• by Michael Connolly , July 25, 2013

While market players tend to associate automated bidding with unwanted remnant inventory, we’re seeing an increased interest in real-time bidding (RTB) to sell premium ads.  In theory, RTB for premium inventory should bring the same efficiency to the process as it does for ads on the lower end of the scale, helping both publishers and advertisers. But until the technology is honed that allows publishers to take advantage of this new market opportunity, publishers are sitting on the fence.

Here are five challenges publishers still face with premium programmatic:

Pricing control. A major concern for publishers is that automated bidding drives the cost of inventory down. RTB creates an entry point for bidding well below the rates usually demanded during direct sales,enabling buyers to get the same inventory at a much cheaper price.

In particular, publishers can be expected to balk at eroding margins for their best ads. For them to buy into programmatic premium, publishers need a set of tools that let them control the price levels at which selected brands, buyers or segments are allowed to purchase inventory.  For example, if publishers have a direct ad campaign with a car manufacturer for which they are receiving/selling at $20 CPMs, they could block the company from buying impressions below that price point in an automated bidding setting.

Limited access to data. Too often, publishers feel that buyers have an unfair advantage when it comes to data, as buyers frequently have better tools for understanding the value of an impression. For programmatic to work with premium, there must be transparency on both sides, which is standard operating procedure in the direct sales market. Publishers need tools that allow them to segment their audience using first- and third-party data, to more efficiently price their inventory. Empowering publishers with this information enables them to better structure pricing around their inventory in a programmatic marketplace.

Hard-to-manage inventory. Another thing that prevents publishers from jumping on automated bidding for premium is the prospect of having to manage disparate and fragmented inventory on various platforms. Having ads fractured across multiple systems makes it difficult to manage competitive bidding for ad impressions. Premium inventory on one system and remnant on another is not sustainable. What publishers need is an end-to-end solution that allows them price control, buyer management, and data aggregation in one place.

The need to negotiate. Premium inventory tends to be more complex than remnant inventory, and thus can’t be sold as easily as a one-size-fits-all product. To get publishers interested, they need the capability to negotiate different terms with different sets of buyers, as they do with private exchanges. A set of tools that helps publishers negotiate prices combined with a system that automates delivery of that campaign will provide the best of both worlds: the flexibility to negotiate, but the delivery efficiency of automated bidding.

Lack of reporting insights. Publishers selling premium inventory will require more insight into the bidding process than is currently reported. Being able to see the second and third bids for premium inventory will facilitate additional negotiations with those buyers for other bid ranges or segments. Publishers also require deep insight into inventory performance by segment, so that they can more efficiently manage pricing for those segments.This applies to all programmatic transactions but is particularly important for premium, where amounts are much higher than in the remnant market.

If publishers have a premium tier of $10, understanding who bid $9 is of great value to them; there is little value in a huge negotiation effort for a deal that is only worth 50 cents per impression.

The ease and efficiency of programmatic premium makes it an inevitable player in the future of digital publishing. The only thing currently preventing the widespread adoption and big advertiser acceptance of selling premium inventory programmatically is lack of the right tools allowing publishers to fully leverage programmatic’s advantages.