• by Skip Brand , June 18, 2013

Premium programmatic has a major hurdle in its path: publishers are slow to join. In my conversation with Peter Minniuma few months back, Minnium noted that a shortage of premium inventory was a key obstacle to getting brands to invest in digital display. So, if the IAB is publicly telling publishers that the demand is there, why aren’t more publishers offering up the inventory?

This week I spoke to Alex White, GM of data and trading at DG, and this topic came up early in our conversation. “I think premium publishers already find a benefit in selling premium ad units directly on their sites, and that’s something that they are not necessarily interested in commoditizing,” he told me. “That’s where they like to have bigger relationships and they can do more custom type of things. Typically they want to sell those themselves, keep rates high and keep scarcity.”

But scarcity is the root of the problem, based on Minnium’s statement. Yet past conversations with both Sean Cullinane of Digital Trends and M. Scott Havens of The Atlantic support White’s assertion.  Premium brands want to take advantage of high-impact, “never been done before” or native advertising opportunities. Premium publishers want to sell these opportunities through their direct sales team and collect a premium price point for them. Any remaining inventory may or may not be released to the networks and exchanges.

I completely understand this perspective – I really do. But I think premium publishers are missing an opportunity here. In fact, I think they’re missing several opportunities.

1.    There’s an opportunity to have both impact AND scale with premium programmatic.  Where many in the industry see two tiers of advertising, like White, I see three or more. Yes, high-end publishers like The Atlantic and Digital Trends do incredibly well with those custom, content-based ad sells. I think that’s terrific; I think native ads hold tremendous promise. But I think there’s an opportunity to add a more scalable, premium ad offering there.  So let’s consider a second tier of premium, and let’s hinge it on those oversized, rich-media ad units like the Rising Stars. Add custom content to those for additional impact, and then trade via a premium programmatic marketplace. It still commands top pricing because it’s targeted, oversized, rich, engaging and within a premium environment -- but it’s most definitely not “remnant.” That said, a third tier might be considered for remaining inventory, and might be comprised of IAB legacy units available at a lower cost.

2.    There’s the opportunity for efficiency, which has always been the point of programmatic. White and I agreed on this one, although our vision is different.  In his mind, “When the publisher’s primary ad server is in a position to do programmatic, that’s when programmatic premium will become a reality.” I’m all about the premium programmatic marketplace – but either way, it’s automation. Recall my recent discussion with Frank Addante of Rubicon. Travel, retail and finance have all become automated because it’s simply more efficient. It takes hours and hours of valuable staff time to produce a single I/O. Why, when you can automate the entire process? When was the last time you picked up a phone or dropped off a check to pay for a first-class airline ticket?

3.    There’s an opportunity to offer more value via better metrics. Layering in metrics that are relevant to brands is a step in the right direction for everyone in the ecosystem. As Jonah Goodhart from MOAT said, “Whether it’s ultimately viewability, exposure time, interaction rate, or some combination of those things matters less. It matters that marketers are moving beyond the click. They’re valuing the power of better ad units and doing it in an efficient transactional system like a premium exchange.”

White still isn’t sold, and that’s OK. Change won’t happen overnight. But digital advertisers, publishers and agencies need to look at programmatic as an opportunity whose possibilities go far beyond “remnant” and well into “premium."