#OPSPOV: Is Programmatic Direct a Point Solution?

Though it seems fraud and the scourge of bots were high of mind at the IAB Annual Leadership Meeting this week, EmpiricalMedia’s Steve Goldberg launched a few missiles via AdExchanger that I’m sure exploded in debate over in Palm Springs. One of these missiles included predicting “the end of stand alone self-service platforms,” because programmatic direct providers are “point solution companies.”

In a Twitter exchange (for that is how gentlefolk communicate these days), Goldberg emphasized he was not arguing that programmatic direct as a transactional channel is a point solution, but the highlighted providers (to name names, isocket, Shiny Ads, AdSlot, etc.) were only offering a solution, a small spectrum of the channel.

But it is a question that should be put out there – is programmatic direct a point solution? I got a little spicy in researching my latest tome, "The Maturation of Programmatic Direct" – I emailed my contacts at a bunch of programmatic direct providers with this blunt question: why is programmatic direct not a point solution?

They all answered somewhat similarly – prog direct is a big, big field, and within it exist a variety of point solutions; for example, insurance on guaranteed contracts. Indeed, Alanna Gombert, General Manager of Conde Nast’s Catalyst Platform, is not the only person that defines programmatic direct as a one-to-one programmatic relationship between advertiser and publisher, regardless of the transactional technology used. Yes, that would technically put private exchanges/DealIDs in the realm of prog direct.

So, no, programmatic direct is not a point solution, but every company that’s mainly offering the tech du jour is going to be whispered about as a “point solution provider.” Do you remember the RTB enablers just a few years ago? Yeah, those companies filing gigantic IPOs left and right were pretty recently labeled as peddlers of point solutions.

But as their products grew, so did their market potential. Shiny Ads CEO Roy Pereira commented in "Maturation" that he believes programmatic direct providers are on a similar trajectory, and right now their position is akin to the RTB cabal’s four years ago.

Eventually, we’re going to have to debate the difference between automating transactions and using programmatic direct channels – for now it seems some publishers are using the latter to accomplish the former. This is why Goldberg comments that programmatic direct provider tech “a simple subset of what the big SSPs do.” Thing is, the major SSPs have been threatening such technology, but products have failed to come to fruition. 

However, other players, notably those involved in yield optimization. Yieldex is testing a programmatic direct platform built via an agreement between AOL, Yahoo and Microsoft. FatTail also offers an automated order-processing product called PageGage

In addition, keep your eyes on the workings of the IAB’s Digital Advertising Automation Task Force (you may notice the URL contains "eBusiness_Task_Force"), which has developed the Open Advertising Protocol, an XML schema that aims to standardize transaction processes. Check out the repository on GitHub. (I hope to write more about this in the coming weeks.)

It seems SSPs or some other major platforms (side-leaning players seem to be increasingly reaching toward the middle – e.g., Xaxis gobbling up 247 Media) will either have to unveil their own programmatic direct solutions relatively soon, or acquire one of the fledgling providers. I’ve heard plenty of rumors of offers floated – from what I understand, prog direct providers see the potential for a much bigger business. Oh, to get a glimpse at a roadmap.

Prog direct is in a growth spurt – the buzz is strong with this one. As publisher adoption improves, demand-side awareness grows and buyers begin to use the channel en masse, we’ll have a clearer picture of whether the programmatic direct providers have staying power.

Related Event: 
Publisher Forum XXXII


Gavin Dunaway is Senior Editor for AdMonsters’ Content Team. Previously he served as Senior Editor for interactive advertising trade news depot Adotas.com, and before that he held reporting and editing roles for numerous industry-related publications. When not diligently producing news and feature articles related to ad ops, he enjoys playing guitar so loud that the walls shake. Follow him, if you dare, on Twitter at @AdMonsterGavin.


Comments

Gavin: What is clear is that, after a long time coming, shifting of these dollars is "a thing.". And I think that the maturation phenomenon you tag is the key to answering both questions #2 and #3 (which in some ways are tied to one another.)

For industry watchers #3 is -- as you point out -- the key question. In my experience (Corp Dev for a number of companies in our industry) when you can't buy something you often just do it yourself. So I think we are likely to see movement of the SSP's to this and then that will create momentum for the DSP's and so forth.

Obviously, if you are a "directly automated transaction" vendor (heck, what's one more descriptor!) you hope to get to more market space before the SSP's launch anything serious and, as a result, get peak value or fight it out.

Which goes back to the "stand-alone" thing that got this all going.

The bottom line here is that we just have too many publisher-facing vendors. Not one client of Empirical (or any of the other clients I've worked with) would dispute that. So, I'm hopeful for either good exits for the other vendors or strong action by the SSP's. Not to re-stir the pot (alright, this will re-stir the pot) but as an industry, in this case, consolidation is good.

Steve

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Consolidation may take care of needing separate point solutions moving forward, but for now it's a moot point as we need Prog + Direct sooner than later & not whenever AdX/Google or another SSP decides to build one (and offer server to server connections - i.e AOL Marketplace, Index, OpenX, PubMatic).

I'm also beginning to change my perception of how the Programmatic Market should be structured and defined.

Just to simplify terms, let's say for example a Publisher has at the top a Private Marketplace. This would consist of SSP, Prog + Direct, and PD/PA.

Here's the nuance of the new concept...

What a Pub creates is either "Open" or "Private" Exchange. The definition of which should be simply, is it open to every buyer, or are the packages of inventory sold privately (non-exposed) to a select group, or single buyer.

Programmatic + Direct can be placed in both the Open and Private Exchanges depending on the transparency of the inventory being made available.

Additionally, in terms of Dynamic Allocation or Ad Server Decisioning, a Programmatic + Direct campaign could actually be served at a lower priority than a Preferred Deal or Private Auction.

An Open/Public Prog + Direct package could be served above a Private Preferred Deal.

What this does is restructure the common perception that everything above the Open RTB Auction sits in a Private Exchange.

Instead, Open and Private sit side by side, and only the Open RTB Auction is guaranteed to sit at the bottom.

Google is a point solution for web search. How's that working out for them? I'm not really too concerned about the semantics of what you call us (iSocket). Rather, let's look at what we're focused on: that over 80 of the display/mobile/video segment was direct sold last year - i.e. the vast majority of ad spend is not RTB. That seems like a pretty sizable opportunity for a platform...er, I mean, a point solution to serve.

80 percent, that is!

Steve,

Thanks! Hey, you had so much going on in that other piece that I am hoping to come back to a segment before the week is over.

1. Agree. Sigh, why can't anyone in ad tech use the same nomenclature?

2. Kinda under the radar, DSPs and PD providers are hooking up. As I mentioned in "The Maturation of Programmatic Direct," agency trading desks/programmtic buying platforms are increasingly excited to grab reserved inventory budget by buying through PD. Seems to be the same case for DSPs.

3. I think that's the big question – will SSPs have the resources to build their own PD solutions, or will they try to acquire the current providers? Well, word around the water cooler is they have tried to do the latter, but the PD providers don't want to sell because they see a bigger market opportunity. Really, if an SSP were to launch and successfully scale a PD solution, that would be a game-changer... But that's still an if.

Gavin: Super thoughtful piece with great depth (wish I had the space /word count to flesh this out in my original post:)) I think the key points that stand out to me are:

1- there is confusion and overlap about the evolution of PD, PMP, Self Service, etc. But in the end, pubs will follow the money which means...

2- As you pointed out, without a connection to the DSP's It is a long long haul for these guys and...

3- If the product road maps of the SSP's and others with great "market space" turns towards this area (which I firmly believe they will) then it is not clear why they would acquire one of these "point" (loops, did it again) solutions. They might --which I hope for Foundry and iSocket's sake -- but it is a hard argument to make.

What do you think?

Rocket Fuel