Last month I wrote an article titled, "What the heck does 'programmatic' mean?" The response was pretty phenomenal, and it became apparent that there is much more to be said on this topic. In this article, I'll flesh out a few of the concepts from the original column and dig into new issues, including commonly believed myths, surrounding programmatic buying.
As in my last article, let me start out with a broad definition of "programmatic" buying and selling. I would define it as any method of buying or selling media that enables a buyer to complete a media buy and have it go live, all without human intervention from a seller.
Programmatic buying is a superset of exchange, real-time bidding, auction, and other types of automated media buying and selling that have mainly been proven out for remnant ad inventory clearing mechanisms up until today. So, while an auction might or might not be involved in programmatic buying and selling, the roots and infrastructure behind the new programmatic world is based on the same infrastructure that the ad exchanges, demand-side platforms, supply-side platforms, and ad servers have been plumbing and re-plumbing over the last five years.
Let's take a look at some of the most common and widely believed myths regarding programmatic buying and its current and future role in our industry.
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The following research paper is relevant to this article, Title : "Internet Advertising: An Interplay among Advertisers, Online Publishers, Ad Exchanges and Web Users" , download here : http://arxiv.org/pdf/1206.1754v2.pdf
Michael Hubbard, thanks! The last time I calculated impression volume I came up with 5 Trillion monthly impressions across the whole online display space. This is based on private conversations with folks over drinks who own the serving infrastructure at the largest publishers and ad servers, plus some public data. Note that the Comscore and Nielsen numbers are radically off when compared to ad server numbers. I found that when I compared numbers I had access to and numbers I was hearing from other publishers to the numbers from Comscore and Nielsen the differential was pretty proportional. So I'm confident we're well over 5 Trillion display ads a month. Cause last time I did this was 2 years ago. ;)
Eric - GREAT article - I will circulate it around the office as well. A couple quick questions for you... First, on the remnant side of things - do you have any numbers on the web as a whole, how much inventory is truly remnant inventory? With company's such as Federated Media shuttering their sales team and saying that 89% of it's revenue was being generated via programmatic methods, is it fair to say that their truly could be 80-90% remnant inventory? I just don't understand how much of the private marketplace deals truly are unsold inventory versus premium inventory.And then I think it's worth noting that RTB is not like sitting at your Level 3 quotes and bidding when you see a price light up green... The RTB side of things is more behind the scenes technology. I often get asked about how a trading desk managing the RTB inventory can keep up, and I explain it more like putting in market orders and limit orders - but there's truly no one on the agency side that is yelling buy, sell, hold! Not sure if that's just old school mentality, but worth noting that RTB is all technology driven as I don't think everyone understands that just yet.Well written article!
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