business of matching audiences. The company has rich data on users through its many services and Android operating system. The tech kingpin also works with nearly every publisher on the planet. Meanwhile, other publishers like The New York Times have also seen increases in the number of programmatic direct deals over the course of 2016. "We had some big deals in every quarter," said Sara Badler, director of programmatic advertising at the New York Times. "Obviously, seasonality helps, but marketers are becoming more and more interested in transacting this way." Ms. Badler added that the publication is "definitely" seeing more and more agencies moving toward programmatic direct. "I think that marketers used to think of it as just direct response. Before programmatic direct used to be standard units. Now, we're starting to see high-impact units go this way and marketers are starting to follow." "We're not just remnant inventory anymore," she said.

Google Says Programmatic Direct Is Due for a Rise in 2017

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