THE PROGRAMMATIC ECONOMY Publisher and agency views and attitudes towards programmatic advertising in the UK

Commissioned by

UK

Key findings from a qualitative-based FaR Partners study commissioned by Improve Digital October 2013

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The digital advertising market is rapidly becoming more automated, more data driven and interconnected. But what are publishers and agencies doing with this today? Are they adapting and if so how? What are their attitudes towards this opportunity and what are the barriers to doing things differently? Improve Digital asked FaR Partners to conduct a qualitative-based research study in the UK to provide a market wide view of Programmatic Buying and Real Time Advertising trading from a publisher and agency point of view. FaR Partners conducted the qualitative research through their agency and publisher panels. Market benchmarks and insights are aggregated, evaluated and summarised in this report. We hope that you find the results of this survey informative, and thanks again to those who took the time to participate. We look forward to your participation in the future. Sincerely, Sue Hunt Managing Director Improve Digital UK

The Programmatic Economy

FOREWORD FROM IMPROVE DIGITAL

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STUDY METHODOLOGY

Panel Interview Setting

The study is comprised of face to face interivews as the topic is both complex in nature and is yet to have firmly established standards and market terminology. All interviews were conducted confidentiallly to ensure the panellists felt comfortable and were transparent with their feedback, viewpoint and approach. Then the results were aggregated in order to provide a market wide view. This approach has enabled FaR to deliver a relevant study that provides a unique insight into the current state and attitudes towards programmatic in the UK market, from the publisher and agency perspective.

The FaR Media Agency and Publisher Panels are comprised of over 300 decision makers in digital and all media from the top twenty media agencies and top hundred publishers. The panel is defined by title, role, company and discipline, and therefore the panel make up can be selected against these criteria. Their feedback is gathered either via face to face interview or through online surveys. Panel questions combine both quantitative and qualitative approaches in order to deliver market benchmarks and insights. When aggregated, these deliver a clear representation of the market overview, or attitudes to a particuar area or discipline.

The Programmatic Economy

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CURRENT PUBLISHER APPROACHES AND ATTITUDES TOWARDS PROGRAMMATIC ADVERTISING

A sizeable number of publishers still see the sales model as split between a direct sell and programmatic sell. They see the Supply Side Platform (SSP) role as managing standard display inventory, predominantly for unsold inventory, and their role is handling the direct sell for all their premium and non-standard activity. However, amongst the more progressive publishers there is a vision for all of their inventory to be traded programmatically. They believe this will take some time, as it will require both publishers and the market to evolve, but that they and the market are clearly headed in this direction.

How do you see your media owner sales model working in the future?

‘ ‘

It’s still really new to us, but our inventory will be split into

standard display for RTB, and direct sales for big partnerships, solution based buys and bespoke

high impact formats.

Manager, News Publisher

89%

11%

Split between direct and programmatic offering Complete programmatic

“It’s still really new to us, but our inventory will be split into standard display for RTB, and direct sales for big partnerships, solution based buys, and bespoke high impact formats.” Manager, News Publisher

“I personally see it as completely programmatic, I think that's how the whole industry sees it going. However my company as a whole disagree and are threatened by programmatic - see it as cannibalising their direct sell and want to keep it to a minimum.” Ad Ops Manager, Ents Vertical

The Programmatic Economy

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THE CHALLENGES FACED BY PUBLISHERS IN THEIR PROGRAMMATIC DEVELOPMENT

The unlocked potential Many publishers are just using their SSP to drive remnant. They are not fully engaged in using programmatic to improve the cost of sale and increase yield across all inventory. Programmatic buying is not seen as a core factor at the moment, but most people see cost savings in the long run. Today, yield seems to be the most important factor for premium vertical content publishers and because they largely see it as a remnant channel they are not realising that yield opportunity. Beyond this issue it is largely about protecting their brand and direct sell rather than growing the market opportunity.

Management are really not into structural change, they’re very resistant to embracing programmatic beyond just remnant. Sales Manager, Online Publisher

The reality is a sizeable number of publishers still haven’t moved

beyond a remnant strategy.

‘ ‘ Yield tools

Lower usage / access fees

Efficiency - reduced cost of sale

Pub protection tools

Floor prices

Access to campaigns / buy side sources e.g. RTB

Ease of technical integration

Scale/right demand for your audience

Average yield delivery

Ability to monetise your inventory (at volume)

0 1 2 3 4 5 6 7 8 9 10

What are the most important reasons to work with a programmatic sell-side partner?

The Programmatic Economy

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Therefore it is vital that the market supports their development through education and the development of standards to enable the establishment of a value-based market in order to aid their transition into this new market.

‘ ‘

To change providers we’d need face to face meetings and a lot

of help setting up, because eventually the management

would come in-house so we’d need a degree of hand-holding

to start.

Sales Manager, Online News Publisher

Old habits die hard Many publishers have inventory that is sold exclusively as a direct sell, that they don’t ever see going through platform trading. A sizeable number of publishers don’t have a strategy for up selling the value of their inventory programmatically, yet. Resistance to change is mostly coming from the decision making structure of publishers which is made worse by a lack of resource and skills within these companies.

Lack of standardisation in programmatic has a clear impact on market growth

Currently there is limited standardisation around data or placements. As different providers have different approaches and standards, it is hard for publishers to supply the data or placements in a uniform way across demand sources. Consequently a test and learn policy has been implemented concerning ‘data’. Due to the fragmentation of the market Private Market Places are common place.

The Programmatic Economy

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THE TRUE PROGRAMMATIC BRAND OPPORTUNITY FOR PUBLISHERS ACCORDING TO THE DEMAND SIDE

For agency trading desks, there is a clear market gap and challenge due to constrained supply from trusted publishers with a quality audience.

Publishers will definitely retain an important role, they’re the ones with the content. They’ll change the way they sell it, but that’s no bad thing. Manager, Major Agency Group/ ATD

‘ ‘ Advertisers want to ensure that their brands are associated with the right audience and environment, contributing to an agency fear that they cannot control these environments. There is also clear demand and attributed value for publisher audience profiles and data. This is again driven by a lack of supply as many of the trading desks’ current data suppliers aren’t delivering the quality of data profiles they require. This presents an opportunity and area of strength for the publishers as their role is to provide quality audiences that deliver consistent and trusted patterns of behaviour. As the market evolves demand for this will only grow, especially as it’s very challenging for the demand side to source this data elsewhere in the market.

0 2 4 6 8 10

Advertiser bid level

Unique ad placement

Brand protection tools

Audience profile data

Inventory Scale

Quality of publisher

Publisher requirements mentioned by the Agency Trading Desks

The Programmatic Economy

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This survey shows that there is high demand for the quality environments and audiences that publishers are best placed to deliver and that the demand side also sees publishers as having a clear role in brand activity that is run programmatically. However many publishers are still approaching programmatic as predominantly a remnant channel and it’s this approach that is restricting publishers’ ability to meet demand for more premium inventory and audiences. In order for publishers to be able to effectively and safely address this market demand two key developments need to occur: The good news is that the stages to delivering this type of marketplace are already happening. Publishers are transitioning from a remnant approach into Private Market Place trading, which gives them the controls and therefore confidence to provide the inventory the market requires, delivering the environment that provides the appropriate protection and transparency for all parties.

The biggest challenge for publishers is the fact that competition has increased exponentially, if they’re not in the RTB market they’re already a million miles behind. Group Account Director Major Agency Group ATD

We can't think beyond our three layers; premium,

network and house ads. We can't build a strategy beyond the need to feed

these areas.

Head of Ad Op News Publisher

CONCLUSION: PUBLISHER OPPORTUNITY TO BRIDGE THE GAP

‘ ‘ ‘ ‘ The Programmatic Economy

1) The market needs to develop tools and standards that ensure that publishers (and the market in general) can sell their inventory in a transparent way and at rates that are sustainable.

2) Publishers need to adopt more of a strategic approach to the programmatic market as this will enable them to provide the inventory, but also the confidence to layer in audience data if they can manage and control at source.

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For information on key findings and methodology contact:

dominicfinney@farpartners.com +44 (0)7810600989

For further information please contact:

Improve Digital UK MD Sue Hunt s.hunt@improvedigital.com

+44 (0)7712 344401

Improve Digital is Europe’s leading real time supply side platform. Founded in 2008, and now part of PubliGroupe, Improve Digital focuses on providing premium publishers with the technology and tools set to monetise their inventory and audiences in a programmatic fashion. With local teams located in UK, DE, ES and NL, Improve Digital powers the real time advertising revenue for over 100 publishers. Improve Digital offers integrated audience and data solutions, yield management and optimisation, full pricing control, data protection, and Private Market Place access to all major DSPs and agency trading desks.

ABOUT FAR PARTNERS

FaR Partners is a commercial consultancy for media companies operating on the sell side. FaR provide unique market benchmarks and help develop new revenue streams for these companies. With unique tools, data and market reports, FaR Partners help clients generate maximum revenue from the UK media market. Their work has two outputs – they optimise business and market performance and they open up new revenue streams. FaR was originally founded in 2007 for UK media businesses but now services businesses across Europe through its international panels, tools and data.

ABOUT IMPROVE DIGITAL

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