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The search for programmatic's golden mean

The search for programmatic's golden mean Jonathon Shaevitz

If life had a roadmap, it would be easy for us to know the exact path to take to achieve balance, something Aristotle referred to as the "golden mean." But in reality, we face difficult and often extreme choices each day in the search for equilibrium in both our personal and business lives.

In programmatic advertising, it is equally important to achieve a "golden mean" that balances the interests of both the buyer and the seller. However, as today's programmatic landscape has evolved, a natural imbalance has emerged. Investments in technology and data have given buyers the edge. The sell side, until recently, has muddled their way through programmatic at a significant disadvantage. That is now starting to change.
Just as advertisers have embraced data to become programmatic's winners on the buy side, data-driven publishers need to emerge as the rule, rather than the exception on the sell side. Accordingly, sellers need to continue to get smarter about how they value their inventory and empower themselves with data and insights similar to that of the buy side. Any challenges to sellers achieving command of their seller trading data (the data about a seller's inventory that helps sellers understand inventory value and direct pricing strategy) should be treated as a high priority issue and a threat to market balance.

The good news is sellers are becoming smarter about how they use data to value their inventory. This is moving everyone toward a more balanced market and mutual transparency which will benefit the entire programmatic landscape.

But more work needs to be done. There are three conditions that must exist in order to help foster programmatic's "golden mean".

Embrace data-driven selling
When sellers have full command of their trading data, it allows them to more confidently engage in programmatic channels. They can make better decisions and more accurately evaluate the marketplace. This removes the hesitancy of publishers to engage in programmatic selling because they now have the information they need to understand if they're getting a fair deal. When publishers are confident, higher quality inventory reaches programmatic channels, resulting in happier buyers.

Balanced use of technology
When publishers gain access to powerful sell-side technology that delivers insights to improve sales decisions, the market will continue to grow as more inventory is committed. Today's imbalance in insights and pricing has left sellers unwilling to commit the brand-quality inventory buyers crave to programmatic channels. Publishers are the only ones that can change this by investing in the appropriate technologies and resources to become data-driven.

Balanced value realization
It's an accepted fact that the programmatic ad ecosystem needs to drastically cut the margin-eating tolls and high "ad tech taxes" that reduce buyer and seller ROI. With more equal command of buyer and seller data, greater transparency, and improved information, both sides will know exactly when they are paying too much, losing margin, and giving others outsized commission. Collectively, they can identify and eliminate waste and re-capture the true value of inventory. This in turn will allow sellers to maintain sustainable businesses independent of the Google-Facebook duopoly and improve the performance of buyer media investments.

Looking ahead

At worst, in the absence of an equilibrium in programmatic advertising, the market will continue to move to monopoly or duopoly. It will be a world in which independent sellers are marginalized to the value of commissions from search returns or feed placement, and where concepts such as content control and ownership are drastically different. The less draconian picture foresees a marketplace where publishers continue to muddle through and pay high fees to middlemen and excessive ad tech costs, while the buy side continues to exploit its current advantages. Either scenario isn't ideal because everyone ends up in the same place: with significantly fewer profitable independent publishers and buyers facing drastically reduced options -- and higher prices for quality inventory outside of the largest players.

To prevent such scenarios, publishers must take the first step. We are early enough in the transition to programmatic for them to have an impact. Publishers can and need to better understand their data in order to restore confidence and control in working with the buy-side. That will move us all one step closer to programmatic's golden mean. And there's no doubt that will be a good thing for everyone.

Jonathon Shaevitz is president and COO at Adomik.

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Jonathon Shaevitz is a media technology veteran, having led multiple ad-tech companies, served on numerous boards and provided consultancy for dozens of organizations. He is currently the President and COO of Adomik, a provider of programmatic...

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