Change is Coming: Connecting the Dots for Programmatic Reserve in Video

Maria Flores, OoyalaWhen you consider how long we have been banking, shopping and booking flights online, it seems bizarre that an industry as tech-focused as digital advertising is still doing business via insertion orders (IOs). However, as Maria Flores, VP Programmatic at OOYALA , explains, the industry is on the verge of a seismic change in terms of how it does business. This article is sponsored by Ooyala, who are a gold sponsor at New Video Frontiers.

Let’s face it: making programmatic work if you are a premium video content owner is not an easy task. And here we mean programmatic in the traditional sense of the word: placing inventory on a programmatic platform (supply-side platform or “SSP”) and allowing ad buyers to make a purchase decision on each individual impression. There are a number of different models for doing this, from direct deals to open marketplaces, but they all have one thing in common: It’s a non-guaranteed trade and the seller is never certain how much inventory the advertiser will end up buying.

Yes, programmatic does offer interesting opportunities to premium publishers: higher efficiencies, the promise of access to additional budgets – such as brands starting to use DSPs for their own buys – and the opportunity to boost their CPMs for specific audiences. However, the reality is that the main motivator for the premium end of the market at this stage is about being afraid of being left behind. Their existing buyers are shifting their spend to programmatic platforms, and so they know they must too, whether they like it or not.

In an ideal world, no premium video publisher would want to change their traditional way of doing things, and this is in many ways totally understandable. Publishers and broadcasters are happy with their less efficient, insertion order (IO) based model, through which they can contract fixed amounts of volume with a buyer. This model gives them business predictability and the ability to sell without too much scrutiny of their digital audience. Today, programmatic is still seen as a threat by some premium publishers, and some of those who have started trading in this manner may err on the side of caution, resistant to placing large volumes of inventory on any SSP and relegating programmatic to a remnant game.

Programmatic reserve: Opportunity + control = revenue growth with efficiency

But what if the industry found a way for publishers and broadcasters to benefit from the advantages of programmatic without giving up that crucial business predictability? Or, even better, what if they could build a model for achieving this without having to give intermediaries such as SSPs a percentage of their hard-earned ad revenues?

Conceptually, this is actually not very hard to achieve. One would just need to connect the publisher’s ad server into a buying platform (demand-side platform – DSP), allowing buyers to surface available audience from the publisher and make a guaranteed offer on it, which could then be automatically booked into the ad server once accepted. A series of controls on the part of the publisher would be necessary at the ad server level to ensure a fair negotiation, but that’s about it. No SSPs, no deal IDs, no complicated marketplaces, nothing.

This model, typically known as ‘programmatic reserve’, gives publishers the opportunity to tap into programmatic budgets and discover new buyers, as well as massively increasing their sales efficiency, all under a reserved, controlled environment. Buyers in turn are able to purchase audience at scale from very premium environments, which is one of the main limitations they are facing today with regard to video platforms.

The future for programmatic – a holistic ad server

Programmatic Rrserve will not make unreserved buys disappear – spot buys or spike management will always be a perfect fit for more traditional programmatic models, but it will ensure premium content is more widely available to brands on programmatic platforms as the whole industry moves towards higher efficiency and accountability. Publishers should ultimately be able to execute a holistic strategy across all these models – direct sales, programmatic reserve and open marketplaces – under one single platform: the next generation of ad server. In fact, vanilla SSPs will most likely be displaced as any initiatives under the reserved realm will necessarily require access to the publisher’s video ad server, which is typically beyond their technical capabilities.

The good news for premium video publishers is that the industry is already making some interesting moves towards this vision for programmatic reserve, with companies like ours and buy-side technologies working more closely together than ever.

Up until now, premium publishers have just been dipping their toes into the programmatic pool. Programmatic reserve should offer them the chance to jump in with both feet.

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