This document discusses the emerging landscape of programmatic direct marketing beyond real-time bidding (RTB). It notes that while RTB has grown significantly, the majority of digital display spending still occurs through manual transactional processes. It explores how new programmatic approaches aim to automate these manual processes to connect buyers and sellers more efficiently. The document provides context on the complexity currently involved for both advertisers and publishers. It also examines the key questions around how programmatic direct may develop, including what technologies and standards will enable it to operate at scale for higher-value inventory beyond RTB. Overall, the document analyzes the opportunity and challenges for automating the "middle slice" of digital media transactions.

1. Market Data / Supplier Selection /
Event Presentations / User Experience
Benchmarking / Best Practice /
Template Files / Trends & Innovation

Programmatic
Marketing: Beyond RTB
Understanding the new programmatic
direct landscape

2. Programmatic
Marketing:
Beyond RTB
Understanding the new
programmatic direct landscape
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Published December 2013

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Contents
1. Overview .......................................................................... 5
1.1. Methodology................................................................................ 5
1.2. About the author ......................................................................... 6
1.3. About Econsultancy .................................................................... 6
2. Introduction: Pivoting to Programmatic Direct..............8
3. Programmatic Definitions ..............................................11
3.1. Defining programmatic direct ................................................... 11
3.2. Defining programmatic RTB .....................................................15
3.3. Refining and defining by programmatic approaches................17
3.4. Chapter summary: programmatic definitions...........................17
4. The Demand Side........................................................... 19
4.1. Agency trading desks................................................................. 22
4.2. Agency culture and personnel................................................... 23
4.3. Agency pricing models and programmatic............................... 26
4.4. Fraud: the elephant in the programmatic room ...................... 27
4.5. Standards...................................................................................28
4.6. Chapter summary: programmatic direct and the demand
side............................................................................................. 29
5. The Supply Side .............................................................30
5.1. New monetisation options: programmatic direct, native,
etc............................................................................................... 32
5.2. Programmatic direct: a sales channel or real trend? ............... 32
5.3. Programmatic direct and organisational change ..................... 34
5.4. Chapter summary: the supply side ........................................... 35
6. Transactional RFP Workflow ........................................ 37
6.1. Research ....................................................................................38
6.2. Media planning.......................................................................... 39
6.3. Demand-side order management.............................................40
6.4. Demand-side ad serving ............................................................41
6.5. Supply-side order management................................................ 42
6.6. Supply-side ad serving .............................................................. 43
6.7. Billing and reconciliation.......................................................... 44

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7. Where Are We Now?......................................................45
8. Contributors...................................................................48

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1. Overview
Programmatic Marketing: Beyond RTB is aimed at marketers, agencies, and publishers
who want to understand the new programmatic landscape and its applications beyond real-time
bidding (RTB). Today, new technologies and approaches are connecting buyers and sellers, and
eliminating many of the manual tasks associated with planning and buying digital media.
In this report, we’ll explore the new programmatic direct landscape, the implications for
demand- and supply-side players, and the barriers to successful adoption of programmatic
approaches. The report includes insights from key executives in ad technology, agencies, and
publishers, as well as daily practitioners, to see where programmatic automation stands today,
and where it is going.
It’s hard to believe, but agencies and publishers are still closing digital media deals with fax
machines. However, large-scale growth in web-based RTB platforms and increasing adoption
from marketers is putting pressure on all sides to automate processes for buying and selling
digital media. This report will explore the following key questions:
 What is the difference between programmatic and automation?
 What is needed to embrace a programmatic approach?
 What are the benefits of a programmatic approach to transactional media?
 How will my company’s organisational personnel needs change?
 What are the barriers to successful programmatic strategy implementation?
Readers of this report should come away with a solid understanding of current programmatic
direct approaches, available solutions in the space, and how they can structure their organisation
to implement programmatic techniques.
The report contains key insights from some of the most recognised thought leaders and
practitioners in the space from companies, including Adslot, AppNexus, Bionic Advertising
Systems, Centro, FatTail, isocket, MakeBuzz, Maxifier, Mediaocean, OpenX, Operative, Rare
Crowds, Rubicon Project, SAS, Shiny Ads, Strata, True Media, Yieldex, and many more.
1.1. Methodology
This report aims to provide an unbiased, balanced look at manual process automation in digital
media, aided by leading practitioners in the space. The author surveyed over 19 senior-level
digital media and ad technology executives who provided detailed, written responses to a wide
range of questions.
In addition, the author conducted extensive phone interviews with programmatic thought leaders,
and drew upon his own previously conducted research. The opinions in this report are the
author’s own, and may not reflect the views of his employer or companies in which he holds
equity.

6. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 6
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1.2. About the author
Chris O’Hara is the CRO and co-founder of Bionic Advertising Systems,
author of several Econsultancy reports (Best Practices in Digital Display
Advertising and Best Practices in Data Management) and a researcher and
contributor to Econsultancy’s recently published Data Management
Platforms Buyer’s Guide.
A domain expert on advertising platform technology and programmatic
media technology, Chris is a member of the IAB’s Programmatic Task Force, and a contributor to
the recently published Winterberry Group/IAB whitepaper “Programmatic Everywhere: Data,
Technology, and the Future of Audience Engagement”.
He also writes frequently in industry publications including AdExchanger and Econsultancy.
1.3. About Econsultancy
Econsultancy is a global independent community-based publisher, focused on best practice digital
marketing and ecommerce, and used by over 400,000 internet professionals every month.
Our hub has 200,000+ subscribers worldwide from clients, agencies and suppliers alike with over
90% subscriber retention rate. We help our subscribers build their internal capabilities via a
combination of research reports and how-to guides, training and development, consultancy, face-
to-face conferences, forums and professional networking.
For the last 10 years, our resources have helped subscribers learn, make better decisions, build
business cases, find the best suppliers, accelerate their careers and lead the way in best practice
and innovation.
Econsultancy has offices in London, New York and Singapore and we are a leading provider of
digital marketing training and consultancy. We are providing consultancy and custom training
extensively across Europe, Asia and the US. We train over 5,000 marketers each year.
Join Econsultancy today to learn what’s happening in digital marketing – and what works.
Call us to find out more on +44 (0)20 7269 1450 (London) or +1 212 971 0630 (New York). You
can also contact us online.

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Recommended reports and content from Econsultancy
Best Practices in Digital Display Advertising
http://econsultancy.com/reports/best-practices-in-digital-display-advertising
Best Practices in Data Management
http://econsultancy.com/reports/best-practices-in-data-management
Real-Time Bidding Buyer’s Guide
http://econsultancy.com/reports/rtb-buyers-guide
Data Management Platforms Buyer’s Guide
http://econsultancy.com/reports/dmp-buyers-guide
Online Advertising Survey
http://econsultancy.com/reports/online-advertising-survey
Improved performance and reduced wastage seen as main benefits of real-time bidding
http://econsultancy.com/blog/63480-improved-performance-and-reduced-wastage-seen-as-main-benefits-of-
real-time-bidding
Four years on: the growing pains of programmatic media (part one)
http://econsultancy.com/blog/63079-four-years-on-the-growing-pains-of-programmatic-media
Programmatic media unpacked (part two)
http://econsultancy.com/blog/63254-programmatic-media-unpacked-part-two
The nuts and bolts of programmatic marketing (part three)
http://econsultancy.com/blog/63464-the-nuts-and-bolts-of-programmatic-marketing-part-three
The future of programmatic media (part four)
http://econsultancy.com/blog/63685-the-future-of-programmatic-media-part-four
How far should programmatic marketing go?
http://econsultancy.com/blog/62082-how-far-should-programmatic-marketing-go
Programmatic premium is not about bidding
http://econsultancy.com/blog/62028-programmatic-premium-is-not-about-bidding
Why you can’t ignore programmatic marketing
http://econsultancy.com/blog/11362-why-you-can-t-ignore-programmatic-marketing

8. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 8
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2. Introduction: Pivoting to Programmatic
Direct
Despite almost continuous hype and billions in investment in LUMAscape companies, in 2010
only 25% of $9 billion digital display dollars flowed through programmatic real-time bidding
channels. About 5% was bought on a sponsorship basis, and nearly 70% was purchased through
the manual, highly cumbersome transactional request for proposal (RFP) channel. This ‘middle
slice’ of the market is ripe for automation.
Both buyers and sellers of digital media struggle with the complexity involved in digital media
transactions – planners can easily spend hours manually sorting through available inventory and
discovering prices to begin negotiating deals with the sellers or publishers; and publishers
compete for these sales in a cumbersome, highly manual agency-created RFP process that keeps
them at arms-length from advertisers.
These inefficiencies – coupled with the exponentially increasing amount of inventory to be
transacted online – helped create auction-based approaches to media buying (RTB), in which
today’s programmatic movement was born. These new methods for transacting media rely heavily
on technology and data to efficiently – and often automatically – manage the cumbersome work
of digital media sales.
Growth in RTB technologies, and widening adoption of their use for audience segmentation and
targeting over the past several years has now spurred interest and investment in programmatic
approaches to not just digital display inventory, but content creation and optimisation, and even
workflow and back-end processes. In short, marketers see the potential to leverage digital
addressability, real-time analytics, and granular levels of control to achieve their business and
customer engagement objectives – and do so without the complexity that had previously been
inherent.
Figure 1: The 42 steps involved in the typical display media ordering process has
created an opportunity for ad technology
Source: Bionic Advertising Systems1
1 http://www.bionic-ads.com/2011/05/typical-online-display-media-order-process/

9. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 9
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Considering the complexity of digital media, the variety of creative sizes, millions of ad-supported
sites, and dozens of ad servers, analytics platforms, order management and billing tools, it goes
without saying that digital marketing is a hard competency for any organisation to master. On the
demand side, advertisers have gone from managing the relatively limited number of media outlets
offered by TV, print, and radio to a digital channel with literally thousands of choices. Publishers,
facing a marketplace oversaturated with display inventory and a cumbersome workflow system,
have had to become experts in technology and yield management to realise the most revenue from
their readership.
For both sides, RTB systems offered a way to buy and sell inventory via a web-based interface,
rather than over the phone. From the start, advertisers realised the benefits that data-driven
audience targeting brought, enabling specific audience segments to be found across ad exchanges
– the major transaction platform for programmatic – rather than by purchasing contextually
relevant content, or those whose visitor logs index highly against a desired demographic profile.
Publishers, oversaturated with their own inventory, found a new channel to monetise mid- and
long-tail inventory, which proved difficult to sell on a direct basis.
Most marketers have embraced programmatic RTB vigorously for lower-funnel marketing activity
such as retargeting, enjoying the ability to cherry pick segmented audience members without
making large spending commitments, and have come to expect the kind of robust analytics that
programmatic RTB platforms provide. The pipes have been laid to transact bidded media in near
real-time, there is a seemingly endless amount of third-party data, and an ocean of exchange-
based inventory upon which to place targeted media. Programmatic RTB works, is growing, and it
is here to stay.
That said, there is a reason why programmatic RTB has attracted more direct response dollars
than branding dollars, and that is largely inventory quality. Publishers, afraid of data leakage and
desirous of control over pricing and availability of top-tier inventory, have been unwilling to
contribute premium inventory to exchanges. The most coveted placements must still be
purchased via manual insertion order, and the transactional layer of inventory still commands the
lion’s share of digital display budgets. This dynamic has led to what Bionic Advertising Systems
founder, Joe Pych, calls the “Sutton Pivot”:
“Willie Sutton robbed banks because ‘that’s where the money is’. Today, we are seeing
many companies that provide automation in programmatic RTB pivot to try and
provide programmatic solutions for guaranteed inventory.”
Figure 2: Programmatic is just getting on the radar in 2013, as compared to RTB
Source: http://www.google.com/trends/

10. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 10
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Make no mistake about it: there is a race to build technology that can provide programmatic
access to higher classes of inventory, and everyone from small software startups to large service
companies and well-funded leaders in programmatic RTB are looking to get in on the action. But
how will digital marketing automation be accomplished: through new web-based programmatic
direct software built from the ground up, or by leveraging existing technologies, and building
features atop today’s programmatic RTB systems? Also, what side of the transaction will be most
influential in creating the standards and protocols needed to make programmatic direct buying
operate at scale: inventory owners, or marketers and their agencies? Over the next several years,
we will see many of these questions answered, and the proof will be demonstrated by how much
of that middle layer is automated.
For Ian Lowe, CEO of Adslot, the programmatic direct platform which recently acquired Facilitate
Digital2, the automation of this critical middle layer faces three distinct problems. First is the
issue of cost:
“The cost to buy and sell and fulfil of the average campaign schedule amounts to
approximately 28% of the dollar value of the media itself. The vast majority of this is
spent on the manual labour required to create complex iterative documentation, and
manual data entry into multiple systems such as planning tools, ad servers, finance
tools, billing tools and reporting tools.”
The second issue is speed to market, which Lowe described as “agricultural in execution”. And
the third barrier has been the absence of scalability, to wit:
“The economies borne of scale have so far eluded the guaranteed display segment. As
display ad spend scales the $40 billion barrier and continues to grow at 15% CAGR, and
no evidence that our toolset of choice (spreadsheet and faxes) will ever offer us the
scalability we need, we simply cannot sustain this level of inefficiency. More
importantly, the stakeholder that bankrolls our industry – the advertiser – should not
have to fund these inefficiencies.”
Lowe, Adslot, and many other stakeholders are betting on the fact that marketers and publishers
alike will not tolerate high transactional costs, slow execution, and lack of scale when it comes to
procuring higher classes digital media.
What is the dream of a programmatic direct future? The day when a media planner can log into a
system, discover inventory, create an order for a guaranteed amount of impressions, deliver that
order electronically to a publisher who can press an ‘accept’ button, and transmit that order
through to his ad server. It’s a one-to-one transaction that eliminates thousands of keystrokes,
dozens of spreadsheets, hundreds of emails, and even the occasional fax. It is also a future that
both inventory buyers and sellers have desired since the first banner ad was sold nearly 20 years
ago, and today an entire industry is hard at work trying to deliver.
2 http://www.adslot.com/adslot-to-acquire-facilitate-digital/

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3. Programmatic Definitions
The rapidly evolving world of online media has been criticised for its ‘alphabet soup’ of ad
technologies (RTB, DMP, SSP, etc.) and it is no surprise that confusion reigns in the
programmatic landscape. Although the Internet Advertising Bureau (IAB) has recently released
guidelines for nomenclature (see table below), consensus has settled around two types of
programmatic buying: programmatic direct, which focuses on process automation, and
programmatic RTB, which involves real-time, auction-based approaches. In this section, we
will define and discuss both.
Figure 3: IAB definitions
Source: http://www.iab.net/media/file/IAB_Digital_Simplified_Programmatic_Sept_2013.pdf
3.1. Defining programmatic direct
Also called ‘automated guaranteed’, ‘programmatic guaranteed’, and ‘programmatic premium’3,
programmatic direct refers to the methodology by which advertisers and publishers automate the
workflow process that exists for buying and selling media. According to an analysis of digital
display spending by Arkose Consulting4, of the $9 billion dollars spent in 2010, nearly 70% were
transacted in the negotiated market, in which buyers reserve inventory from sellers in a highly
manual process. Despite the rapid growth and adoption of RTB over the last two years, the large
majority of digital advertising still happens through the transactional RFP process, rather than in
an automated fashion.
The process for securing reserved inventory is notoriously inefficient, often taking up to 42 steps5
for an advertising program to go from conception to ad serving, and involving multiple systems.
The typical agency will leverage comScore or Nielsen for research; rely on the RFP process to
3 http://www.adexchanger.com/data-driven-thinking/programmatic-direct/
4 http://www.arkoseconsulting.com/files/42501951.pdf
5 http://www.nextmark.com/wp-content/uploads/2012/06/Online-Display-Media-Order-Sequence-
Diagram.pdf

12. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 12
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discover inventory pricing and availability from publishers, build their media plans in Excel,
transact deals with paper insertion orders, even receiving approvals via fax, and will typically go
on to enter placement details manually in an ad server interface. Once the first ad impression
runs, more manual work ensues, involving manual optimisations, change orders, and the
inevitable billing and reconciliation work to make sure invoices match differing inventory delivery
numbers from demand- and supply-side ad servers.
As other programmatic digital advertising solutions (Google search, Facebook, RTB) have taken
hold, marketers have seen the first hand benefits of data-driven media buying through a web-
based interface. Marketers that have benefited from having fast access to inventory, pricing
control, seamless delivery, and the availability of built-in performance analytics, are increasingly
eager to find similar efficiencies in other channels – especially in terms of reserved inventory.
Increased efficiency has benefits for both sides of the transaction. Larger ad agencies that still
operate on cost-plus pricing models are starting to get pushback from clients who are eager to
shift the 8-12% of budget they are spending on non-working media spend to working media
spend, increase their reach while decreasing their hourly labour bills. Smaller agencies, or those
that operate on a fixed-fee basis, obviously benefit when they can shift low-value labour activity
such as data entry to higher-value tasks (strategy, service) that result in performance gains for
clients.
Table 1: The experts weigh in
What does programmatic direct mean to you? What inning are we in?
Raju Malhotra, SVP, Products, Centro
“It means automated or ‘machine to machine’ transaction. A media
buy can be researched, negotiated, purchased, trafficked,
optimised and billed all in one cloud-based interface that has a
direct connection to the publisher’s ad server. In this model,
theoretically, there should be no need for a buyer to ever contact a
direct seller or even an ad operations person. Machines conduct
this business for you.”
“We are early in the game. Maybe it is the
top of second inning, so the heart of the
line-up is still coming up, because we
obviously haven’t been hitting homeruns in
the first inning.”
Eric Picard, CEO, RareCrowds
“There are two key aspects to programmatic direct. One critical
aspect of programmatic direct is the automation of the buying and
selling of premium inventory. The second key aspect of
programmatic direct is ensuring that buyers are able to acquire the
precise inventory they are seeking at a valuation that benefits both
buyers and sellers. Programmatic direct means bringing a level of
automation to the direct sales process and improving the current
resource-heavy RFP / insertion order / targeting process of buying
and selling ‘premium’ impressions.”
“All media, even ‘traditional media’ will
ultimately be bought and sold
programmatically. Digital media will be
completely programmatic within the next
five years, and even traditional will be
programmatic within 10 years.”
Tom Shields, Founder and Chief Strategy Officer, Yieldex
“The automation of some or all of the processes involved in
buying, selling, negotiating, trafficking, optimizing and billing
guaranteed media.”
“Still in the first or second inning, 5-7 years
from maturity is my prediction.”
Ben Trenda, CRO, isocket
“Programmatic direct creates interoperability between buy-side
systems and publisher-side systems, allowing people to find each
other and do business together seamlessly.”
“Second inning. We could get to the fourth
inning pretty quickly if some of the largest
holding companies move forward with what
they are currently working on. I like the
analogy of RTB better. We’re at about
2009 on the RTB timeline.”

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What does programmatic direct mean to you? What inning are we in?
Roy Pereira, Founder and CEO, Shiny Ads
“Programmatic: server-to-server, automated, real-time.
“Direct: Connect the dots from the buyer to the seller, without any
(or much) vendors or people in the middle.”
“Over the next 12 months, we shall see not
only small and mid-sized agencies
embrace this new way of buying premium
inventory, but large agency holding
companies and their trading desks,
demand-side-platforms, as well as buy-side
ad tech vendors.”
Matt Gay, SVP of Customers and Partners, Operative
“We are using the correct terminology in the real world, but not in
the way it’s gotten twisted in the media industry. What we are
trying to do here (that has been done decades ago in other
industries) is transact business in an electronic manner vs. manual
manner. [Programmatic direct] means automating manual tasks
between buyer and seller.”
“We are in the fourth inning. We’ve had a
couple of infield hits, 28 errors, a rain
delay, a first-ever manager change in the
middle of a game, 16 balks, seen an infield
fly rule called (twice), and ejections based
on HGH use. My point is, I think we’ve
finally hit the ball out of the infield.”
Doug Burke, General Manager and Chief Revenue Officer, FatTail
“We are comfortable with programmatic direct to describe
automated guaranteed sales of premium inventory. We only have
clients with premium guaranteed inventory. [Programmatic direct
means] an automated guaranteed selling solution for premium
inventory.”
“We are in the first inning. The media
buying behaviour around the RFP process
will have to radically change for
programmatic direct to become the norm.”
Jason Fairchild, Chief Revenue Officer, OpenX
“Programmatic direct is a phrase aimed at pushing the notion of
programmatic beyond the trading of low-value ‘remnant’ inventory
on open spot marketplaces/exchanges powered by real-time
bidding. The idea is not to automate the selling of all publisher
inventory, but to partially automate the sale of ‘the fat middle’:
medium-to-high-value, standard-format inventory transacted
between known publishers and buyers.”
“Perhaps the third / fourth inning? We’re
really yet to see programmatic transactions
hit the substantial majority, but if Karsten
Weide at IDC is correct, we’ll likely be
experiencing 80% of total US display ad
sales being traded via real-time bidding by
2022.
6
”
Jay Sears, SVP Marketplace Development, Rubicon Project
“Programmatic is the ability to break a buy down to the impression
level for decisoning and/or the application of advertiser or
publisher data. This is commonly associated with real-time
bidding. Workflow is the replacement of manual processes (often
phone, fax and email) with a more unified process, often in an
easy-to-use user interface. Some companies present solutions
that focus only on programmatic or only on workflow. Others
deliver solutions that encompass both. Make sure you know the
difference.”
“We are in the third inning. Bases loaded,
no outs.”
Andy Atherton, SVP, AppNexus
“I still prefer ‘programmatic reserve’. I think most of the market is
still conflating two distinct segments: applying technology to
improve the efficiency of direct sales transactions – as I have
advocated in the past, I would call this ‘programmatic reserve’;
enhancing the capabilities of RTB infrastructure to better
accommodate creation and execution of custom trading
relationships. Call this ‘negotiated RTB’ maybe?”
“We’re still early. I am more of a music guy
than a sports guy. I’d say we’re somewhere
in the first chorus.”
6 http://www.pubmatic.com/reports/IDC-RTB-2013.pdf

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What does programmatic direct mean to you? What inning are we in?
Ana Milicevic, Lead Industry Consultant - Digital Media and Advertising Technology, SAS
“At its most basic, it’s the ability for a buyer and seller to execute a
set of insertion orders in an automated way.”
“The majority will shift and embrace
programmatic within the next 3-5 years. A
large player on the buy side (like an
Omnicom) can accelerate this process
significantly if they aggressively come out
in favour of programmatic.”
Bill Wise, CEO, Mediaocean
“Premium, guaranteed inventory should be available to purchase
without an RFP process and should be a direct conversation
between buyer and seller, without ANY intermediaries other than
true SaaS enablers who don’t have a voice in the transaction.
We’ve coined the term RTP (for) real-time procurement.”
“We are very early in the process. The
publishers are generally sceptical as they
do not want to cannibalise their
sponsorships and premium ad offerings.
However, we need to get to a point where
publishers can confidentially expose their
yield curve through technology such that
the market can dictate true market pricing.
Mediaocean will be enabling this through
partnerships with a select few market-
leading SSPs in our Avails offering.”
Joe Pych, CEO and Co-founder, Bionic Advertising Systems
“Programmatic direct is simply automating the process of direct
buying and selling of advertising inventory. It's just process
automation. A defining characteristic of programmatic direct is its
focus on standardizing and automating the transactions between
buyers and sellers (versus automation inside the walls of an
organisation).”
“We're in the top of the second inning. In
the first inning, we saw enthusiastic play by
rookies who made some comical errors.
But we also noticed some solid base hits
from the rookies. We also saw all stars
getting into the game. I'd score the
announcement that AOL, Microsoft, and
Yahoo! made during Advertising Week
about standards collaboration as a double.
But at the end of the first inning, there was
no score. As we enter the second inning,
the focus is on creating and implementing
interoperability standards. Those that get
behind industry standards will be the
winners of this ballgame.”
Voice of the expert
“We’re clearly in the early days of this space, maybe the third inning. But we’re early partially due to the slow
adoption rate of this new form of media buying. Culture change is really the key issue. I believe that many of the
vendors enabling ‘programmatic direct’ today will be assimilated into larger platforms where their technology is
behind the market need.”
Anthony Katsur, ad tech veteran and former CEO of Maxifier

15. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 15
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3.2. Defining programmatic RTB
Programmatic RTB is exactly what it sounds like: digital media which is accessed through a
platform where inventory is secured on a bidded basis. With concepts born in search marketing
(biddable keyword terms, sold on a cost-per-click basis), programmatic RTB generally refers to
the method of buying and selling inventory through ad exchanges. On the demand side,
advertisers can apply first- or third-party data segments to find audiences across a large swath of
inventory, and set bid pricing to automatically compete for users.
Programmatic RTB has been a tremendous boon to advertisers, who have increasingly easy access
to vast amounts of inventory (often at a low cost) and widely available third-party behavioural
data to use for targeting. Most marketers now leverage RTB to employ an ‘always-on’ digital
display strategy that retargets existing customers, lookalike audiences, and key segments of likely
‘intenders’.
Programmatic’s first proving ground – bidded media accessed through ad exchanges – has shown
great promise. Despite certain drawbacks (predilection for fraud, lower inventory quality, and
commoditised ad units) – likely the result of the early-evolution stage – RTB is expected to soar to
$3.3 billion in 2013, up nearly 74% from last year and accounting for nearly one-fifth of all display
media sold. 7 These huge numbers are a testament to the fact that marketers crave programmatic
access to audiences.
Growth in RTB has fuelled interest in programmatic access to not only display inventory currently
unavailable in exchanges, but also other media channels – including addressable television – as
well as broad approaches to customer engagement. In short, enabling the discovery, purchase,
and management of targeted audience impressions has quickly become a huge priority for
marketers. This drive for efficiency is rapidly changing the way marketers, agencies and inventory
owners are structuring their businesses and plans for future growth.
On the supply side, large publishers and networks add tags to their site(s), which enable third-
party networks and exchanges to value and sell their inventory to their demand-side users.
Publishers are able to monetise large swaths of mid-premium and long-tail inventory without a
direct sales force, and use supply-side platform (SSP) to manage their yield, and adjust floor
pricing for inventory based on dynamic data.
That said, RTB – essentially the notion of buying audience rather than inventory – has been both
a blessing and a curse to publishers. Larger publishers have often seen premium prices decline as
less expensive RTB alternatives (i.e. reaching the same audience segment elsewhere, for a lower
price) gain demand-side adoption, yet they have still benefited from monetizing more of their
long-tail inventory. Smaller and less known publishers, who find it expensive to monetise
inventory through direct sales, have benefited from being able to programmatically compete for
demand in a variety of platforms.
Programmatic RTB adoption has been rapid, and widespread. Programmatic RTB technology is
evolving rapidly, and participants now have access to several different buying methodologies,
including:
 Open auction: The traditional methodology for programmatic RTB, in which buyers
compete for users in an open auction, and the highest bidder wins. In these cases usually a
second-price auction applies, in which the winning bidder pays the second highest bid price.
 Invitation-only auction: On certain exchanges, publishers have the ability to set aside
pools of inventory for specific buyers, and thus create private marketplaces. These invitation-
only marketplaces enable specific demand-side partners to get priority in the ad server (a ‘first
7 http://adage.com/article/digital/rtb-ad-spending-growing-faster-expected/243798/

16. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 16
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look’ at a publisher’s inventory), and are usually sold at a higher floor price. A smaller amount
of bidders compete in an auction to win inventory inside the marketplace.
 Unreserved fixed-rate buying: Despite its name, today’s RTB systems can also be used to
trade unreserved inventory on a fixed (rather than bid-adjusted) rate.
Despite its growing use and functionality for enabling private transactions, programmatic RTB
has its challenges. Challenges for marketers include click fraud (estimated to be as much as $400
million per year, according to an AdWeek report8), privacy concerns regarding cookie-based
targeting and inventory quality concerns. The latter has been the largest barrier to wider adoption
for RTB, as publishers have been largely resistant to placing premium inventory into exchanges.
Larger publishers – especially those with marquee properties in specific verticals such as
automotive, travel, and healthcare – generally retain control over their highly premium inventory,
selling it manually through their direct sales force, and allocate lower classes of inventory to
exchanges. This has made programmatic RTB buying a staple for lower-funnel marketing activity,
judged on direct response performance metrics, rather than a natural channel for higher-funnel
branding initiatives.
Private exchanges are starting to offer publishers more granular control over their inventory and
the ability to manage demand-side partner access, but broader programmatic RTB adoption will
be curtailed until privacy, brand safety, and inventory quality issues are addressed.
Ultimately, whether transactions take place via programmatic direct or programmatic RTB – or
whatever the terminology ends up being – the goal is not just efficiency in the procurement of
digital media, but adding intelligence to the process.
Voice of the expert
“Adding a layer of business intelligence to transactional media is critical because today both buyers and sellers
are faced with overwhelming numbers of choices that are decided mostly in an ad-hoc manner without much
reason. Providing simpler ways to understand how campaign goals can be solved while automating the processes
of spending the budget ultimately creates new opportunities.
“Today the intersection of manual processes with lack of business intelligence and intelligent automation means
that campaigns are naturally basic and not very valuable. Going forward, automation, intelligence and
optimisation technologies driving this process means massive leaps forward in effectiveness of advertising on
almost every conceivable metric. The power of software can be unleashed on this problem in fundamentally
game-changing ways.”
Eric Picard, RareCrowds
8 http://www.adweek.com/news/technology/suspicious-web-domains-cost-online-ad-business-400m-
year-148788

17. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 17
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3.3. Refining and defining by programmatic approaches
Before arguing which programmatic approaches work best, it is valuable to have a taxonomy that
enables practitioners to discuss the various methodologies. Although the IAB has been helpful in
defining terms (see Figure 3), Jed Nahum, Microsoft’s senior director of programmatic sales, has
added some needed definitions9
which RareCrowds’ Eric Picard has expanded upon, adding
examples of vendors in the space that are engaged with various approaches:
Figure 4: Eric Picard’s expanded taxonomy of Nahum’s programmatic buying
tactics10
3.4. Chapter summary: programmatic definitions
 Nomenclature: It seems that the industry has coalesced around programmatic terminology
in general, although there are still subtleties in terms of definitions to describe the various
methodologies being used to connect buyers and sellers. One thing has been clear however,
that the players involved in what was called ‘programmatic premium’ have coalesced into two
distinct camps, based on the methodology of approaches:
– Programmatic direct, which loosely describes process automation in media
transactions. From a technology perspective, this is about streamlining formerly manual
processes and creating integrations between systems used to buy and sell digital media.
From a business perspective, it’s about providing programmatic access to media
traditionally bought and sold under the transactional RFP method.
– Programmatic RTB, whose ‘pipes’ can be leveraged to create private marketplace
access to inventory, and perform fixed-rate deals. From a technology perspective, this
means bypassing the traditional transactional RFP process by modifying auction-based
systems to secure guaranteed deals.
 Timing: The consensus view is that we are in very early innings of the programmatic direct
game – anywhere from the first to the fourth inning in terms of both technology development
9 http://www.adexchanger.com/data-driven-thinking/what-we-mean-when-we-talk-about-
programmatic/
10 http://www.adexchanger.com/data-driven-thinking/programmatic-platforms-vs-standard-digital-
platforms/

18. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 18
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and ecosystem adoption. All agree that agency holding companies and large marketers will be
the key to pushing for broad scale adoption and moving the programmatic direct needle from
its current early stage into significant growth.
Voice of the expert
“Private exchanges via RTB protocols can be considered a ‘bottom-up’ approach to programmatic direct since
they extend the existing RTB approach currently associated with remnant to higher-value inventory by providing
publishers with additional controls and restrictions that they can apply to their non-guaranteed inventory on
spot marketplaces. Private exchanges are confined trading relationships operating within existing RTB
platforms. As with open RTB exchanges, private exchanges involve the use of audience data (provided by the
buyer and sometimes the publisher), allow buyers to pass on impressions they don’t want and tend to align with
performance goals.
“Programmatic guaranteed via ad server APIs, on the other hand, can be considered a ‘top-down’ approach to
programmatic direct, since it provides a level of automation to traditional, directly-sold, guaranteed sales
between publisher and buyer. Via APIs hooked into the ad server, buyers can discover and purchase inventory on
a guaranteed basis, subject to rules determined by the publisher. Some of these systems also partially automate
RFPs, price negotiation, insertion orders, the trafficking of creative assets and/or optimisation. Like traditional
direct buys, these orders don’t (currently) involve the use of audience data, force the buyer to commit to certain
number of impressions and tend to be used for branding goals.
“Eventually the two will merge to provide the simultaneous advantages of reaching defined audiences at scale
with the volume predictability and spend guarantees provided by forward buys.”
Jason Fairchild, OpenX

19. Programmatic Marketing: Beyond RTB Understanding the new programmatic direct landscape Page 19
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4. The Demand Side
Recently at an IAB programmatic working session, I overheard a senior-level executive say, “Let’s
face it; any time change comes to this industry, it’s been based on what the buyer wants.” He
was speaking about creating standards for transacting programmatically, and emphatically
dismissing the question of whether publishers could set the ground rules for this new
programmatic direct landscape.
He appears to be correct. Buyers are starting to realise massive gains in efficiency, performance,
and measurability, and are trying to set the terms upon which tomorrow’s advertising spend will
be allocated. Buyers are saying, “Make it easy to buy for me, and you will get more of my budget”
and that assertion has been proven, as more publishers who resisted programmatic RTB have
come back into the fold (e.g. Gawker Media, USA Today, and Turner11). These publishers and
many more have opened up limited amounts of inventory through private exchanges, and now are
looking at making larger swaths of premium inventory available, either via RTB channels or newly
available premium direct channels.
Some direct marketers (most notably Kellogg’s, which has been a vocal advocate of private
exchange buying12) have built their own internal marketing capabilities to have closer control of
media pricing and their first-party data. Agencies have leveraged their access to demand to funnel
huge volumes of spending through centralised trading desks, with some enjoying network-like
arbitrage profits. In short, the demand side loves programmatic marketing: tactics that keep them
firmly in control of media procurement methodology, offers them scale and efficiency in buying,
and the opportunity to profit on a transactional basis.
Marketers and their agencies have accomplished their mission only halfway, though. While access
to lower classes of inventory through exchanges has been affected, along with some select access
to more premium inventory via ‘private deal’ functionality inside RTB systems, the vast majority
of quality inventory remains firmly in control of its owners. The question is not whether access to
higher classes of inventory will be automated, but how: primarily through modifications to
existing RTB methodologies, or through new technologies altogether.
Today, the digital industry is trying to understand how to leverage these individual approaches to
programmatic, and asking whether programmatic direct buying can leverage the existing RTB
pipes – or if we need a purpose-built technology to support programmatic direct buying.
For Eric Picard, “the distinction between RTB and direct technology is essentially meaningless.
There will be convergence in both infrastructure and methodologies, and there will be
convergence of vendors and technologies – no one vendor will remain on one side of a
theoretical ‘fence’. The fact is that RTB technology will need to continually evolve to deal with
the complex and ever-changing nature of programmatic.”
Ultimately, buying higher classes of inventory will involve integrations and connections between a
large variety of vendors that support each buying channel, and marketers and publishers have to
be prepared to partner and plug into multiple platforms that enable programmatic transactions.
To date, almost all programmatic direct success has happened over existing RTB pipes through
the aforementioned private marketplace methodology. These private exchange transactions have
been the first careful stabs at opening up premium inventory to programmatic buying, made
possible because the ‘pipes’ for delivery have been largely put in place through SSP and DSP
connections. Advocates of the RTB approach to programmatic direct have a strong argument,
based on billions of dollars in technology innovation, almost universal programmatic RTB
adoption among publishers, and the embrace of agencies. Media procurement across all channels
11 http://digiday.com/publishers/gawker-ad-exchange/
12 http://www.adexchanger.com/ad-exchange-news/kellogg-company-is-positive-on-private-exchange-
results/

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is seen as going programmatic, and continuing development can modify existing pipes to
accommodate a variety of different buying methodologies that include guaranteed buys.
But can RTB systems be tweaked to effectively enable the programmatic direct vision? According
to Jay Sears of Rubicon Project, “The short answer is yes”. For Sears, automating both workflow
functionality and ad delivery can happen together in modern programmatic RTB systems:
“Buyers – especially the holding companies – need to deliver unique access and this now
includes both media (access others cannot get) and data (leveraging unique publisher
data assets as well as leveraging the unique data assets of the advertising). This
deliverable is core to the trading function run by each holding company.”
Robert Burkhart, who heads up digital initiatives for Strata, order management software used by
over 600 agencies, programmatic RTB does not go far enough:
“We see that programmatic (RTB) buying presents many opportunities and challenges
to both agencies and advertisers. The largest challenge is that there is general feeling in
the industry that things are being rushed to adoption without the proper education of all
parties.”
Burkhart thinks that agencies and brands must be able to differentiate themselves by offering
more strategy, and depend less on leveraging programmatic tactics and platforms that are
becoming ubiquitous. Agencies need to “go beyond the short-term benefits realised through
analytics and reporting and more to developing the most strategic campaigns possible. While
there is merit to programmatic buying, more questions need to be answered before we know its
proper context and true value.”
For Andy Atherton, who heads up programmatic direct efforts for AppNexus, the answer is less
technology oriented, than focused on the end user:
“We need new technology. RTB buying and direct buying are done by different teams
with different requirements. This will all converge down the road, but in the meantime
we need to focus on the direct buyers’ particular needs if we want to drive this
transition.”
Anthony Katsur, former CEO of publisher revenue optimisation platform Maxifier, agrees that
programmatic direct is a subset of the larger programmatic ecosystem that has been raised on
RTB methodology:
“Today’s RTB platforms, namely DSPs, SSPs and exchanges (but aren’t they all
morphing into exchanges?), will adapt through a build or buy strategy to support the
features buyers and sellers require to directly transact media on a guaranteed basis.
“I even believe the deeply integrated sponsorships and home page takeovers will go
programmatic. Buyers can reserve the inventory via programmatic channels and then
let the creative/ops team take over to enable the sponsorship. There’s still significant
plumbing required to support this.”
On the flip side, detractors argue that RTB is fundamentally opposed to the guaranteed
transaction, being neither real-time or bidded in nature. Agencies still secure the vast majority of
digital inventory through a transactional RFP process which is clunky, but still enables a high
degree of human control and personal touch. Why not automate the process for transacting on
premium inventory, rather than a wholesale change in methodology? Also, detractors of the
programmatic RTB approach (largely publishers) are concerned with margin erosion, lack of
pricing control, and data leakage. Carefully curated audiences, monetised by advertising, have
made a lot of content free. Premium publishers are right to demand media rates aligned with the
quality of both their content and audience.

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Joe Pych of Bionic Advertising Systems believes that there are too many pieces of workflow
functionality needed to enable true process automation inside existing RTB systems:
“RTB cannot be ‘tweaked’ to support programmatic direct. An entirely new technology
stack is required. Programmatic RTB is all about bidding and transactional execution.
It’s basically, ‘Here’s an impression. In the next 30 milliseconds, tell me how much you
want to bid for this one impression. If you’re the highest bidder, we’ll serve your ad.’
“While I think RTB is an incredible advance, there’s no real workflow involved. DealID
and private exchanges can be part of a programmatic direct solution, but they only
solve for one step in a 42-step process: the execution of the ad. A new technology stack is
required to automate the other 41 steps.”
For Tom Shields of Yieldex, the programmatic RTB approach doesn’t make sense:
“There’s no shortage of people attempting to shoehorn this square peg into that round
hole, and some of them might get it to fit. But it seems pretty inefficient to involve an
exchange, a DSP, and an SSP in a transaction that doesn’t need to involve anyone other
than the buyer and the seller.”
To others, including isocket’s Ben Trenda, the fundamental communication protocol and delivery
mechanisms powering RTB are complimentary to programmatic direct, but auction-based
approaches fail to take many of the nuances of negotiating premium guaranteed inventory into
account, such as context, page content, and placement. For Trenda, a former programmatic RTB
veteran, there are even more fundamental issues:
“RTB is a call/response communication protocol. Imagine a bar with 100 customers
where the bartender pours an old fashioned and then asks each person in the bar if they
want to buy it and for how much. Yes, it would be silly and inefficient. But worse, the
bartender would prioritise accordingly to save time, so they would eventually just ask
the 5 or 10 people who tend to buy most of the drinks.
“This was one of the earliest pieces of logic we built into our RTB system at Rubicon once
we got to 50 or so DSPs. We would predict which bidders would make a bid, and then
we would only call those we thought would bid. This is still happening today, and it
should. But imagine being a customer of one of those DSPs who don’t get all the calls. If
you really want to buy what you’ve decided to buy, one of the core reasons to buy
premium reserved inventory, you’d want to know that your DSP is receiving every bid
request.”
For Centro’s SVP of Products, Raju Malhotra, whose company now owns its own DSP (SiteScout)
and is building home-grown programmatic direct technology (Centro Planner), the answer for
marketers is not so black and white; marketers need to leverage both programmatic approaches
to match differing applications:
“We need a combination of new technology, processes, standards and skillsets to suit the
demands of programmatic direct. RTB technology is good for media transactions that
are based on second price auction mechanics. But it is not designed to solve the
workflow inefficiencies for contractual based media buys. Now, programmatic direct
can solve some of these problems, but it won’t have access to some of the most valuable
custom media available. This requires a different solution. There will always be a need
for custom advertising bought direct from publishers.”

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4.1. Agency trading desks
You cannot have a discussion on programmatic marketing and not discuss the profound impact
agency trading desks have had on adoption of buying technologies, techniques, and business
models. Only a few short years ago, agencies were the ultimate arbiter of where to allocate digital
marketing dollars. All deals were transacted directly with publishers, and digital agencies were
specialist shops that could help marketers with the discovering media and the complexities of
delivering technically complicated digital campaigns.
That era was brief, however. Ad networks quickly sprang up to take advantage of the ultimate
market opportunity: an infinite supply of banner inventory, the availability of audience data, and
marketers eager to find efficiency, measurability and scale. Networks like Tacoda created new
ways to access audiences, and quickly disintermediated agencies’ monopoly on audience
discovery. Agency trading desks (ATDs) were eventually created to take advantage of the
emerging technologies (DSPs) that would enable them to leverage their access to demand and
turn the tables. They have been extremely successful at doing so. Programmatic buying
methodologies offer some agencies the ultimate in marketing: one-stop shop that gives
advertisers access to a one-to-one conversation with potential customers.
Agency trading operations like WPP’s Xaxis are benefiting from the network effects of
programmatic buying, and earning significant profits from arbitrage – leveraging programmatic
technology platforms to buy low and sell high. With technology poised to deliver programmatic
access to more than just banner ads, trading desks are turning their attention to building a
programmatic technology stack that enables the agency to acquire all kinds of inventory, from
online video to addressable television. At the moment, the lowest hanging programmatic fruit is
premium display inventory, accessible through existing RTB pipes and being made increasingly
available through private marketplaces. According to Shiny Ads CEO Roy Pereira, this is a
relatively recent phenomenon:
“Agency trading desks, much like DSPs, are now recognizing that they need to buy
inventory on more than just remnant-based exchanges. Thus they are now looking at
how to purchase premium inventory for their agencies through programmatic direct.”
Are trading desks a sustainable solution for marketers? For Tom Shields, chief strategy officer of
publisher yield management solution Yieldex, the future is unclear:
“Arbitraging inventory without transparency to the marketer is a problem. But
centralised buying for economies of scale might make sense in the long run.”
Naturally, publishers are eager to benefit from the ‘always-on’ revenue stream that the
programmatic RTB sales channel has been consistently providing, but reticent to expose their
closely held inventory to be purchased on ad exchanges. For Doug Burke of FatTail, a software
provider that helps publishers manage their directly and indirectly sold inventory, the distinction
between the programmatic and direct channel will fade as agencies understand how they interact:
“The agency creates a separation of the guaranteed buying process and the RTB buying
process with agency trading desks that is a historical anachronism at this point. The
two processes of guaranteed buying and RTB buying need to be connected at the agency
to deliver the most effective return on investment to the brand client.”
Although all ATDs add a layer of cost for the marketer (whether through arbitrage, or via a
transparent media mark-up or service change), it is generally accepted that they offer value by
leveraging data and technology to meet specific marketer needs – and deliver digital messages at
scale. For Centro’s Raju Malhotra, the missing ingredient is “transparency and value”, which
clients will increasingly demand. Also, it is obvious that some clients will grab the programmatic
reins themselves:

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“Agency trading desks address a business need for marketers. As marketers get smarter
and more comfortable with programmatic direct and ad exchange buying, the self-serve
model becomes easier to use for broader adoption.”
Clearly, accessing the large ‘middle layer’ of premium inventory programmatically is and will
continue to be a focus for agency trading desks, who must continue to innovate and provide ways
for marketers to gain programmatic access to consumers across the many digital channels they
are spending time in, including online video, addressable television, tablets, and mobile devices.
With a strong embedded investment in RTB-based programmatic tools, it seems likely that early
efforts at programmatic direct will continue to build upon their existing stacks, rather than
embrace new technologies. However, agencies’ reliance upon legacy order management and
billing systems for media buying across channels will continue to be influential, as agencies seek
to take digital out of its current silo and align processes with traditional media procurement
methodologies.
Voice of the expert
“For agency trading desks to continue to thrive there is no doubt that they will need to address the questions that
some marketers have raised about agency trading desk transparency. Trading desks operate today on an
arbitrage model for the most part, and that won’t be allowed by marketers in the long-term, especially as the
proportion of budget going to RTB has grown significantly.
“Ultimately, trading desks will be absorbed back within the individual media agencies, rather than being held
separately. The approaches, processes, and technologies of the trading desks will become best practices within
media agencies, but the business model will change. Marketers that have significant amounts of business data
that can be applied to digital advertising will likely build out their own stacks of technology and vendor
relationships, and will build their own equivalents of a trading desk but will optimise exclusively for their own
benefit. They will give their media agencies access to their systems and enable them to work within them – but
on a traditional media agency model, not the trading desk model.”
Eric Picard, RareCrowds
4.2. Agency culture and personnel
Another large factor influencing the pace of programmatic direct adoption is within the media
agency itself: namely, the legacy business models of holding companies built around hourly
labour charges, which rely upon a steady stream of young, inexpensive hires. This has given rise
to the popular meme of the ’23-year-old media planner’, often described as an underpaid agency
employee, who wields unusual power over multimillion dollar media budgets, and susceptible to
being influenced by ‘sneaker parties’ and other off-the-books incentives to select one media or
technology vendor over another. Unfortunately, when it comes to selecting guaranteed media, this
unkind assessment of the typical agency is highly valid. Often, agency personnel with less than
five years of media experience are asked to make sophisticated digital investment decisions, and
often at the forefront of vetting new ad technology opportunities.
Moreover, agency media planners are notorious for job migration; a recent Digiday/Bionic
Advertising Systems joint survey found that more than half of agency planners (56%) are either
“actively looking” for a new role, or planning to leave their current job within the “next two
years”.13 This has much to do with long hours and low compensation – but the same study
indicates that media planner unhappiness also has a high correlation with the tools they use.
Around half (45%) of media planners spend between one and four hours per day in Microsoft
Excel performing manual tasks – and over a third (35%) spend over four hours a day in the
spreadsheet tool. The large percentage of that work is concerned with cutting and pasting data
from one system to another (placements from an Excel-based plan into an ad serving interface,
13 http://www.slideshare.net/fullscreen/jpych/next-mark-upstream-seller-forum-2013-06/1

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and then again into an order management system). This modern drudgery manages to get digital
ads from conception to serving, but at a high cost to the agency, who deals with the cost of
constant turnover within the ranks and the accompanying inability to capture institutional
knowledge.
For Joe Pych, whose web-based Bionic Advertising Systems is on a mission to replace Excel at
agencies, the advantages of a programmatic direct approach to planning are clear:
“When a media agency loses a planner, all of the knowledge that planner acquired over
two years goes down the elevator with them. They go to another agency, and lend that
company the sum of their acquired knowledge. The information on the best places to
place media is locked up on computers, ad servers, and various files – but almost
impossible to access and make actionable at the organisational level.”
Programmatic direct approaches that streamline media discovery and acquisition not only add
the critical layer of efficiency necessary to turn grunt workers into knowledge workers, but also
add a layer of business intelligence to guaranteed media selection previously only available in the
algorithms of programmatic RTB systems.
Shiny Ads’ Roy Pereira sees a future with fewer young planners:
“There will be a lot of personnel changes in our industry in the next five years. There
will be fewer media buyers and media planners at agencies and they will have a lot
more technology in their hands to accomplish their buys. The job of a media buyer,
specifically, will need to change as the actual buying process becomes incredibly easy
and quick with just a push of a button. Media planners will be able to discover the right
inventory from thousands of top-tier publishers, get an accurate assessment of
available inventory and be able to create digital RFP or even IOs within seconds.”
For Centro’s Malhotra, younger planners can be activated using easy-to-use technology:
“We need to make the ’23-year-old media planner’ appear like a seasoned executive
using a combination of technology and advanced analytics so they can plan millions in
advertising spend like a true professional.”
If agencies had access to solutions that placed an organisation’s proprietary planning data in an
easy-to-use tool, they would be empowered to act on behalf of agency clients more effectively.
Malhotra added:
“The industry is filled with disparate point solutions that create clutter, confusion and
complexity for them and their agency leaders. Planners and buyers are limited by the
low-quality tools. We are betting in favour of superior, easy-to-use technology
empowering them.”
Andy Atherton, whose company has been empowering agency personnel with programmatic
tools, thinks technology can enable planners to spend less time on manual tasks and actually be
happier in their roles:
“There has been surprisingly little investment in trying to make [planners’] lives better…
and empowering them to leverage their skills and add more value. So I don’t think
today’s buyers are ‘replaced’. I think they will be empowered by technology to become
happier, more productive and more valuable contributors to great business outcomes
for their clients.”
But new programmatic direct approaches for the demand side must involve more than just
efficiency gains that remove manual grunt work and free time for creativity among agency
personnel. Centralisation of the media planning and procurement function must also lead with
data, and add a layer of business intelligence to the process.

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In discussing programmatic planning needs with the chief digital officer of a large agency
recently, it was clear that being able to justify media selection was as critical as being able to
produce plans quickly:
“Our clients don’t ever come to us and ask what kind of tools we are using to do our jobs.
They really couldn’t care less. But they do come to us and ask for huge media
recommendations, due within several hours. And they definitely want to know why we
are recommending what we are recommending.”14
Moreover, understanding how much budget to allocate to various inventory partners – a process
now operating largely on gut instinct – must be grounded in data.
Christopher Skinner, whose MakeBuzz platform helps marketers understand how to allocate
branded digital media, believes that a lot of today’s procurement strategies are too heavily focused
on reaching customers already in the market for products and services – and not focused enough
on creating new demand. Because programmatic direct buying can leverage data to make media
investment choices, it has the distinct potential to start helping marketers justify branding efforts
with new metrics.
MakeBuzz, as an example, measures success based on profit potential – the idea that there is an
optimal number of specific customers in a geo-targeted area – and uses that data to drive
investment decisions in display. “Digital marketing is still stuck in a DR (direct response)
mentality. DR accounts for 6% of ad spend globally, meaning that until we start thinking
proactively about creating demand, we’re not going to command the attention and respect of
the boardroom,” remarks Christopher Skinner, the company’s founder and CEO, adding:
“A big part of why many are stuck in this mindset is that they rely too heavily on data of
the past, and we’re including so-called ‘real-time’ data under that heading. What
[programmatic direct must do] is look at potential – using diverse data sets to
understand our client’s potential growth, market-by-market. So we’re looking at upper-
funnel media that can drive demand for our clients, not just capture it.”
“[Efficiency and business intelligence] are inextricably linked. We need to provide the right
technology to get the manual transactions into some sort of system so we have the data
available for analysis,” remarks Andy Atherton, adding, “The creation of basic transactional
efficiency is the foundation for the more transformative improvements that can be driven by
business intelligence (BI). I don’t think you are likely to get the second one without the first one.”
Voice of the expert
“My bet is [that 23-year-old media planners will be] replaced. Like spreadsheets replaced legions of bookkeepers
because the execs could update the sheets themselves.”
Tom Shields, Yieldex
“Most of the ‘23-year-old media planners’ that I have worked with are very smart and talented and there is
always a demand for those types of people in any industry. Automated tools should allow the more traditional
planners to transition into the digital media realm however.”
Sean Cotton, True Media
14 http://chrisohara.wordpress.com/2013/10/29/programmatic-direct-isnt-just-about-efficiency/

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Voice of the expert
“Some [planners] will adapt and the less qualified will be replaced. I don’t necessarily see programmatic
replacing most roles, but the people and roles will evolve. I believe that there is an opportunity for the machines
to replace some personnel over time, but there is still so much to automate, integrate and build across our
ecosystem that we’re a long way off from that moment.”
Anthony Katsur
4.3. Agency pricing models and programmatic
Terence Kawaja, the creator of the famous LUMAscape maps which depict the 300-plus
companies who enable the 20% of display buying that happens programmatically, once said that
“inertia is the agency’s best friend” when asked why holding companies were not doing more to
bring innovation to advertising. I imagine that part of what he meant was that their common
business model (billable hours plus a negotiated margin) does not create an incentive for
efficiency. On the contrary, complexity in media planning means more billable hours – as well as
a built-in need for agencies’ existence. After all, if media buying were easy, then marketers would
do it themselves.
That means today’s large media agencies actually have a perverse incentive to gain efficiency;
because they get paid for planning media on an hourly (cost-plus negotiated margin) basis; the
more time it takes to plan a complex campaign, the more they get paid. The efficiency of
programmatic direct approaches actually hurts the bottom line. That said, marketers – exposed to
self-service tools that enable direct access to digital channels like Google and Facebook – are
pushing agencies to gain efficiency in media procurement. In the effort to take control over their
own data and how they apply it to digital messaging, will brands and marketers build their own
technology stacks and internal practice groups?
OpenX’s Jason Fairchild thinks it’s “more than possible they will”, but stresses that only certain
types of marketers will benefit from such an undertaking – those with extremely large and
valuable first-party datasets. Once marketers adopt data-driven marketing practice groups, and
the technology (especially DMPs) to capture and activate customer and sales data, marketers are
“going to be a lot more particular about what their agencies will do for them once they begin to
develop the strength and skill to build their own customer solutions. It’s likely that some of the
big marketers will begin to invest in buy-side workflows, data management and reporting /
analytics tools that are custom solutions for their unique environment. They will then leverage
these outputs in more sophisticated ways to instruct and utilise agencies.”
Ben Trenda of isocket compares the likelihood of agencies adopting their own programmatic
stacks to early marketplace dynamics in search marketing. Early on, only a few agencies built
their own internal search practices, and an entire “cottage industry” of SEM providers quickly
rose, eventually to be acquired by agency holding companies, once the market matured and
stabilised.
Initially, however, agencies can react negatively to efficiency tools. “Process efficiency might
appear to be bad for agencies at first glance,” says Trenda. “One agency exec once said, ‘I hate
when people say it’s inefficient that we still use fax machines – we like sending faxes’. But in the
next sentence that same agency exec said, ‘but we understand that automation is inevitable so
we want to get involved and get in front of it’. There are some really smart people at the holding
companies, and they’ll adapt to the future.”
For Bill Wise, the Mediaocean CEO whose Prisma platform processed over $17 billion of display
spending in 2013, it is the ad tech ecosystem that is causing the most imbalance in the current
media ecosystem. Wise argues, “ad technology intermediaries are charging a king’s ransom by
combining their tech stack with quasi-planning and media buying. That’s what needs to be
disrupted, not agency business models.”

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For Jay Sears, the future seems clear: marketers will inevitably begin to bring on internal
programmatic capabilities:
“Some marketers – especially those that have already taken functions such as search
and social in house – will look hard at bringing automated media in house as well. This
is good for the business as this pressure will force agencies, trading desks and others to
continue to innovate to maintain relevance and grow business.”
But will marketers commit to organically developing and sustaining expertise required to keep up
with the technologies and techniques required in digital? The future remains unclear.
Voice of the expert
“Planning and buying media well is hard work. Digital media is twice the amount of work. I am not sure how
many companies want to bring that in house and try to learn new platforms that would enable them to do that.
What could happen is that more large companies could start working with smaller agency shops that are nimble
and efficient due to implementing automated tools that compensate for the large workforces of the holding
company shops.”
Sean Cotton, True Media
4.4. Fraud: the elephant in the programmatic room
Rather than a being a barrier to programmatic direct adoption, the increasingly visible problem of
fraud may end up being its largest driver. Because the overwhelming majority of click fraud and
robotic traffic happens inside of exchanges, it would seem to be a problem inherent in
programmatic RTB. Marketers therefore should be more willing to seek direct connections with
trusted inventory sources to ensure their media investments are not wasted on ‘non-human
eyeballs’.
Some reports suggest that as much as 46% of display inventory is ‘suspicious’, and may be
robotically generated.15 Despite growing awareness of non-human traffic, however, programmatic
RTB buying continues to rise. This can be accounted for by the act that the large majority of
programmatic RTB buying is done on a direct response basis. Centro’s Raju Malhotra questions
how much fraud matters for performance buyers:
“At the end of the day the advertiser is tracking return on ad spend (ROAS) all the way
to a conversion. Therefore all of the ‘fraud’ gets thrown together with the real clicks, etc.
and if the ROAS is there, the advertiser does not care as much as we may think they
should.”
isocket’s Ben Trenda agrees:
“If all you want is to find your cookie pool on cheap inventory, you’re not going to let a
little fraud get in your way.”
Of course, when measuring against cost-per-order or other DR metrics, fraudulent clicks do not
contribute significantly to the marketer’s cost, and can be ignored. For programmatic RTB to
successfully attract branding dollars, direct connections to higher classes of inventory need to be
established along with significant viewability and fraud protection guarantees. Viewability
standards should be embraced by all publishers with quality inventory as a key differentiator.
15 http://www.adweek.com/news/advertising-branding/bots-infecting-nearly-half-web-traffic-report-
152300

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“Every media buyer should question why they are buying non-viewed inventory because they
are wasting money and the attribution modelling vendors are using garbage data if they are
including non-viewed inventory”, said FatTail’s Doug Burke, adding:
“The brand lift and clickthrough rate performance on non-viewed inventory is
zero. Only a spider and bot can click on a non-viewed ad. Premium publishers should
embrace viewability because they will be rewarded for their high engagement; high
view rates of their high quality sites and long tail, non-premium, low engagement sites
will be flushed from the market.”
Today, the digital bifurcation between direct response and branding remains strong. Performance
marketers are willing to tolerate a high degree of fraud when buying against strict ROAS metrics,
and even seem to stomach the inevitable price inflation generated by fraud when buying on a
CPM or CPC basis. The efficiency for reaching audiences at scale, and tactical advantages of
cookie-based retargeting mitigate some of the open issues in programmatic RTB. That said, as
new viewability standards become ubiquitous, and publishers embrace new programmatic
approaches to enabling inventory access, fraudulent traffic will be tolerated less and less. This is
both a challenge and huge opportunity for programmatic RTB providers who are looking to pivot
their offerings to capture more branding dollars through programmatic direct capabilities.
Voice of the expert
“Greed outweighs fear of fraud. But it is a real problem, and will come home to roost.”
Tom Shields, Yieldex
4.5. Standards
One of the biggest barriers to achieving programmatic direct adoption at scale is the fact that
there are no standards. Buyers in other fields, such as print and direct mail, have access to
directories that make finding pricing and audience reach easy. Digital has lacked a similar
directory, largely because publishers would rather get a phone call than expose their rate card.
Complexity in ad sizes, differing technical requirements, and the lack of an accepted taxonomy
make it difficult to create an electronic order. The IAB has been trying to engage the industry on
this effort with various committees over the years (see Section 7), but progress has been slow.
What is clear is that, without standardisation that can enable electronic transactions,
programmatic direct cannot achieve significant scale.
Voice of the expert
“Industry standards are absolutely critical to the success of programmatic direct. Without widely adopted
standards, it will fail to live up to anywhere near its potential. The IAB has been trying to set standards for years.
Although they are very polite about it, I think they are frustrated by lack of motivation and involvement by the
players in the industry. But I’ve seen a huge change recently as a new breed of hungry challengers have entered
the market with lots of energy and smart ideas. This has woken up the incumbents and they are getting more
involved. You are going to see more progress on industry standards in the next six months than you’ve seen in
the last 18 years.”
Joe Pych, Bionic Advertising Systems

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4.6. Chapter summary: programmatic direct and the
demand side
While marketers and their agencies seem poised for broader adoption of programmatic direct,
there are still barriers to broader adoption, although none significant enough to slow the rapid
pace of technology innovation.
 Technology approaches unclear: When it comes to where the experts think
programmatic direct success will be found, there is a bifurcation between those who see
higher inventory classes being accessed through new systems, aided by direct API connections
to existing ad serving systems, and those who think programmatic RTB pipes can be activated
to create discrete one-to-one guaranteed transactions. Others see both technology approaches
needed for future success. Today, there is no accepted standard for programmatic direct
transactions, no accepted standards and protocols, and few success stories to build broad
models upon. It’s very much an early market with huge upside for startup layers and
established ad tech companies alike.
 Trading desks will be hugely influential in determining how quickly programmatic direct
buying methodologies will be implemented, and also help determine which underlying
technologies will be adopted in the near future. That said, the adoption of new programmatic
direct platforms will eventually result in less centralisation among large agencies, as media
shops within the holding company who own relationships with premium inventory owners
seek to retain control over buying higher classes of inventory. Programmatic direct platforms
– especially if tied into legacy agency operating systems that handle order management and
interface with billing systems – may be the starting point for decentralisation of
programmatic buying.
 Culture: The only certainty of programmatic direct adoption is that it will be painful and
probably slower than expected. Programmatic direct buying represents a wholesale change in
the way digital media buying has been performed for nearly 20 years, and getting media
planners off spreadsheet-based, manual approaches will require significant culture change.
The dynamic of the ‘23-year-old media planner’ may not go away, but roles will shift, leading
to personnel needs more closely aligned with data, analytics, and creative and away from
manual tasks. The way in which guaranteed media is ultimately discovered, selected, bought,
and optimised will also be informed more by data than by instinct and habit – a welcome
change for mid-tail publishers with less sales penetration into media buying agencies.
 Fraud: The entire programmatic space is rife with click and impression fraud, mostly found
in the programmatic RTB channel. This is keeping higher classes of inventory out of
exchanges, and making demand-side players wary of paying premium prices in auction-based
systems. This dynamic has given new (non RTB-based) programmatic direct players an edge
in terms of publisher adoption, but has not managed to impact the growth in programmatic
RTB for direct response buying. The divide between DR and brand buying remains wide.

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5. The Supply Side
Publishers struggle with the same inefficiencies as agencies when it comes to implementing
campaigns in the transactional RFP channel. A recent study by Digiday and Adslot16 showed that
the average publisher in North America spends up to 1,600 man hours per month responding to
RFPs, which accounts for 18% of sales (excluding commissions). Publishers who connect with
demand through the transactional RFP process also spend 22.1 hours on RFP-related
transactions, and only win 35% of the RFPs they respond to. Of the winning deals, another 24%
will be cancelled for performance reasons. With those kinds of numbers, it is not surprising that
publishers are also seeking programmatic efficiencies for selling their premium inventory.
Unlike other media industries, such as direct mail, which expose pricing and inventory availability
information directly to their demand-side customers, digital media sellers continue to reserve
their premium inventory to the manual sales channel. Discovering pricing and availability is often
only available through the RFP process, effectively gating access to select inventory behind a
human sales force. Buyers are also subject to a widely divergent set of standards for each
publisher: common ad units have wildly different creative specifications from publisher to
publisher, terms and conditions of sales vary between publishers and publishers leverage a wide
variety of tools for delivering various types of ads. This makes achieving scale in guaranteed
digital placements highly manual, difficult, and expensive.
“The fact is that a significant portion of most salespeople’s work day involves far too much
clerical work. Managing RFPs, IOs, billing, pacing reports, change orders, inventory queries
and reporting all consume a significant part of the typical sales person’s time. Reducing or
eliminating these repetitive clerical functions will allow publishers to hire more talented and
high-end salespeople,” says Eric Picard, adding, “There will be less need for low-end salespeople
and the number of supporting staff will be reduced significantly – at many major publishers
there is a 10:1 ratio between a senior sales person and all the supporting staff such as account,
sales planning and ad operations teams needed to execute against campaigns.”
Operational inefficiency has much to do with how a publisher’s inventory is represented in
programmatic channels, according to Jason Fairchild of OpenX:
“Realistically, there are a bunch of options readily available for publishers to use today
to control their inventory. What’s holding them back is often the reason that there’s not
enough information that can get through the programmatic ‘pipes’ to the buyer – [an]
above-the-fold [or] below-the-fold flag… doesn’t always get through or isn’t trusted. A
lot of the information that you would typically see on a manual IO still isn’t getting
through, and that’s a problem. Until programmatic platforms do a good job about
conveying information in a transparent way, publishers will continue to be frustrated.”
While this is true for all inventory, the challenges in securing premium inventory at scale has
created a two-tiered monetisation dynamic: publishers hand-sell premium inventory with a high
degree of control, and let a chain of networks and tech vendors monetise their remnant, unsold
inventory. There has been little middle ground. Previously, publishers with lots of site visitors and
quality demographics could benefit from their scale and offer marketers relatively inexpensive,
quality reach. Today, however, the story has changed: marketers have easy, cheap access to
cherry-picked audiences through exchanges, and it takes strong share-of-voice in a category for
publishers to command premium pricing.
Moreover, today’s digital publishing landscape is a tale of Haves and Have-Nots; publishers with
category-specific content and quality demographics have been able to command relatively high
CPMs for their guaranteed inventory (e.g. WebMD, TripAdvisor, ESPN) and publishers with
broader content and wider demographics (such as news and entertainment sites) have struggled
16 http://www.adslot.com/blog/study-confirms-rfps-a-time-sink-for-digital-publishers/ and
http://www.adslot.com/soti/

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to sell directly at premium rates. This dynamic leaves a lot of quality inventory on the table for
marketers, albeit that which is more difficult to access at scale – what isocket founder Jon Ramey
has described as the ‘fat middle’ in the inventory yield curve.
Figure 5: Today’s digital buyer buys super-premium inventory from publishers manually through
the transactional RFP process, and finds reach with RTB audience buying on long tail inventory,
leaving a relatively unexploited ‘fat middle’ of higher class inventory.
Although it is unclear whether buyers will find ‘mid-tail’ inventory a place in media plans between
super premium display and the long tail of exchange inventory, what is clear is that today’s buying
methodologies and technology have not enabled access to the ‘fat middle’ at scale. Earlier
platforms such as TRAFFIQ (since pivoted to become a digital media agency) tested the concept
of premium mid-tail marketplace aggregation as early as 200917, but failed to gain traction as RTB
took over. Nearly five years later, newer programmatic direct technologies are still trying to solve
for the ‘yield cliff’ that exists today.
That said, technology availability might not matter for every publisher, according to SAS’ Ana
Milicevic:
“It’s really an issue of how premium is your inventory: if you’re not on the comScore
100 probably not that much, and while you can probably gain some operational
efficiency by adopting programmatic, the reality is that it might not make that much of
a difference over current situation. To put it simply, there are many publishers who
should continue to focus on the AdSense check. There’s a reason there’s a ‘premium’ in
‘programmatic premium’.”
17 http://www.adexchanger.com/data-driven-thinking/the-fat-middle-and-other-programmatic-direct-
myths/

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5.1. New monetisation options: programmatic direct,
native, etc.
Today, publishers who hold premium ‘mid-tail’ inventory have access to programmatic direct
technology, but have yet to see enough demand to move the revenue needle significantly. What is
missing is the connection to demand-side buying systems. Shortly, we will begin to see deals
between supply-side technologies who have amassed large publisher portfolios, and buying
platforms.
Ian Lowe’s Adslot has recently tied this together with the acquisition of Facilitate Digital. For him,
programmatic direct is a global opportunity worth $20 billion dollars:
“Ultimately, the entire programmatic direct opportunity is about contemporizing a
global industry. Not a trivial undertaking, but one that is entirely inevitable. For
publishers, it’s more than just a margin play. The sustainability of their forward
booking revenue model is at stake and with it their capacity to fund quality content with
the confidence of foresight. And making guaranteed display easier to buy can only help
close the $20 billion opportunity gap and grow revenue.”
Connections between the demand and supply side will test the idea of true programmatic direct
buying from both a business and technology perspective. Firstly, can the technology work
effectively enough to provide demand-side customers with access to guaranteed premium
inventory at scale? Secondly, will publishers embrace this as a sea change in monetisation, or
continue to view programmatic direct as just another channel to exploit, like ad networks?
The answer to the first question is that programmatic direct technology will work. The answer to
the second question is more important; it means the difference between wholesales change in
supply-side inventory economics, and just another ad tech fad. For FatTail’s Doug Burke,
connections are key:
“The ecosystem of guaranteed media buying and programmatic direct selling has to
form the connected scalable systems in order for programmatic direct to accelerate.”
As Jason Fairchild explains:
“Publishers aren’t putting much of their inventory in these programmatic guaranteed
platforms just yet in part because agencies haven’t started using them at scale, but that
will change as existing companies like Mediaocean, newer players such as isocket, and
the DSPs figure out how these buys will be executed by agencies and trading desks.”
5.2. Programmatic direct: a sales channel or real trend?
With the right technology, enough marketplace participation by quality publishers, and demand-
side interest, the programmatic direct ‘channel’ looks quite compelling. Buyers are able to string
together a portfolio of guaranteed buys on premium inventory often with lower purchase
minimums and short out-clauses, and sellers retain control of pricing and availability.
Easing the friction of the overcomplicated manual RFP process also means being able to optimise
plans in-flight more seamlessly, opting out of lower performing buys, while being able to easily
add budget to higher performing line items on a plan without ‘change orders’, more manual
insertion orders, and the rest. Newer programmatic direct technology also empowers sellers,
keeping salespeople in the process, and giving publishers a way to compensate their sales staff for
driving demand through the channel.
The future is real from the standpoint of technology, and large publisher adoption of such
platforms shows that publishers are keen on trying programmatic direct (or any methodology,

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really, that offers new ways of discovering demand). But the outstanding questions are whether
programmatic direct business models are appropriate.
Some programmatic providers are charging up to 12% transactional costs, which may be entirely
appropriate when originating new business for a publisher – but would be difficult to justify for
enabling an existing account through programmatic direct. However, taking the viscosity out of
the transactional RFP channel by making it easier to respond to RFPs, manage deal flow, and
increase speed to market may justify higher transactional costs for programmatic direct selling.
Ultimately, the market will determine how much to award the programmatic ‘middleware’ that
sits in between buyers and sellers.
Adoption of new programmatic direct technology is also complicated by the overall economics of
ad monetisation, explains Mediaocean’s Bill Wise. Fragmented point solutions and intermediaries
sucking margin out of inventory transactions have resulted in a lot of innovation – but little in the
way of revenue gains for publishers. “First, the economics need to be fixed,” says Wise. “Secondly,
8-10% of the publishers’ inventory is driving up to 35% of their revenue, so publishers need to
figure out how to monetise the remaining 90% of inventory without cannibalizing their
premium demand or creating sales channel conflict.”
For FatTail’s Doug Burke, this will be determined by the inherent design of platforms. “Not all
programmatic direct sales systems are designed the same way. Many are simply creating
another channel to sell to unsold, or remnant inventory at excessively high prices similar to ad
networks”, says Burke, stressing that the systems that will be successful will operate as “a sales
extension tool of the premium guaranteed selling processes [that offers] greater operational
efficiency.”
Voice of the expert
What about new, programmatic direct technologies? Are publishers really putting their
inventory into these platforms, or are they viewing these ad tech opportunities as yet another
channel for unsold inventory? In other words, is this a ‘real’ trend, or another ad network
disguised as a technology?
“The inventory sold through these platforms can compete with hand-sold orders at the same high levels in the
primary ad server, so no, this is not just another ad network. The real question is how long do the sales teams get
compensated on these deals? I’d guess another year or two.”
Tom Shields, Yieldex
“It’s not a network model. The reason we call it programmatic direct is that there has to be a connection between
the advertiser/agency and the publisher. There is also much more transparency into fees relative to ad networks.
The revenue that publishers are getting out of private exchanges is also still relatively small, mainly due to
barriers on the buy side (lack of standards, poor deal discovery, etc.) and publishers needing to figure out how to
balance exclusivity and scale.”
Jason Fairchild, OpenX
“Programmatic direct technologies do not rely or needing the publisher to ‘allocate’ inventory as they reserve
inventory on demand when new orders come in and are approved. These technologies are not being used for
unsold inventory and are instead being used as a companion selling technique to traditional sales teams selling
direct. Any programmatic direct technology that is based on, or behaves like, an ad network, will not succeed.”
Roy Pereira, Shiny Ads
“This is a ‘real’ trend with a big potential but the current availability of inventory is not at scale. If the buy side
adopts these technologies, the sell side will follow. Suppliers are making their inventory available, and there is a
plethora of enablers in the market. But they all need integrations with entities with buying clout. However,
publishers are taking a wait-and-see approach because they do not see enough demand in the system to make it
worth their while to take this initiative.”
Ben Pashman, Centro

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Voice of the expert
“Publishers are happily putting their inventory in these technologies at over-inflated rate card pricing. There is
no drawback for them to do so. The main problem is that ‘rate card’ is a non-starter for programmatic buying,
and just invites negotiation. Negotiation leads to an RFP. Premium inventory will start to be transacted in this
manner when publishers are comfortable enough to put the price they are willing to transact the inventory on –
their true yield curve. Think SABRE reservation systems and pricing for airlines. This is where RTP (real-time
procurement) comes in…”
Bill Wise, Mediaocean
“Publishers are pushing packages of inventory into programmatic direct, but not in ways that solve the problems
mentioned above. The packages tend to be very ‘summary level’ rather than granularly created to match against
advertiser goals. The right long-term answer for programmatic direct is to assemble packages based on campaign
goals – much like is done in the RFP process today – but to do so in a fully automated way. Again – this needs to
resolve somewhere between the needs of the buyer to ensure they get the best available inventory and the needs
of the seller to ensure that there is enough competition over that inventory to get significant yield.”
Eric Picard, RareCrowds
5.3. Programmatic direct and organisational change
On the flip side of the ’23-year-old media planner’ is publishing’s ‘$200,000 salesman’, the highly
compensated digital seller responsible for getting premium inventory into an agency’s media
plan. Often derided for their outsized compensation and the high cost of travel and entertainment
expenses (T&E), some of which funds the ‘sneaker parties’ at the heart of the transactional RFP
negotiation, digital salespeople are wondering whether new programmatic channels will replace
them. There is a clear incentive for publishers to do so; sellers with an average tenure of 7-10
years make a median income of $200,000, not including benefits.18 Even when handling a quota
of $2 million or above, sales personnel adds significant cost of sales – in an ever shrinking
‘premium’ channel that is being supplanted by programmatic RTB sales, much of which go
uncompensated.
Before programmatic direct solutions gain significant adoption within the overall supply-side
monetisation playbook, publishers have to reconcile the impact this new approach has upon the
existing organisational structure. Most specifically, publisher organisations have to decide how to
compensate sales personnel for managing programmatic channels, and driving demand inside
them.
For Anthony Katsur, just because the transaction takes place programmatically doesn’t change
the overall sales dynamic:
“Salespeople are still needed. We’ve all heard the old adage about advertising, ‘this is a
relationship-driven industry’. Show me one that’s not. The salesperson creates and
cultivates relationships constantly. They are the tip of spear. Just because the
transaction is realizing efficiencies, it doesn’t mean the salesperson is any less
important in driving awareness of the publisher’s product and working with the client
to understand their goals.”
“I don't see the death of the $200k salesman. I see the birth of the $300k salesperson,” says
Bionic’s Joe Pych. “Programmatic direct can unleash the full potential of a salesperson. There’s
only 24 hours in a day. Good salespeople are held back by cumbersome processes and high
transaction costs that keep them out of a lot of deals. With efficiency, they can do more deals per
quarter and bring in more revenue to the publisher. And get paid more to do it.” Of course, the
future of the “$300,000 sales person” depends on whether or not he or she is getting
compensated for driving growth in programmatic buying, which is critical to wider adoption.
18 http://digiday.com/publishers/what-digital-ad-sellers-make/

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This sentiment is shared by most interviewees, including Anthony Katsur, who sees compensation
as a “massive barrier” to achieving programmatic change on the supply side:
“[You must have] compensation for all deals, programmatic or not. Sales are driven by
quotas. Quotas equal their paycheck. Logic would dictate that if you tell someone if
revenue comes in through X channel, they’re not going to get paid on it, how supportive
do you think that person would be of that channel?”
Bionic’s Joe Pych agrees:
“Would you compensate a salesperson differently if the insertion came in over the fax
versus email? Of course not. Likewise, they should be compensated the same when it
comes in through the programmatic direct wires.”
More important in terms of overall organisational change is the composition of the entire sales
and delivery organisation, which must include new data-centric leadership. For isocket’s Trenda,
publishers have been greatly impacted by RTB, and need to adjust to service a new type of
customer that impacts every aspect of inventory sales – the media trader:
“The most interesting recent phenomenon we’ve started seeing is the birth of the media
trader. Not an official title (yet anyway), but these people aren’t simply setting nobs and
dials in their DSP and hoping the inventory comes through. Instead, they’re making a
commitment to some well-defined guaranteed piece of inventory, and then delivering it
via their DSP. They’re simply providing a way to allow these campaigns to get access to
much more premium inventory than they would otherwise get via a private exchange.”
This represents a sea change for publishers. Instead of evaluating media investment decisions on
panel-based measurement data and publishers’ own information on audience composition and
reach, they are leveraging all kinds of data to make premium inventory investment decisions. In
order to be successful, publishers must increasingly speak the same language – a language of
trading rather than sales. This requires different personnel, specialist groups within a publisher,
or a significant re-training of existing staff.
RareCrowds’ Eric Picard summarises this dynamic precisely:
“Publishers that are doing this right are investing in both people and technology –
creating significant senior and executive roles for people with the right experience and
empowered to create organisational change. These people also need to have the funding
and resources to implement the right technologies to ensure that every open channel of
demand gets access to the inventory – ideally in a way that drives competition across
channels to increase yield. This is a big departure from the older approach of protecting
individual channels from competition – which actually artificially reduced competition
and has stifled yield.”
5.4. Chapter summary: the supply side
 Adoption of programmatic direct low: Publishers continue to struggle with the high
cost of sales related to the manual transactional RFP channel for selling premium inventory,
but are hesitant to place higher classes of inventory into programmatic RTB systems without
having more granular control over pricing and data. Publishers are still struggling to quantify
all of the various programmatic direct monetisation technologies available to them, and how
they will fit into existing ‘stacks’. Additionally, publishers seem content to take a wait-and-see
approach to programmatic direct, and are making moves largely influenced via buy-side
pressure to make more inventory available programmatically, rather than taking the initiative
on sales monetisation approaches that have not been tested at scale.
 Interest high: While the supply side has fully embraced programmatic RTB for
monetisation of unsold remnant inventory, publishers have just started to test programmatic

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direct tactics via private marketplaces and invitation-only auctions through exchanges. While
there remains confusion around the terminology to describe various programmatic direct
sales tactics, there has been a growing consensus that API-driven programmatic direct
solutions (isocket et al) are a compelling alternative ‘middle ground’ for premium
monetisation – and maybe even a wholesale solution, if embraced at the enterprise level.
However, it is early days in terms of adoption, and not enough agency demand has been
aggregated through programmatic direct platforms to warrant serious consideration.
 Debating programmatic direct as channel or enterprise technology: Publishers like
the idea of programmatic direct from an efficiency standpoint, as it offers more control over
pricing and partners, but most (excluding Google) do not have the market power to dictate
how their inventory can be purchased. Buyers are firmly in control of the inventory
procurement process, and have been steadily pushing their inventory suppliers to create
programmatic access to their inventory. Buyers clearly would like programmatic direct to
happen inside of existing RTB pipes, where agency trading desks and marketers’ in-house
programmatic buying teams have already created investment. From a process automation
standpoint, agencies also desire programmatic direct API-driven solutions, but are wary of
price inflation – and unwilling to embrace such solutions without them being tied into their
legacy systems. Publishers therefore are currently treating programmatic direct as a channel,
and waiting for systems integration and buy-side adoption before reconfiguring at the
enterprise level.
 Publishers must adapt to new investment dynamics: Publisher salespeople are not
going away, but their roles are quickly changing. While demand still must be generated, the
modern programmatic sale organisation must understand the new media investment
dynamics happening within agencies, who are increasingly embracing a trading culture that
looks holistically at reach and performance across a wide portfolio of opportunities.
Management, sales leadership, on-the-ground sales staff and operational personnel must also
foster a culture that can rapidly position inventory based on rapidly changing demand, and
manage yield across existing premium inventory, the fast-moving RTB channel – and new
programmatic direct channels. Ultimately, automation will weed out personnel who cannot
adjust from transactional duties to more analytical roles, and the winners on the sell side will
be those publishers who take a data-driven approach to serving their advertisers.
Voice of the expert
“Ad technology – largely as part of a cloud of arrogance that floats over many companies – has forgotten a very
key component: PEOPLE. Many an ad technology executive, usually one at a small, emerging, overcapitalised,
unprofitable company with an alpha stage product has taken to Twitter or the trade press and declared the death
of salespeople, of media planners, of media buyers. That’s not a great idea. As we all move out of the auction
market and into direct deal automation, into automating the rest of it: we need to empower people, we need to
empower sellers, we need to empower buyers. We need to push the technology down and pull the buyer and
seller closer together.”
Jay Sears, Rubicon Project

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6. Transactional RFP Workflow
There’s been a rise in programmatic direct software solutions seeking to automate manual
processes between buyers and sellers, and create improvements throughout multiple phases of
the transactional RFP workflow. This section will take each phase of the transactional RFP
process, and discuss how programmatic approaches are impacting them, from both a demand-
and supply-side perspective.
There are significant opportunities in each distinct piece of the transactional RFP workflow, and
there seems to be increasing motivation for stakeholders on both sides of the media transaction to
embrace new technologies that promise efficiency and cost savings. Agencies, used to having
more and more programmatic access to inventory, want similar efficiencies in managing reserved
buys. Publishers, who enjoy the ability to easily monetise remnant inventory in programmatic
RTB systems, also want to be able to reduce the cost of direct sales – and the pain caused by
transactional RFP churn.
We will look at each segment of the transactional RFP workflow, examining the current paradigm
and challenges, what is coming next in terms of technology and solutions, and potential game
changers.

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6.1. Research
Current paradigm
Currently, for buys on premium publishers, agencies and marketers use research tools from
comScore, Nielsen, Quantcast, Compete and others to understand demographic viewership
trends, and see what websites match their targeted audiences. Although this has been the way
media discovery has worked across many channels (even traditional media), digital programmatic
RTB buying has completely disrupted this notion. By separating audience from the media,
programmatic RTB enabled pure audience buying for the first time, eliminating need for panel-
based measurement to provide a proxy for audience. Currently, audiences are discovered in vastly
different ways for RTB and guaranteed buying.
As recently as 2011, it was estimated that 70% of digital display dollars were still contracted on a
guaranteed basis, with 20% flowing through programmatic RTB pipes, and the remaining 10%
spent on sponsorships/native ads. This paradigm is rapidly shifting as more dollars are allocated
to RTB and native, but digital media budgets in the transactional RFP space will remain strong,
and capture as much as 50% of digital dollars until publishers expose considerably more premium
inventory into RTB channels.
Challenges
On the demand side, agencies and marketers love the direct access to audience that programmatic
RTB provides – but can’t apply audience segments to premium inventory that remains unexposed
in exchanges. Therefore, marketers are increasingly buying in two channels and methodologies:
using panel data for premium, guaranteed buying and leveraging third-party data segments for
exchange buying. On the supply side, publishers are challenged by new viewability standards
from measurement companies that threaten revenue, as the standards for viewable ad
impressions increase and billable impressions decline. Also, publishers face pressure to enable
more programmatic ways to discover their inventory – which is impossible without exposing it to
third-party systems and risking ‘data leakage’.
New datasets are also bringing about new opportunities to discover audience unrelated to both
traditional panel-based measurement and third-party audience data. Social affinity data providers
such as Colligent recommend sites based on brand affinity, and companies like MakeBuzz
leverage profit potential metrics to select digital media. These and other new discovery
mechanisms may replace – or be used in conjunction with – traditional measurement to inform
media plan creation.
What’s next?
New programmatic direct planning platforms are increasingly integrating research data,
providing planners with ‘one screen’ access to planning and research tools in the same interface to
increase workflow efficiency. New web-based planning systems, by aggregating structured data,
can also start to relate traditional demographic data with ad performance and pricing data, tying
media discovery to performance for guaranteed buys. New planning and buying systems are
leveraging multiple datasets to enable programmatic media recommendations. Ultimately,
aligning audience research more closely with the digital planning process will yield greater
efficiencies and offer more opportunities for data to be applied before initial impressions run.
Watch out for
 Dismantling of current cookie system (via legal process, or wide adoption of newer ‘unique
identifier’ technologies from large publishers like Google, Microsoft, Apple and Facebook)
creates increased demand for programmatic direct, and less within programmatic RTB –
making media research more important than ever.

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 Newly emergent data for page scoring (measuring viewability, ad adjacency, relevance, etc.)
increasingly become embedded in research and planning tools, further segmenting premium
inventory from exchange-based remnant inventory. Companies such as Moat and Evidon
collect such data.
6.2. Media planning
Current paradigm
According to recent research by industry journal Digiday and Bionic Advertising Systems , 76% of
agencies report using Microsoft Excel as their primary planning software, with MediaVisor
running a distant second with around 10% market share. Complicated digital plans require a
flexible format, and 89% of agency planners report spending more than an hour per day in Excel
– with 35% spending over four hours every day in the software. Plans are created manually in
Excel, pitched in PowerPoint, sold over phone and email, and deals are signed with PDF
documents – or even fax machines.
While ironic, the highly manual process of digital media planning and buying today has created
the opening for the ascendancy of programmatic RTB, whose obvious efficiencies appeal to
marketers who want the lion’s share of their media budgets spent on the media itself, rather than
planning (which the same study indicated might cost between 8-12% of a campaign’s total
budget). The legacy paradigm offers scant ability to leverage data-driven insights for planning, as
much historical pricing and performance data is stored on different systems, and not centralised.
Challenges
Because they are compensated by the hour (mostly on a cost-plus billing model), large agencies
have a perverse incentive to change. Agencies make money on complicated media engagements
that take hundreds of hours to plan, and this dynamic has led to a labour model in which younger,
largely inexperienced and lower-paid media planners work long hours to execute plans. While
large agencies benefit from this model, small- to mid-sized agencies, many of which get
remunerated on a percentage-of-spend or flat rate model, suffer margin degradation from lack of
efficiency. At this time, choices for demand-side platforms are relatively limited, and agencies are
challenged culturally to adopt new web-based tools.
From a tools perspective, programmatic direct adoption has been severely limited by the legacy,
server-side agency operating systems upon which they depend for order management and billing.
Agencies want a single, seamless ‘operating system’ that includes programmatic direct planning
tools, but are hesitant to adopt solutions that do not integrate with their legacy software.
What’s next?
For the demand side, programmatic direct technologies are looking to replace Excel with web-
based planning tools that centralise workflow, and also connect to the rest of the tools in an
agency’s stack, such as the ad server and order management systems.
Agency clients are rapidly adopting new programmatic technologies, and starting to build in-
house media practices by taking advantage of SaaS model applications. While this is almost
exclusively on the programmatic RTB side, agencies are starting to feel pressure to bring their
clients other programmatic solutions that offer transparency and cost efficiency.
Smaller agencies with data-driven digital practices will lead the charge in programmatic direct
adoption, and large holding company shops will not engage in a significant way for 18-24 months.
Watch out for
 Legacy systems acquire a programmatic direct technology and quickly prove model by linking
their large demand-side customers directly to publisher inventory via application
programmatic interfaces (APIs).
 The Sutton Pivot (see Section 2) is realised. If a big supply-side platform (SSP) can quickly
modify its offering to enable publishers more granular control over direct channels, its strong

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links to demand may generate out-sized market share quickly, and sideline pure-play
entrants.
 Newly emergent pure-play programmatic direct systems gain adoption from holding company
player(s), threatening the current paradigm, spurring M&A activity as entrenched workflow
systems move to acquire programmatic direct media planning tools and embed them.
6.3. Demand-side order management
Current paradigm
Traditional software systems such as Mediaocean (the combination of Donovan Data Systems and
Mediabank) and Strata have long dominated the inner workflow of agencies, which use the
systems to process orders and align actual ad delivery versus that which was ordered. Currently,
these traditional systems are not integrated directly into planning tools, and media planners find
themselves manually entering approved plan details in these systems. Both the traditional
software companies and new entrants are trying to create programmatic workflow efficiencies
which seamlessly connect planning data with order management software to eliminate duplicative
work and manual data entry.
Upstart software players like Centro and Bionic have created agency workflow systems from the
ground up, seeing adoption in the regional agency market. Adslot’s Symphony product (acquired
through the merger with Facilitate Digital) is an enterprise-class system meeting large agency
needs that has seen strong adoption in the Asia-Pacific region, and is well positioned for growth
in the US. That said, Mediaocean continues to have a stranglehold on workflow management for
the holding companies, and is looking to modernise its platform with its new Prisma tool.
Challenges
Legacy systems dominate agency workflow, but their architecture makes them difficult to
integrate with. Agencies, desirous of a single ‘operating system’ to run their businesses on, find
themselves reluctant to add another login and further complicate a media procurement process
that includes a high level of complexity and multiple systems.
Understandably, the leading systems have little incentive to be extensible, as they would like to
protect their market share, and provide internal innovations for their customers, rather than
enable smaller technology companies to plug in and disrupt traditional processes. Agencies who
want to innovate in workflow face a dilemma: whether to disrupt existing models with innovation
now, for perceived performance gains later; or to pressure incumbent systems to innovate, and
risk missing new technological advances offered by more nimble startups.
What’s next?
Legacy systems are slowly innovating, while controlling the amount of new entrants that can ‘play’
within their existing ecosystems, and looking to create the standards and protocols needed to
make programmatic direct solutions universal. Younger startups and smaller players will look to
exploit the small- to mid-sized, regional agency market (those that do not need or cannot afford
enterprise-class systems), and look to gain adoption. Ultimately, successful innovation in the mid-
tier agency market (and among a handful of in-house planning teams from direct marketers) will
lead to more legacy system integrations – or, more likely, the acquisition of programmatic direct
technology companies.

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Watch out for
 Google updates Campaign Manager (including MediaVisor functionality), and makes their
stack available for planning and buying media outside of the Google media ecosystem.
Although there is a low probability of this happening, a free Google entrant could challenge
large legacy players and quickly disrupt many smaller software entrants. Currently, Campaign
Manager is configured to be more of a configuration interface for DoubleClick for Advertisers
(DFA), with limited media planning functionality.
 Centro, having recently shown a commitment to owning its own stack by purchasing the
SiteScout DSP and indicated interest in acquiring a DMP, is also a player to watch. An
aggressive move away from services and into software-as-a-service would make them a
credible threat to challenge legacy software players in the regional agency market.
6.4. Demand-side ad serving
Current paradigm
The linchpin of the workflow process, agency ad serving technologies (such as Google’s
DoubleClick for Advertisers, MediaMind, and Atlas) have experimented over the years with
building agency workflow tools into their systems (e.g. MediaVisor). Today, web-based
programmatic planning tools are plugging into ad servers via API, pushing planning data into ad
servers – and pulling key pricing and performance data back into planning tools to enable
smarter approaches to media selection, based on historical performance data.
Today, ad serving technology is both the biggest hindrance to programmatic direct success – and
the most critical component to its eventual success. On the demand side, inputting negotiated
placements in DoubleClick or MediaMind requires much manual work, and is often subject to
error.
Challenges
Ad serving has become increasingly complex. According to a recent study by MediaMind, today’s
top advertisers are running campaigns that are six times as complex as the average campaign. The
study also indicates that over a third of ads have more than one tag, and the amount of campaigns
with five or more tags increased by nearly 500% over the last several years.
Demand-side ad serving is only growing more complex as new native opportunities appear, the
expansion of new advertising formats (such as Rising Stars) gain traction, and new display video
formats increase. Publishers, who all seem to have proprietary ad unit specifications, have added
to the complexity by not embracing standards. The result is massive ad operations complexity,
which creates a great deal of technically complicated, manual work for demand-side ad operations
teams, adding to the overall cost of campaigns.
What’s next?
Programmatic RTB has gained fast adoption in a large part due to the naturally occurring
standardisation around IAB ad units; marketers know that they can access large swaths of
exchange inventory by leveraging the most popular units. However, ‘banner blindness’ is pushing
marketers to look for higher impact creative units and new native opportunities often require
bespoke creative development, meaning complexity continues to grow.
On the transactional RFP side, new programmatic direct technologies are enabling demand-side
customers to access marketplaces and upload creative directly into platforms that connect via
APIs to supply-side servers such as DFP. Additionally, more web-based planning and buying
systems are connecting via APIs to demand-side servers, and eliminating duplicative manual
entry of placement-level detail, creating more streamlined workflow.
More importantly, ad server connectivity is enabling pricing and performance data to be more
closely aligned with planning systems – adding a layer of business intelligence to the process of
securing guaranteed inventory.

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Watch out for
 Cookie crumbling: One of the biggest problems bringing efficiency to ad serving is the
complexity created by cookie-centric targeting. The introduction of unified identifiers from
large players like Google, Apple, Microsoft and Facebook may reduce cookie complexity, but
necessitates adoption of varying user IDs and separate reporting/measurement platforms.
 Measurement: New viewability standards such as comScore’s VCE and Nielsen’s OCR gain
rapid adoption, and all ad servers start incorporating such metrics on a default basis. Recent
tests between Nielsen and Google indicate that we are rapidly moving to a world in which a
Gross Rating Point (GRP) equivalent provides a standard reach and frequency metric for
display advertising. Because this is critical for cross-channel campaign measurement, ad
servers and the systems they connect with that support such measurement will be ascendant.
6.5. Supply-side order management
Current paradigm
On the supply side, larger publishers have embraced order management tools that integrate the
publishers’ CRM, ad serving, and finance systems to centralise operations and improve workflow
processes. Premium publishers, who still realise the large majority of their revenue from the
transactional RFP process, realise lower margins on premium inventory, due to the high cost of
sales personnel and inefficiencies in proposal management and delivery. A recent joint study
between Adslot and Digiday revealed that publishers spend over 22 hours responding to a single
RFP – with win rates as low as 35%. Combine that with a high cancellation rate once impressions
start running (up to 25%), and publishers are spending an average of 18% of revenue on the
transactional RFP process.
Publishers have benefited from the seamless monetisation offered by SSPs, ad networks, and
exchanges (place a tag, get a check) for their lower classes of inventory, and are seeking more
programmatic ways to sell inventory to enhance margins. Today’s programmatic options are
largely limited to working out ‘private deals’ inside of exchanges, but some new programmatic
direct opportunities have emerged which offer a deeper layer of sales control over pricing and
inventory availability and are gaining mindshare from inventory owners reluctant to cede more
power to technology companies.
Traditional order management tools are trying to connect to demand-side systems to provide
publishers with order fulfilment operations that are aligned with the agency’s planning and
buying process (e.g. Operative and Mediaocean collaborating on electronic ordering and invoicing
standards), and also looking to tie into publisher ad serving systems, to align pricing and
availability data with common CRM tools.
Challenges
An improved DFP API means that it is easier than ever to tie into the publisher ad server and
expose pricing and availability detail, and newer technology such as that offered by Adslot, Shiny
Ads, and isocket can enable demand-side partners’ direct access to premium inventory without an
insertion order.
While the technology hurdles to programmatic direct adoption seem surmountable, the largest
barrier to programmatic adoption for higher classes of inventory has been the publishers’
reluctance to cede sales control. Organisations are challenged from a compensation standpoint
(whether or not to commission sales of programmatically acquired inventory), and also
challenged to gate access to preferred buyers in a non-RTB environment.
Publisher monetisation has been largely a tale of two silos: an expensive sales force selling
expensive inventory and technology-enabled aggregators selling low-CPM remnant inventory.
The challenge is to streamline premium sales by leveraging the efficiency of network monetisation
without ceding control of pricing and availability.

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Increased focus on robotic inventory and new measurement tools are starting to pressure pricing
for lower classes of inventory.
What’s next?
Publishers hate the low CPMs offered by networks, but love the fact that they aggregate
significant demand. What has become the SSP sales channel is now an indispensable part of
publisher monetisation.
Order management systems’ next logical evolution is to go beyond connections to billing and
CRM systems, and plug directly into programmatic direct solutions that expose pricing and
availability to demand-side systems, to enable a new channel of deal flow.
Watch out for
 ‘Systems of Record’ for publishers (such as OperativeOne, Fivia, and FatTail) start to connect
directly with demand-side platforms, enabling electronic ordering, seamless ad delivery, and
connections to the publishers’ CRM. Once this ‘middle layer’ becomes entrenched, it will be
hard for competitors to dislodge.
 Demand-side platforms leverage their aggregated demand and build their own publisher
marketplaces, and pivot buyer transactional technology to help publishers manage multiple
channels of inventory.
6.6. Supply-side ad serving
Current paradigm
Currently, most publishers employ Google’s DoubleClick for Publishers (DFP), which gives them
the ability to seamlessly tie into AdSense, and offers a flexible API for extensibility into other
systems. Other popular ad serving solutions include Open Ad Server (OAS), ADTECH, and
OpenX, among others. Many systems also include the ability to tie into marketplaces which help
them monetise remnant inventory, along with tools to help optimise and prioritise programmatic
sales. The last several years have seen significant innovation in terms of bringing the ad server
beyond a delivery system, and tying ad serving more closely to overall monetisation strategies
through yield management.
Challenges
Aligning advertiser ad tags with publisher-side ad serving can be highly manual, and create
discrepancies in reporting that take many hours to reconcile. Adding to this is the amount of
third-party technologies that ride alongside ad server tags, creating more complexity and room
for error. Publishers can also employ multiple ad serving technologies for standard display, video,
and rich media, adding to the complexity.
What’s next?
Google’s DFP has commanding share of market in supply-side ad serving – but also an advanced
API, which enables any tools to integrate seamlessly. Yield optimisation tools like Yieldex have
leveraged direct ad server connections to enable publishers to get the maximum amount of money
from advertisers, based on competing demand profiles and inventory type. Programmatic direct
software providers believe building connections between demand- and supply-side servers can
make seamless ad delivery a reality.
Watch out for
 The recent Adslot acquisition of Facilitate Digital will prove to be an early testing ground of
the seamless delivery theory.
 Possible acquisition of key players that enable yield management and optimisation within the
publisher ad server. With commoditised ad serving prices and slow tools innovation, major ad
serving providers may look to add value through acquisition.

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6.7. Billing and reconciliation
Current paradigm
Although modern ad technology has infinitely increased the flow of ad impressions, it seems to
have had the opposite impact on the flow of dollars between marketers, their agencies, and
publishers. Agencies struggle to gather data to create monthly invoices based on delivery
numbers, publishers are challenged in terms of invoicing the correct amounts, and cash collection
has turned into a waiting game, with receivables aging 120 days or longer. Currently,
reconciliation in the billing process is done manually, using data pulled from order management
systems and pulled from large financial systems (such as SAP for a large agency) or agency-
specific financial solutions (such as Advantage for independent agencies). To date, there have
been few efforts to link this critical part of the media procurement process to overall workflow.
Challenges
For both sides of the equation, much time and effort is expended trying to reconcile the monthly
delivery numbers between an order management system, the demand-side ad server, and the
publisher’s ad server. That means matching order and vendor numbers across systems, and often
manually negotiating final delivery numbers when discrepancies arise. Complications in
reconciliation also slow down payment times, and increase billable hours for some clients, making
digital less efficient.
Although the IAB has been helpful in terms of creating the terms and conditions necessary to
assist with reconciliation (the standard 10% delivery discrepancy allowance), needed system
integrations have not been adopted at scale that would allow for reconciliation for guaranteed
buying to occur dynamically.
What’s next?
Today’s programmatic direct technologies are helping with billing and reconciliation in several
ways. Supply-side solutions offer distinct advantages: first, by tying directly into the publisher’s
ad server, there is a direct connection between impression availability and ordering, ensuring that
delivery goals can be met. Secondly, because such systems effectively create an electronic ‘order’,
there is a single system of record, simplifying bookkeeping.
Demand-side programmatic direct solutions are developing an electronic alternative to the
insertion order that can deliver both campaign and invoicing details electronically to publishers
for acceptance.
Watch out for
Look for massive strides in this area to be made over the next six to nine months by industry
leaders, along with possible participation on the implementation of such standards by the IAB,
AAAA, and possibly others.

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7. Where Are We Now?
Taking cues from our interviewees, and applying their observations to Gartner’s hype cycle model,
it looks as though we are indeed in the early innings of the programmatic direct game.
Figure 6: This version of the Gartner Hype Cycle shows that programmatic direct
is at an early stage, and still requires significant marketplace changes to grow in
size and gain velocity
The technology triggers that enabled programmatic buying of higher classes of inventory (decent
ad server APIs, and private deal functionality inside of RTB systems) have happened relatively
recently, and are just getting some early market traction. Before programmatic direct volume
rises, a lot needs to happen:
 Standards adoption: After nearly five years, the IAB’s Digital Advertising Automation Task
Force is not much close to its original mandate (when it was started as the “eBusiness Task
Force”). Its stated mission: “Updating the XML schema and implementation testing for the
electronic delivery of digital advertising business document.” Those documents include
Requests for Proposals (RFPs), insertion orders (IOs), and invoices – documents that must be
standardised in order for adoption of programmatic direct buying to occur at scale. Although
the group has reorganised some new member initiatives and technology changes, it seems
clear that stakeholders will ultimately work to build workable API standards, implement
them, and let market adoption dictate how specific standards and protocols are implemented.
 Connections: Another significant barrier to rapid adoption of process automation
technology is the fact that legacy order management and billing systems are not extensible,
like modern cloud-based platforms. The key to programmatic direct buying is being able to tie
specific systems in the media procurement workflow together, and buy- and sell-side systems
are not speaking to each other yet. When large agency operating systems like Mediaocean
integrate directly with large publisher order management systems such as OperativeOne,
adoption will proceed more rapidly. This is happening among innovators on the edges, but
true connectivity is just beginning to be established among the larger, legacy players.

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 Demand aggregation: Beyond the holding company level, another factor that could drive
rapid programmatic direct adoption is the aggregation of demand from regional agencies.
With less need for large-scale order management systems, but the same need for
programmatic access to quality media and efficiency, there is the opportunity for demand-
side planning and buying platforms to aggregate demand, giving the sell-side a single
technology-based integration point for regional agency demand. Success in aggregating hard-
to-get small agency budgets for publishers would incentivise more rapid adoption and drive
process automation to scale more rapidly.
 Client embrace: Perhaps as significant as the adoption of standards, and overall
marketplace dynamics, is being embraced by the ultimate financing source: the marketer
itself. Marketers have already shown they are willing to look at taking the programmatic reins
when it comes to RTB, giving themselves more control over their first-party data, more
granular control over media pricing and placement, and – most importantly – a 15% ‘agency
discount’ they can apply to building internal capabilities. Marketers who use agencies to place
direct digital buys are increasingly looking at new programmatic solutions that can streamline
access to quality, brand-safe inventory, while lowering the cost of procurement. Clients with
internal media buying teams can quickly move the needle on programmatic direct adoption.
Voice of the expert
“We in digital advertising and especially ad tech have a tendency to go gaga over the next shiny object: recent
examples include social, RTB, mobile, and it seems the topic for 2014 will be programmatic. To ensure that this
is not simply another hype cycle, we need to be very clear about what we mean when we say programmatic: is it
automating direct sales of premium inventory, a marketplace for automated buying, a private exchange, or
something else entirely?
“Outlining these distinctions can help all sides of the ecosystem understand better what applies to them and how
to practically tackle programmatic so I think you have to start from the basic definitions in every thought
leadership piece. When it comes to challenges, understanding what demand, supply, and technology players
perceive as barriers to adoption is critical. The question I’d really like to ask is – is it worth it? How can we
illustrate and clearly articulate the value proposition for demand, supply, and technology partners and is there a
formula for efficacy based on amount of premium inventory or amount of spend managed?”
Ana Milicevic, SAS

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Figure 7: The Picard workflow model for programmatic direct, inclusive of RTB
infrastructure

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8. Contributors
Andy Atherton is SVP at AppNexus, the world leader in real-time
advertising technology, where he is driving delivery of innovative new
technology for programmatic direct. Andy is also spearheading the
development of the AppNexus office in San Francisco, where he is based. A
well-known and respected executive in digital advertising, Andy previously
spent four years as COO and cofounder of Brand.net, a pioneer in
programmatic reserve technology and leading digital media buying solution
for top brands. Prior to Brand.net, he was Vice President of Pricing & Yield
Management for Yahoo!, responsible for maximizing monetisation of a global portfolio of display
inventory worth $2 billion annually. Prior to Yahoo!, Atherton was president and co-founder of
Optivo, a venture-backed startup that developed price optimisation software for ecommerce
retailers. Andy received a B.S. in Mechanical Engineering from M.I.T.
Doug Burke is General Manager and Chief Revenue Officer of FatTail,
where he is responsible for sales, corporate strategy and business
development, marketing and recruiting. FatTail is a leading provider of
software to help online publishers price, plan and sell premium guaranteed
inventory. Prior to joining FatTail, Doug was a Managing Director in
investment banking in the software and media verticals at Morgan Joseph &
Co., Tucker Anthony Sutro and Montgomery & Co., where he specialised in
working with entrepreneurs in online media. Doug holds a BA with honors
in Economics and German from Dartmouth and an MBA from the Amos
Tuck School at Dartmouth.
Robert Burkhart joined STRATA in 2004 where he served as Director,
Business Development and led the product management team that
engineered development of STRATA’s digital platform for agencies.
“STRATA has always been an industry leader and we are proud of our
digital product, it truly is second to none.” Burkhart led the project
management teams to also build out STRATA’s digital outdoor and National
TV buying platforms along with modifying the architecture approach to
leverage high volume cloud computing. Burkhart definitely knows what
agencies are looking for, having spent the better part of two decades in strategic
media/advertising information technology. A former Senior Vice President and Director of Media
Systems for Universal McCann, he developed and supported strategic systems for all media
disciplines across the country. He continues that leadership with STRATA where he represents
the company on some of the top industry committees including IAB, ANA, 4A’s and the TVB.
Sean Cotton is Interactive Director at one of the fastest growing media
agencies in North America, True Media. He has worked closely with many of
the leading digital technology companies in the marketing industry to
advance the implementation programmatic solutions for agencies in the
areas of search marketing, display advertising and online video.

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Jason Fairchild is the Chief Revenue Officer of OpenX, where he is
responsible for strategic partnerships, publisher network development,
supply and demand relationships for OpenX Market, and all forms of
monetisation/revenue. Prior to OpenX, Jason was a Senior Vice President at
Claria, a behavioural marketing pioneer. Prior to Claria, he was a Vice
President at GoTo.com/Overture/Yahoo! (Overture) for six years, where he
built and led the business development/affiliate team responsible for
developing, executing and managing all of that company’s paid search
partnerships and global strategic relationships, helping the company evolve from a destination
site to the largest distributed search network on the internet, generating $1.5 billion+ in annual
revenues. Before Overture, Jason co-founded an affinity-based ecommerce company, CU
Shopper, which developed and distributed co-branded shopping portals to more than 100 credit
unions nationwide, and was an early team member at EarthLink Network.
Matt Gay is Operative’s SVP of Customers and Partners,
overseeing strategic client relationships and technology partnerships. While
at Operative, Matt has also managed a new business venture as well as the
marketing function. Prior to Operative , Matt was SVP of Global Media
Systems for Mediabrands Worldwide, where he was responsible for
implementing and integrating systems in order to create efficiencies within
and across agencies. Prior to his stint at Mediabrands, Matt was Vice
President of Media Advertising Operations for Martha Stewart Living
Omnimedia, Inc. and also served as Manager of Technology Integration at Deloitte
Consulting. He holds a B.S. in Electrical Engineering from Bucknell University and sits on
Bucknell’s Alumni Board of Directors. In 2008, he co-founded Bucknell’s Media and Technology
Network and is active in media industry standards initiatives.
Anthony Katsur is a well-respected ad tech veteran with wide industry
experience encompassing ad serving, media buying platforms, real-time
bidding and optimisation technologies. He brings more than 16 years of
experience in building digital media and content delivery solutions. Most
recently, he was CEO of Maxifier, a publisher campaign optimisation
platform. Having previously served as GM of MediaMath, he led all aspects
of the TerminalOne platform. Prior to MediaMath, he was at DoubleClick,
where he managed all levels of the engineering division, improved and
managed its real-time ad serving infrastructure, directed the software development process for
enterprise software applications, and led the client services group, and Panther Express, a CDN
he helped build from the ground up and where he had similar operations, engineering and client
services roles.
Ian Lowe joined Adslot as CEO in October 2012, bringing over 20 years
media industry experience and 13 years managing high growth media and
media technology companies, both privately held and publicly traded.
Immediately prior to joining Adslot, Ian was CEO of Facilitate Digital Ltd
(ASX:FAC), where he launched Symphony - the world’s first workflow and
trading platform for media agencies - and led the company’s international
expansion into Asia, Europe and North America. Prior to Facilitate, Ian was
CEO of ad measurement company Traffion Ltd, and Managing Director of Red Sheriff Ltd, a
global pioneer of web measurement technology. Ian has held senior management roles in a
number of media and media agency organisations including George Patterson Bates and PMP
Ltd.

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Raju Malhotra is Centro’s SVP, Products. Raju Malhotra joined Centro as
Senior Vice President of Products to lead the development of features and
functionality for its cloud-based software applications. Raju had an
illustrious career at Microsoft, growing several business units. As Director of
Products for Bing Shopping, Microsoft.com and International Search, he
grew customer engagement, conversion and revenue for many of Microsoft’s
key products. He also led product management for Visual Studio and
Enterprise Services. As a management consultant with McKinsey &
Company, he advised VC-funded companies in Silicon Valley on their
product strategies. Raju mentors software developers and entrepreneurs for startup accelerators
including TechStars. He earned an MBA from the Wharton School of Business (University of
Pennsylvania) and an undergraduate degree in Computer Engineering from National Institute of
Technology (NIT) in India.
Ana Milicevic has been building digital products, strategies, and content
experiences since 1997 with special focus on digital media and advertising
technology. An entrepreneur at heart, Ana founded her first technology
company while at university, and has held key executive roles in several
media and entertainment startups in Europe and the United States. She
currently heads up SAS’ digital media and advertising technology industry
consulting practice. Prior to joining SAS, Ana was responsible for product
development and management of the Demdex platform (part of Adobe’s
Online Marketing Suite) and pioneered the field of data management in
online advertising. Ms. Milicevic is the co-chair of the New York chapter of
the Digital Analytics Association, serves as a mentor at Entrepreneurs’
Roundtable Accelerator, and is an advisor to several startups on scaling, go-to-market strategy,
product, operations, and global market penetration. Ana was the recipient of the Open Society
Foundation’s academic scholarship, and holds a degree in Computer Science from the American
University in Bulgaria.
Ben Pashman is Centro’s SVP of Business Development. Ben Pashman
leads the company’s strategic partnerships with emerging media technology
companies in the areas of video, social, mobile and digital out-of-home,
among others. Ben is also responsible for evaluating strategic investment
opportunities for Centro. Ben has 15 years of digital media marketing
experience, including 10 years in internet advertising sales and business
development. Most recently he served as the first business executive at
Gigya, a leading social media SaaS technology company. Previous positions
include senior sales and product management roles at DoubleClick, Conde
Nast and Travelzoo.
Eric Picard is CEO of Rare Crowds. A Microsoft veteran and the founder of
Bluestreak, an early venture-backed ad technology company that was one of
the first rich media advertising technology companies, Eric brings over 16
years of industry experience to his role at Rare Crowds. Prior to Rare
Crowds, Eric led advertising platform strategy at Microsoft for six years. He
was part of deal teams on all ad technology acquisitions between 2004 and
2007, including Massive, Screen Tonic, AdECN, and aQuantive. In 2010 Eric
left Microsoft to become Chief Product Officer at TRAFFIQ, where he led
product management and engineering. He was responsible for their programmatic direct media
management products that provided a unified interface for managing media planning, RFP
management, media buy execution, real-rime bidding, ad serving, optimisation, campaign
management and reporting and analytics. Eric has been active in advising startups for his entire
career, and he has been writing about advertising technology since 1999, you can read the archive
of his trade columns at http://springload.com. He has undergraduate degrees in History and Fine

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Arts from the University of Rhode Island, and a Master of Fine Arts in Photography concentrating
on Digital Media from the University of Cincinnati.
Roy Pereira is the CEO and founder of Shiny Ads, an innovator in the
programmatic direct advertising space. Roy has a background in
technology startups and large companies as a technology and marketing
executive. He has several patents and has received several awards for his
innovative products.
Joe Pych co-founded Bionic Advertising Systems as a business unit of
NextMark with the mission of streamlining the digital media buying and
selling process. Prior to Bionic, Joe founded NextMark which provides
marketing automation systems. Prior to that, Joe built some of the world’s
biggest marketing databases while with Exchange Applications and two
mobile computing platforms while with Travelers. Joe holds three US
patents, has been awarded the Marketing EDGE Rising Stars Award, and is
among BtoB Magazine’s Who’s Who List. Joe holds a Master’s Degree in
Computer Science from Rensselaer Polytechnic Institute and Bachelor of
Arts Degrees in Mathematics and in Computer Science from Cornell University.
Jay Sears is SVP Marketplace Development for Rubicon Project, working
with management, business unit heads and business development across the
company to expand Rubicon Project’s potential market. Sears has also
served as GM, REVV Buyer, where he was responsible for global relations
with the buy side, including ad holding companies, ad agencies, agency
trading desks and demand side platforms headquartered in North America
Prior to joining Rubicon Project, Sears was General Manager of the
PulsePoint Ad Exchange for PulsePoint (formerly known as ContextWeb,
Inc.). At PulsePoint, Sears brought new products to market and drove key
strategic relationships resulting in audience and revenue acquisition. He co-chairs the Interactive
Advertising Bureau’s Advertising Technology Advisory Board and is the former co-chair of the Ad
Networks and Exchanges Committee and helped write its Quality Assurance Guidelines. Sears
received the 2009 President Award from The Advertising Club. He is the hyperlocal publisher
behind the local media site MyRye.com, provides commentary at JaySears.com and tweets from
@jaysears. Sears holds a BA in political science from Kenyon College. He lives in Rye, NY with his
wife Lauren Rosen and their three boys.
Tom Shields is co-founder and chief strategy officer of Yieldex. Tom is a
pioneer in internet advertising, having co-founded NetGravity in 1995 to
create the world’s first internet ad servers. As CTO, Tom developed mission-
critical real-time ad server software that was successfully deployed at over
300 customer network operations centres. This rapid growth led to
NetGravity’s IPO in 1998, and subsequent acquisition by DoubleClick in
1999 for over $500m. Tom also received a Service Award from the IAB for
leading the group that created the first ad impression counting standards.
Christopher Skinner is a frequent speaker at Google conferences and
other digital industry events, and believes that the dominant methods for
measuring digital media are limiting business growth. Christopher
founded MakeBuzz in 2001 and has worked with over 250 leading
companies, including Vodafone, Target, United Airlines and Oreck. He holds
three patents in marketing automation. His MakeBuzz software is a reliable,
simple and affordable profit optimisation platform that helps business seek

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out maximum profitability through digital marketing.
Ben Trenda is CRO of isocket, the first and largest marketplace for
programmatic direct. After initially considering isocket as an acquisition
target for Rubicon Project, Ben joined isocket to launch programmatic direct
in 2011. Prior to isocket, Ben was VP Marketplace at Rubicon Project. Under
Ben’s leadership, Rubicon launched one of the world’s largest RTB
platforms, and developed the first private exchanges for several major
publishers. Before Rubicon, Ben served as VP of Global Alliances and Agency
Partnerships at AOL, and held various roles in Strategic Alliances at Yahoo
after Yahoo acquired Overture, which was Ben’s third startup role.
Bill Wise is CEO of Mediaocean, the largest independent advertising
technology company in the world. Mediaocean processes approximately
$130 billion in annual ad spend across all media channels, from television to
print to out-of-home to radio to all forms of digital. Bill has spent over a
decade leading and unleashing the potential of revolutionary advertising
technologies, overseeing more than $3 billion in mergers, acquisitions, and
public offerings during that time. He comes to Mediaocean from his role as
CEO of media systems provider MediaBank, which, along with Donovan
Data Systems/DDS, was one of Mediaocean’s two founding companies. Bill
was named Ernst & Young Entrepreneur of the Year for Technology in 2013.