Programmatic vs Direct: Which Ad Strategy Earns Publishers More

Blog
May 30, 2024 | by Aleesha Jacob
programmatic-advertising-vs-direct-buying

Did you know that 50% of publishers still rely heavily on direct ad sales? While programmatic advertising is undeniably on the rise, offering automation and efficiency, direct deals continue to provide unique advantages that publishers can’t ignore.

In this article, we’ll explore why savvy publishers are embracing hybrid strategies that blend programmatic and direct sales to maximize their ad revenue. We’ll delve into the strengths and weaknesses of each approach, offering the best guide to help you make informed decisions that drive your business forward.

The Current State of Programmatic Sales for Publishers

Programmatic advertising has revolutionized the way publishers sell ad inventory. Its automated nature, real-time bidding, and advanced targeting capabilities have made it an attractive option for many. Publishers are increasingly leveraging programmatic platforms to:

  • Reach a Wider Audience: Programmatic opens doors to a vast pool of advertisers across various industries and geographies, expanding a publisher’s potential reach.
  • Optimize Yield: Real-time bidding allows publishers to dynamically adjust their ad prices based on demand, maximizing their revenue potential.
  • Streamline Operations: Programmatic platforms automate many of the manual tasks associated with ad sales, freeing up resources for other areas of the business.
  • Access Advanced Targeting: Programmatic offers granular targeting options based on audience demographics, interests, and behaviors, enabling publishers to deliver more relevant ads.
  • Experiment and Adapt: The data-driven nature of programmatic allows publishers to test different strategies, measure results, and optimize their ad campaigns continuously.

However, programmatic isn’t without its challenges. Issues like ad fraud, brand safety concerns, and potential loss of control over ad placements require careful management. Despite these concerns, the growth of programmatic is undeniable, and many publishers are integrating it into their overall ad strategy.

The Enduring Appeal of Direct Sales for Publishers

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Direct ad buying involves selling the publisher’s ad inventory manually or directly to the advertiser. In this case, an agency may be involved in being the mediator for initiating communication between the publishers and advertisers. Direct deals have been taking place for decades and both parties are comfortable with the ad buying process. In this case, auctions are not conducted and the ad inventory is sold at a fixed rate.

Despite the rise of programmatic, direct sales remain a crucial component of many publishers’ revenue strategies. The direct relationship between publishers and advertisers offers unique benefits:

  • Premium Pricing: Direct deals often command higher CPMs (cost per thousand impressions) than programmatic, especially for premium inventory and high-quality audiences.
  • Guaranteed Revenue: Direct sales offer predictable revenue streams, unlike the fluctuating nature of programmatic auctions.
  • Stronger Relationships: Direct deals foster closer relationships between publishers and advertisers, leading to more collaborative and customized campaigns.
  • Brand Safety Control: Publishers have greater control over the brands and types of ads that appear on their sites, ensuring brand alignment and protecting their reputation.
  • Creative Flexibility: Direct deals allow for more creative and customized ad formats, which can lead to higher engagement and better results for both publishers and advertisers.

While direct sales require more manual effort and negotiation, the potential rewards make it a valuable tool for publishers looking to maximize their ad revenue.

The future of ad sales for publishers likely lies in a combination of both programmatic and direct sales. By strategically utilizing each approach, publishers can leverage their strengths and mitigate their weaknesses, creating a well-rounded and profitable ad strategy.

Programmatic advertising vs direct buying: How do they operate?

Advertisers connect with publishers directly or via a trusted agency for direct deals. After that, publishers send the request for proposal (RFP). Since everything happens directly here, including policy and terms discussion and price negotiation, an insertion order (IO) is signed by both the advertiser and publisher.

After that, the advertiser is allowed to display his ad creatives on the publisher’s ad inventory for a fixed rate & time.

Programmatic deals are completely automated, and users landing on a publisher’s site are served a bid request containing information about their parameters (age, demographics, likes) for targeting purposes.

Afterward, the publisher’s supply-side platform (SSP) sends this bid request to the ad exchange that is determined to display suitable creative to the user.

The ad exchange then passes the signal to the demand side platform (DSP) based on the user’s targeting details. The ad exchange follows this up with an auction to select the winning ad creative.

Finally, the ad creative is displayed on the publisher’s site after it has been retrieved from the ad server.

Key Differences between Programmatic & Direct Buying

The table below gives a solid overview to help you decide which approach, or combination of approaches, best suits your needs and goals:

Feature Programmatic Advertising Direct Ad Buying
Pricing Dynamic, real-time bidding (RTB) or fixed CPMs through PMPs Negotiated fixed CPMs, often premium rates
Targeting Audience-based, contextual, behavioral, retargeting Specific placements, audience demographics
Automation High level of automation, streamlines ad operations Manual processes, requires negotiation and contracts
Control Less direct control over ad placements and advertisers More control over ad creative, placement, and advertisers
Scalability Highly scalable, can reach a vast audience Limited scalability, dependent on individual deals
Transparency Varying levels of transparency depending on the platform High transparency, direct communication with advertisers
Relationships Less emphasis on personal relationships Builds strong relationships with advertisers
Revenue Potential Potential for high revenue with large volumes of impressions Potential for higher CPMs and guaranteed revenue
Best for Remnant inventory, reaching a broad audience, efficiency Premium inventory, brand-safe campaigns, established relationships

Programmatic Advertising Benefits

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  • Simplified Advertising process
  • Time saved when it comes to insertion orders, invoices, or direct negotiations
  • Since it’s totally automated, publishers need to share their inventory details while advertisers share their ad creative, target audience, and budget details.
  • Automated ad serving
  • The programmatic platform comes with abundant options to choose from.

Direct Media Buying Benefits

  • Freedom to customize ad units
  • More ad revenue from premium Inventory
  • Access to major brand deal ad dollars with the right contacts.
  • Comes with a greater higher dollar value per impression.

Can I use both Programmatic Advertising & Direct Buying

As a publisher, you must be wondering if you can use both options simultaneously? You’ll only gain from programmatic advertising and insertion order ad sales.

Sadly, most publishers are not partnered with the right AdTech company that can help them use both deals to maximize ad revenue. Programmatic Guaranteed is the best option in this case, combining direct and programmatic advertising.

With programmatic guaranteed advertising, you get solid insertion orders plus automated ad delivery.

Why try Programmatic Guaranteed?

Programmatic Guaranteed (PG) is a win-win scenario for both publishers and advertisers, offering a compelling alternative to traditional methods. Here’s why publishers should seriously consider embracing Programmatic Guaranteed:

  • Guaranteed Revenue & Impressions: Like direct deals, PG provides the security of guaranteed impressions at a negotiated fixed price, ensuring predictable revenue for publishers.
  • Streamlined Efficiency: Unlike manual insertion orders, PG automates the ad buying and delivery process, saving valuable time and resources.
  • Advanced Targeting: PG leverages programmatic technology to offer precise targeting capabilities, ensuring ads reach the right audience segments.
  • Inventory Control: Publishers maintain control over their premium inventory, deciding which advertisers get access and at what price.
  • Data-Driven Insights: PG provides valuable data and analytics, allowing publishers to track performance and make informed optimizations.

In essence, Programmatic Guaranteed delivers the predictability and control of direct sales with the efficiency and targeting capabilities of programmatic advertising. This hybrid model empowers publishers to maximize revenue, streamline operations, and deliver better results for advertisers. If you’re looking to elevate your ad strategy and tap into the full potential of both programmatic and direct sales, Programmatic Guaranteed is a solution worth exploring.

Options other than Programmatic Guaranteed

  • Private Marketplace (PMPs): Programmatic platforms can offer a hybrid approach with PMPs, where publishers curate specific inventory for select advertisers, combining elements of both programmatic and direct deals.
  • Programmatic Preferred: Publishers offer specific buyers preferential access to their advertising inventory through a programmatic preferred agreement, but that access is also open to other buyers.
  • Preferred Deals: Another hybrid option where publishers offer certain advertisers preferred access to their inventory before it goes to open auction.
  • Guaranteed Deals: A programmatic deal where the publisher guarantees a specific number of impressions to an advertiser at a fixed price. This offers the predictability of direct sales with the efficiency of programmatic.

The Future of Programmatic Direct Media Buying

Programmatic Direct Media Buying (PDM) is poised to revolutionize the advertising landscape, blurring the lines between programmatic and direct sales. As technology advances and buyer-seller relationships evolve, we can expect to see these key developments in the future of PDM:

Increased Adoption and Dominance:

  • PDM will become the predominant method for buying and selling premium ad inventory. Its efficiency, transparency, and control will appeal to both publishers and advertisers.
  • Traditional direct deals with manual insertion orders will gradually decline and be replaced by the automated workflows of PDM.
  • The market share of PDM will expand significantly, reaching a majority of digital ad transactions.

Advanced Deal Types and Customization:

  • New deal types beyond Programmatic Guaranteed will emerge, offering a spectrum of options with varying degrees of automation and flexibility.
  • Publishers and advertisers will have more granular control over deal terms, targeting parameters, creative formats, and performance metrics.
  • PDM platforms will offer customization options to tailor deals to specific campaign goals and brand requirements.

Enhanced Transparency and Data Sharing:

  • PDM platforms will prioritize transparency, providing publishers and advertisers with in-depth insights into pricing, audience data, and campaign performance.
  • Data sharing and collaboration between buyers and sellers will increase, fostering stronger relationships and more effective campaigns.
  • Blockchain technology may be used to ensure data integrity and prevent fraud, further increasing trust in the PDM ecosystem.

Integration with Emerging Technologies:

  • PDM will integrate with AI and machine learning to optimize targeting, pricing, and creative selection, delivering better buyer and seller results.
  • The rise of connected TV (CTV) and over-the-top (OTT) platforms will drive the adoption of PDM for video advertising, leveraging programmatic capabilities for premium video inventory.
  • PDM may incorporate elements of augmented reality (AR) and virtual reality (VR) advertising, opening up new creative possibilities and immersive ad experiences.

Consolidation and Standardization:

  • The PDM landscape will consolidate, with a few leading platforms dominating the market.
  • Industry standards for PDM deals, data formats, and measurement metrics will emerge, facilitating interoperability and simplifying the buying process.
  • PDM will become an integral part of the broader programmatic ecosystem, seamlessly integrating with other programmatic channels and ad tech solutions.

As technology continues to evolve and the industry embraces automation and data-driven insights, PDM will transform how digital advertising is bought and sold, benefiting publishers and advertisers.

Bot Traffic in Programmatic Ad Buying

Invalid Traffic (IVT) and ad fraud is the kryptonite of programmatic advertising that can cause revenue clawbacks and suspensions in the long run. This is the worst part about going fully automated but we can’t blame the programmatic world for traffic bots.

Since direct deals are negotiated directly without a third-party software, they are bot proof and safer compared to programmatic deals. Additionally, user data won’t get leaked due to the non-disclosure agreement between both parties.

Luckily, MonetizeMore has the perfect ad fraud solution. Their IVT busting tool, Traffic Cop is designed to help publishers hide their ads from being shown to bots.

What you should do now?

With programmatic deals, the creatives & prices are chosen dynamically, making it difficult for publishers to predict profits. But with historical  inventory performance data, you can estimate a range.

Direct media buying involves direct negotiation talk & manual insertion order building so save your best inventory for direct media buying to make the most money. With direct buys, there’s zero revenue uncertainty as the prices remain the same most of the time due to past negotiation talks.

It is recommended to make use of both programmatic and direct media buying to take your ad revenue to the next level.

  • Harness programmatic deals to sell unsold inventory.
  • Keep your premium inventory for direct media buying only.

At MonetizeMore, we prioritize both direct buying and programmatic advertising and offer both these deals blended in the best possible way. Once you partner with us, you’ll never have to worry about how you’re going to sell your inventory. Sit back and relax while our AdOps experts and Pubguru ad technology do the rest of the work.

Time to boost your ad revenue now! Get started here.

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