Programmatic advertising vs Direct Buying: Who’s the boss?

Programmatic advertising vs Direct Buying: Who’s the boss?

Are you a publisher who’s been considering whether to jump on the programmatic advertising bandwagon? If so, this post is for you.

With Programmatic Advertising being the hype right now, publishers may find it enticing to go fully automated when it comes to ad auctions, sales, and boosting programmatic revenue. Despite the growing popularity of programmatic media buying, we won’t be seeing Direct ad buying disappearing or going extinct any time soon.

Half of the publishers still rely on direct ad buying to bring in revenue and advertisers to slap their branding on their ad inventory in front of the right audience. In this blog post, we’ll take a look at the benefits of programmatic advertising compared to direct ad buying, and help you decide which option is right for your business.

Definition

Programmatic Advertising Definition:

The programmatic Ad Buying procedure involves purchasing ad inventory in an automated manner. It’s a super-fast & efficient model where ads are bought in a real time bidding auction where a boatload of advertisers place bids simultaneously & the highest bidder wins the ad slot. Programmatic advertising automates the whole ad buying process which saves a lot of time.

Programming advertising uses OpenRTB protocol and operates on an impression level. These auctions are conducted once an impression is available & buyers are ready to bid. Note that this is different from Programmatic Guaranteed where no auctions take place. Since this is an automated media buying process, they rely on AI or machine learning algorithms.

Direct Media Buying:

direct-deals

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.

Programmatic advertising vs direct buying: How do they operate?

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

Post 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 where 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 a 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.

Show me the money: Programmatic advertising vs direct buying

When it comes to which ad-buying procedure generates more money, Direct Deals take the win since publishers only put up their premium advertising inventory for direct sales. Advertisers are willing to pay more in this case due to higher CTRs and high ticket conversions.

In contrast, programmatic deals such as PMPs and RTBs do not guarantee or give an accurate estimate on how much money publishers will make. Money made depends on the number of impressions advertisers are bidding for. In some instances, due to low fill rate, ad units are replaced by blank ad impressions which is a loss in ad revenue for publishers.

Programmatic Ads Benefits

what-is-programmatic-advertising

  • 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.

Programmatic advertising vs Direct Buying: Can I use both options?

As a publisher, you must be wondering if you can use both options at the same time? You’ll only get gains from using both 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 that merges both direct and programmatic advertising.

With programmatic guaranteed advertising, you get obvious insertion order-based methods plus automated ad delivery.

Why try Programmatic Guaranteed?

  • The approach with programmatic guaranteed is direct buying merged with programmatic buying resulting in amplified programmatic revenue.
  • Both parties get to negotiate over pricing
  • Ad campaigns have fixed start and end dates with direct media buying
  • Some inventory is made exclusive for certain advertisers just like direct advertising.
  • You can still benefit from the automation benefits of programmatic when you purchase and serve the ad.

Options other than Programmatic Guaranteed

  • Private Marketplace (PMPs): PMPs are a light version of open ad exchanges allowing a limited bunch of advertisers to get access to the publisher’s exclusive inventory.
  • Programmatic Preferred: Publishers offer specific buyers preferential access to their advertising inventory through a programmatic preferred agreement, but that access is open to other buyers as well.pgu cta

The Future of Programmatic Direct Media Buying

Direct buying being the more traditional method was expected to become redundant but to obtain maximum ad revenue blending both these ad buying models is considered the most lucrative option. Ad tech needs to combine the benefits of IO buys and programmatic ad buying to make advertising better for publishers and agencies. It is not feasible for agencies to buy display ads from the same sites at 10 different places and pay 10 different prices. Advertisers want to buy ad space from one source for the ideal price.

As ad tech advances rapidly, so the cons of programmatic sales and direct ad buying fade away as their benefits merge and become programmatic direct buying.

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.

ad-revenue-increase-copy-banner-bid-shading

Kean Graham

CEO and Founder at MonetizeMore

Kean has been a pioneer in the AdTech world since 2010 who believes in the supremacy of direct publisher deals, programmatic advertising, and building ad technology as keys to scaling ad revenue. Here, he provides publisher resources and guides covering areas like website monetization, AdSense optimization, Google Ad Manager, Ad Exchanges, and much more.

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