What is Programmatic Direct? What do you need to know about it? An Expert Q&A

A Conversation with Adrian Pang, PubMatic’s Senior Director of Product

There is a lot of recent discussion in the digital advertising space around the topic of “Programmatic Direct.” Throughout his career, Adrian Pang has led innovation in developing programmatic solutions. He is currently the product team lead developing PubMatic’s Programmatic Direct solution, which was released on Monday of last week.

Adrian Pang, Senior Director Product

Here’s a Q&A interview with Adrian in which brings some clarity to the confusion surrounding Programmatic Direct.

Q) There’s a lot of buzz around the term “Programmatic Direct” in the marketplace, but also a lot of confusion about what it really is. Can you define “Programmatic Direct” in the simplest possible way?

AP: Programmatic Direct is a term used to describe transaction workflows for direct sold media. Through programmatic direct, both buyers and sellers can leverage programmatic technology to create more seamless and automated transactions for both parties. This includes Automated Guaranteed deals as well as Private Marketplace (PMP) transactions, which are direct deals that give publishers the ability to designate certain inventory for a select buyer or group of buyers that utilizes Real-Time Bidding (RTB) technology..

If you think about the way that digital advertising inventory has traditionally been bought and sold, it often involves a buyer picking up a telephone to call a publisher – or even several publishers – to determine what packages are available at what prices. In recent years, this has changed to some degree, somewhat driven by the rapid adoption of RTB, which allows buyers and sellers to transact in a “real-time” auction environment. The success of the open market auction has provided a lot of learning that has now informed ways to improve the non-auction based direct buys, and auction based buys in which the buyer and seller are aware of each other.

Through Programmatic Direct, buyers can now use a digital interface to interact with a publisher and to discover and purchase inventory, standard packages, sponsorships, custom buys or other offers a publisher wants to make available.


Q) Is Programmatic Direct really going to improve media buying and selling? If so, how?

AP: Programmatic Direct should reduce the friction that exists within media transactions in a number of ways. First, it will provide buyers with vastly improved discoverability – in other words, the ability to know what a publisher offers and find other inventory availability. Buyers will be able to quickly and easily search, discover and transact on inventory through an interface, reducing the need to call their publishers for tactical information.

Another enormous benefit of Programmatic Direct is that it will automate the ad trafficking process. After an offer is accepted or placed inside of the interface, the buy will populate in your ad server of choice. This is significant as it reduces a lot of the possibility for human error, as the technical work that goes into setting-up a digital advertising campaign within an ad server will be done seamlessly. This is immediately a more efficient and effective way to source and place a campaign.


Q) The way you’re describing Programmatic Direct makes it sound a bit like technology is going to replace publishers’ sales and operations teams. Should they be worried? 

AP: No, not at all. Think of this as real-time offers from a publisher. Sales and operations teams will remain critically important in this process, but much of the tactical workflow will be automated so they can spend their time being more strategic. With an independent, unified SSP, sales and operations teams now have an intelligent platform to tap into that will help drive better performance for customers and more revenue.


Q) As someone leading a team that’s developing a Programmatic Direct solution, what has been your approach to addressing this challenge?

AP: There has been so much hype and over promising in the area of Programmatic Direct that we felt it was important to get all the parts right for both our publishers and buyers. We put important products in market over the past 18 months anticipating the market maturation to this moment. Real-time analytics and a holistic one platform approach seem like critical prerequisites for an effective Programmatic Direct strategy. We’re honestly surprised that others have claimed to provide workflow solutions to publishers without the fundamental building block of real-time reporting and analytics that allow a publisher to create intelligent real-time offers. That’s why our approach has been to build our Programmatic Direct solution from the ground up. I think of it this way: if you wanted to build the best flying car, you wouldn’t buy a car, or two in some cases, and then try to make it fly. Instead, you’d rethink the idea of what makes a great car and what makes a great plane in order to redefine the concept. Then you’d build that.


Q) I keep hearing talk of Private Marketplaces and Automated Guaranteed, are they both components of Programmatic Direct?

AP: Yes, they are both part of Programmatic Direct. We believe the best approach is a unified approach to Private Marketplace and Automated Guaranteed, so our platform provides publishers with a single way to define their inventory, price and package it—all the while monetizing across different channels. And for buyers, they have many options for working with us on Programmatic Direct. They can access publisher inventory through tools they already use—such as Mediaocean, Kantar Media, and Adslot—or integrate on our APIs or they can access our media buyer portal. The key point is they don’t need multiple point solutions. Instead, we enable the transaction capability for Private Marketplace, Automated Guaranteed and Real Time Bidding all through one platform.


Q) According to last week’s announcement, PubMatic’s Programmatic Direct solution appears to incorporate a number of additional features. Can you explain that a bit?

AP: Of course. As I mentioned, PubMatic Programmatic Direct includes our Private Marketplace solution as well as Automated Guaranteed, which is workflow automation for direct buying and selling, but it also encompasses several other new and updated features. In addition to the Unified API for Private Marketplace and Automated Guaranteed, which we announced a few weeks ago, this new announcement is focused on the release of our dedicated buyer portal and new audience matching tools.


Q) What exactly are the audience matching tools you mentioned?

AP: So inside of this major product release, we have so many very special nuggets and our new audience matching feature is one of the brightest. Currently, programmatic buyers still face many challenges when it comes to buying audience-targeted impressions in an overly fragmented inventory supply. Buyers are not able to access as much of their desired audience-targeted inventory across the various sales channels they have to manage. With audience matching, buyers will share their own audience data and PubMatic will provide a report that identifies the publishers with the highest audience overlap. This is why we called the feature “audience matching”. Based on this information, when a buyer identifies a specific publisher they want to work with, PubMatic will facilitate the connection of the pipes between the publisher and the buyer in setting up a Private Marketplace or Automated Guaranteed deal. This approach supports the value of the analog relationships by making the technical connections seamless.

So with audience matching, the door is open to create new or strengthen existing Programmatic Direct relationships between publishers and buyers based on finding overlap between a buyer’s desired audience segments and a publisher’s inventory.


2015: Return To The Power of Consumers, Content and Connections

Kirk McDonald, President
Kirk McDonald, President

There is no denying that the future of media and influence is digital. Globally, costs for devices with screens of all sizes are falling. From smart watches and smartphones to the latest large screen televisions, consumers are finding it easier to create more personal content experiences. Leading publishers and marketers are investing in mapping their content and messages to new consumer engagement points. In 2014, iconic publishers such as Bonnier (Popular Science, Outdoor Life, Saveur), iHeartMedia, The Economist, and ESI Media (Independent, London Evening Standard), and brands such as American Express, Mondelez, and P&G are just a few of the leaders that continued to find innovative and efficient ways to connect with their audiences… and programmatic became a preferred part of their strategy around consumers, content and connections.

Global spend on programmatic advertising, which didn’t even exist a decade ago, increased more than 52 percent between 2013 and 2014 and is projected to reach $53bn by 2018.[1] This year, global programmatic spend accounted for 42 percent of display-related spend, up from 33% in 2013.[2] As we kick off 2015, we wanted to share some insights around the trends we see taking center stage:

Walled Gardens: Friend, Foe, or Both?

We have seen a significant transition in the advertising technology business. We moved from a complex and fragmented probabilistic advertising ecosystem based on cookies and anonymous third-party targeting to that of a few large, concentrated and deterministic ad platforms that enable explicit consumer targeting based on actual identity. The growing presence of large first-party consumer platforms – “Walled Gardens” – with powerful self-interests has a strong influence on the way publishers and advertisers engage and do business.

The benefits for publishers are compelling, but at what cost? Despite access to valuable first-party data, the majority of ad targeting data is applied on the buy side, leaving most publishers’ first-party data falling short of its promised value. From traditional solutions like yield management and Real-Time Bidding to the latest innovations like Automated Guaranteed and Programmatic Direct, PubMatic remains focused on the best interests of the publishers that we work with, providing them with the tools and services they need to maximize their digital assets.

Cracking the Code on Actionable Insights for Publishers

The rise in programmatic underscores the fact that media fragmentation is accelerating—giving rise to new complexities. This makes the need for improved workflows, and smarter reporting and analytics critical dependencies for those trying to differentiate their brands and establish a winning strategy.

At PubMatic, we recognized 2014 as the year that programmatic advertising became the “new normal”—like all manner of technologies before it, from the magnetic strips on debit cards to mobile phones, programmatic is no longer quite the enigma it once was. Programmatic is now well understood as more than just the technology protocol of RTB. It is an integral part of any successful holistic media selling and buying strategies. Advertisers and publishers are using programmatic to be more adaptive and responsive, making real-time changes to strategy based on up-to-the-minute data and insights across every channel (both direct and indirect), screen (mobile, tablet, desktop), and format (video, native, mobile).

digital publisher

The real opportunity for programmatic lies in using software solutions to increase media efficiency and efficacy. In October, PubMatic launched PubMatic Analytics, the industry’s first analytics platform featuring real-time reporting and natural language processing. As the industry has moved to operating in real time, we are meeting this challenge with a best in class technology, first ever real time data and analytics, actionable intelligence and easy to use reporting resulting in superior decision-making and business advantages for users.

Making Valuable Connections with Audiences

Smartphones are the most viewed screens in many countries, representing more than 25 percent of global web usage in 2014.[3] In fact, users in emerging markets like Saudi Arabia and Kenya spend more time on their mobile devices than with any other medium. Publishers are taking note. Over the past year, approximately 68 percent of mobile ads were bought programmatically industry-wide, and that number is predicted to rise to 88% by 2017.[4] As a result, we saw overall revenue generated by mobile on our platform more than double during the first three quarters of 2014, and interest in data-enriched solutions like the industry’s first geo-enabled mobile Private Marketplaces captured the attention of publishers and advertisers alike.

Building on this momentum, we acquired Mocean Mobile, PubMatic’s mobile ad server, in May. The combination of our leading mobile SSP with an enterprise-grade mobile ad server allowed PubMatic to create an end-to-end mobile solution for publishers. As mobile devices proliferate, we can expect to see the exponential growth in mobile programmatic continue through 2015.

No “One Size Fits All” Solution for Publishers

Programmatic is also exploding in markets like Japan, China, Brazil, Mexico, and the Middle East. While the United States will continue to lead the way in programmatic, markets like the UK, China, Japan, and Australia are beginning to close the gap.[5] This growth, along with that of formats like mobile, video—arguably paving the way for programmatic TV— and native, are strong indications not just that programmatic is growing, but that it is thriving. For a publisher, keeping up with the rapid pace of change can be sometimes daunting, as new competencies have to be developed in understanding the application of algorithms, business logic and rules, and brand safety, just to get started managing your inventory in a dynamic marketplace.

publisher types

As such, there isn’t a “one size fits all” solution for programmatic. In fact, as programmatic grows and matures and new global markets enter the fray, we see new trends unfolding in how publishers and media buyers integrate programmatic advertising into their business strategies. Our Platform Solutions team was launched over a year ago to bring business and strategy consultancy to our customers. This team is completely focused on customer success from initial adoption to seasoned programmatic veterans.

So, will 2015 be the year when all of the challenges in programmatic advertising are solved? Probably not. But the companies that are making these trends top priorities will break out and truly make a difference. As the last remaining pure-play SSP[6], and the only one dedicated to the marketing automation needs of publishers, we realize that we have unique and valuable insights to share. It’s increasingly important for us to pause and reflect on where this dynamic industry is heading. That’s why we collected our insights in the 2015 Programmatic Outlook Report, offering our perspective of the major trends and opportunities ahead in advertising as we enter 2015. We invite you to download a free copy of our report by visiting www.PubMatic.com/Outlook

So here’s to a successful 2015!



[1] MAGNA GLOBAL. “MAGNA GLOBAL’s New Programmatic Forecasts,” 29 Sep 2014.
[2] MAGNA GLOBAL. “MAGNA GLOBAL’s New Programmatic Forecasts,” 29 Sep 2014.
[3] Mary Meeker. “Internet Trends 2014,” 28 May 2014.
[4] IDC. “Worldwide and U.S. Real-Time Bidding Forecast,” 2013.
[5] MAGNA GLOBAL. “MAGNA GLOBAL’s New Programmatic Forecasts,” 29 Sep 2014.
[6] Forrester Research. “The Forrester WaveTM: Sell-Side Platforms And Exchanges For Publishers, Q2 2014.”

Have You Seen Our Cover?

Journey to the center of programmatic with PubMatic and discover our predictions for 2015 in PubMatic’s Programmatic Outlook Report. Our team couldn’t be more ecstatic to see PubMatic CEO Rajeev Goel and President Kirk McDonald featured in a cover wrap on the latest issue Advertising Age, celebrating the forthcoming launch of PubMatic’s first Programmatic Outlook Report.

As we move into an era where programmatic is part of nearly every aspect of media, we think it’s our responsibility to pause as 2014 closes and do our best to analyze where this dynamic industry is heading. So reserve your copy of the Programmatic Outlook Report here and find out about our predictions for programmatic in 2015.

Some highlights from our analysis:

  • Programmatic isn’t the future, it’s here and it’s the new normal
  • Programmatic is more than Real Time Bidding
  • Mobile programmatic is the norm, but getting it right won’t be
  • Publishers will lose sleep over tech giants’ walled gardens
  • Is the ad fraud arms race winnable?

AdAge Cover

Can you spot what’s wrong with this picture?
Can you spot what’s wrong with this picture?


In the Facebook Age, Publishers Are Starting to Face Facts

As the first day of Advertising Week kicks off here in New York City, announcements are already hitting the web. Of particular note is Adweek’s coverage of Facebook’s new “people-based ad technology” as “marketing nirvana,” driven by the company’s decision to share its deep knowledge of 1.3 billion users in order to power advertising across the web in a way that some marketers are claiming is “unprecedented”—and a shift that some of us in the advertising industry have been keeping a wary eye out for over the past several months.[1]

Back in August, PubMatic CMO Terri Walter encouraged publishers living in the “Age of Facebook” to begin thinking about the data policies and interests of big “media” and “technology” companies like Facebook and Google in a piece in AdExchanger:

“Instead of using content like long-form articles and reportage, recipes and how-to guides to build consumer relationships, these companies use Internet-based services to rapidly grow consumer relationships. But at the end of the day, their business models are as dependent on the buying and selling of advertising as they are on their technology. They’ve entered the publishing game head-on and they’re playing to win.

“To understand this process, look at one of its key drivers: Facebook. The company’s recent earnings report speaks for itself, but just how did it become an emerging advertising juggernaut? Earlier this summer, the social network announced that it will incorporate the anonymous browsing data that it collects on its 1.28 billion users around the globe into its ad-targeting system. This is the advertising system that generated $7 billion in revenue last year, growing 70% year over year in the first quarter of 2014. 

“This looks promising and sounds like a great strategy until you pause to consider where all of this tremendously lucrative anonymous browsing data comes from. I won’t keep you guessing: It comes from the very same publishers who lost $7 billion in advertising revenue last year to Facebook.”

And it sounds like publishers have been listening. Last week, the Wall Street Journal published a piece about some of the websites that are becoming wary of Facebook’s tracking software. According to the article, online retailers and publishers like Krux Digital Inc. and Blinds.com are pushing back against Facebook’s effort to track users across the Internet, “fearing that the data it vacuums up to target ads will give the social network too much of an edge.”[2]

As recently as yesterday, Re/code picked up the story with a focus on the ways in which Facebook will use its data to sell ads on non-Facebook websites. According to the article, what may be at stake here is data, not advertising dollars. As Peter Kafka points out, “If Facebook can convince more publishers to let it into their ad business, it’s ultimately going to glean information that will make its own ads, on its own properties, much more powerful.”[3]

“[Search giants use] this data to build user profiles and sell enhanced inventory, competing directly with publishers for digital ad budgets. And here’s the truly incredible part: Publishers seem to be doing very little about any of this. You don’t see anyone removing those Facebook buttons from their sites or choosing to shut out Google.

“Nor do you see anyone raising the question of whether a third party, like Facebook or Google in this context, should profit from data collected on a first-party publisher site without first garnering permission from the publisher. Even media companies that are suing Google in one arena still choose to give their data to Google for advertising. Take the curious example of Yelp, which famously assisted the FTC in an antitrust lawsuit against Google several years ago and is actively engaged in a similar activity in Europe now. Yet by my own estimate, Yelp is one of Google AdX’s largest local advertising partners, turning over inventory and user data to help Google build richer profiles of Internet users that then compete for advertising dollars away from Yelp. And the dance goes on.

“Sadly, none of this is exactly the publishers’ fault. Most of them, even the very big ones, are trying to be as smart as they can, and reckon that there’s little they can do to counter the tech heavyweights’ iron grip on their landscape. But resistance is not futile: Just as Meredith would never dream of turning its audience data over to Condé Nast or NBC sharing its info with Fox, we would do very well if more publishers took notice and realized that tech companies are using their technological advantage to push forward their own media businesses at the expense of their partners.”

As Facebook starts testing its new “people-based” solution, which is said to have audience-based cross-screen measurement, it will surely be a strong foot forward for advertisers who are looking to better attribute cross-screen behavior. However, one has to question what the impact will be on publishers over the long run and what can be done to ensure that the data Facebook is leveraging does more than benefit Facebook’s interests.


[1] Sloane, Garett. “Facebook’s New People-Based Ad Technology Is ‘Marketing Nirvana’.” Adweek. 29 Sep. 2014. http://www.adweek.com/news/technology/facebooks-new-people-based-ad-technology-marketing-nirvana-160438

[2] Albergotti, Reed. “Websites Are Wary of Facebook Tracking Software.” The Wall Street Journal. 23 Sep. 2014. http://online.wsj.com/articles/websites-are-wary-of-facebook-tracking-software-1411513056

[3] Kafka, Peter. “Facebook Will Use Facebook Data to Sell Ads on Sites That Aren’t Facebook.” 28 Sep. 2014. http://recode.net/2014/09/28/facebook-will-facebook-data-to-sell-ads-on-sites-that-arent-facebook

PubMatic Congratulates Winners of the 2014 AOP Awards

On Thursday, July 3rd, PubMatic was delighted to attend and participate as a Headline Partner at this year’s renowned Association of Online Publishers (AOP) Awards in London. It was without a doubt one of the best AOP award ceremonies yet, as media heads from across the capital came together in their slick tuxedos and elegant cocktail dresses to celebrate the industry’s top performers.

A total of 11 publishers and digital agencies shared the trophies across 18 categories. PubMatic would like to extend a huge congratulations to the following winners:

  • The Drum Editorial Team
  • Vice UK Editorial Team
  • Hearst Digital Pureplay Team
  • Jonathan Kitchen from Dennis Publishing
  • Unruly UK Operations Team
  • Kate Lucey from Hearst Magazines UK
  • The Native Age by AOL UK
  • XFM and Bulmers by Global Radio
  • Radio Times by Immediate Media
  • Madeforums & Heinz Baby by Immediate Media
  • Global Radio and Bulmers
  • IPC Media and Radium One
  • Immediate Media Marketing Team
  • Vice UK Social Media Team, Procurement Leaders Website Team
  • Digital Spy by Hearst Magazine
  • Carnyx Group Digital Publishing Team
  •  Dennis Publishing Digital Publishing Team

With just under 700 delegates in attendance, the Roundhouse played host to a full night of entertainment, including British Comedian Josh Widdicombe, who co-presented the awards alongside the evening’s sponsors. The sheer success of the evening’s event was in no small part due to the fantastic sponsors in partnership with the AOP, which included Blinkx Media, Google, Celtra, OpenX, Theorem, Sailthru, SpotXchange, Vibrant, YuMe and of course, PubMatic!


As delegates entered the Roundhouse, they were greeted with superb reception drinks hosted by Blinkx Media and slowly made their way up the blue AOP- and PubMatic- branded staircase to the main hall. Everyone in attendance shared fun photo ops while posing in front of the sponsors’ logo backdrop. PubMatic also played host to a prize drawing that offered select winners a chance for instant champagne delivery to their table. Our lucky winners included the Telegraph and CBS Interactive. As an added bonus, the drawing also included a chance to win an iPad mini, which was awarded to Bryony Drage, from Mail Online! Another huge congratulations from the PubMatic team!


The night’s ceremony kicked off after dessert, and celebrated many individuals and teams across all areas of our industry; from digital marketers to technology providers, the awards were well deserved and celebrated. The AOP Awards shone a light on all sectors of the online landscape, playing home to innovative and forward thinking experts.

As the ceremony drew to an end and the champagne bottles were cleared from the tables, the evening entertainment began with the opening of PubMatic’s VIP bar, bringing together guests from the Telegraph, Dennis Publishing and many more. We were thrilled to create a warm and inviting environment by providing signature VIP drinks and making sure the dance floor was complete. PubMatic’s Bill Swanson, Country Manager, UK, and Laura Fordham, Advertiser Solutions Manager networked throughout the room, sharing laughs and deep conversations until the late hours.


Representing members from this ever-evolving industry, the awards truly do recognise the excellence in online publishing, reflecting the innovation and creativity that traditionally has characterized this fast paced environment. As a longstanding associate member of the AOP, PubMatic rejoiced in accepting the chance to be a headline partner and participate in the celebration of all of the monumental achievements in the media space this year.

PubMatic Promotes Bob Walczak to GM & VP of Product

Bob Walczak, GM & VP Product
Bob Walczak, GM & VP Product

As the digital advertising landscape grows more complex and publishers are faced with an increasing number of challenges, we at PubMatic remain focused on being the leading provider of programmatic advertising technology enabling publishers to realize the full potential of their digital assets. As part of that mission, we pride ourselves on providing publishers with a platform with the intelligence needed to drive a holistic revenue strategy across every ad (on an impression-by-impression basis), every screen (desktop, mobile, tablet and video) and every channel (indirect and direct sales).

As part of our ongoing efforts to help publishers succeed in a complicated digital media environment, we are very pleased to announce that PubMatic has appointed Bob Walczak to lead our product development initiatives as the GM & VP of Product from his previous responsibility leading Mobile and Video. As an experienced business leader and former CEO of Ringleader Digital, Walczak brings a wealth of market understanding and relationships to this expanded role, in which he will lead product development and innovation.

Kirk McDonald, PubMatic President, commented on Walczak’s appointment: “Under Bob’s leadership, PubMatic’s mobile business experienced material growth and we launched our video RTB solution for publishers earlier this year. We’re extremely excited for our customers and clients as we are confident that Bob will bring the same dedication, passion and intense drive that helped our emerging media business succeed into this product leadership role.”

Bob’s appointment to this role further signals our commitment to maintaining PubMatic’s leadership position with regard to both product innovation and customer service. By taking a strategic view on market evolution and the expanding role of software automation, we’ve made the investments in people and technology that have driven results for our partners. We see this as one of those investments.

“I’m thrilled and humbled by the opportunity to expand my passion for products beyond mobile and video to focus on the entire business across all solution areas” Walczak commented, “Especially at a company like PubMatic, which has continued to lead the programmatic market in providing innovative software solutions.”

Will the real SSP please stand up?

There are many themes in PubMatic’s customer discussions around the globe, but none more critical than innovation and helping our customers navigate between the hype and reality of the advertising technology sector. Every week, publishers are inundated with press releases, white papers and sales calls about why vendor X’s solution to problem Y is the silver bullet to their programmatic revenue strategy. As long term innovators in the programmatic advertising market, PubMatic has always taken a balanced and publisher-centric view of the challenges and opportunities, which has helped us earn a leading place globally among SSPs and exchanges for publishers.

Take the announcement from OpenX yesterday. According to VentureBeat, “OpenX’s groundbreaking new approach represents a major advance over traditional SSPs by truly fusing Real-Time Bidding (RTB) and ad network demand into a single auction, driving up price by increasing competition and maximizing yield for publishers.” OpenX were kind enough to provide a visual explanation of how this works:


As a publisher, this sounds like incredible innovation. Apart from the fact that this technology is more than 4 years old.

So, OpenX, welcome to the party. The one we were having in 2010. Glad to see you are starting to catch up.

In fact, PubMatic launched this version of what we called our Unified Auction in 2010, predicting ad network pricing and combining with real-time pricing from RTB-based buyers to optimize yield for our publisher customers. See our 2010 whitepaper on the topic here (one of the industry’s first exclusively RTB-focused whitepapers).

Example 3_RTB Whitepaper

And over the last two years the market has moved on considerably. In 2010, ad networks were the dominant participants in the yield optimization equation, with RTB-based buying a smaller, but growing component. Fast-forward to 2014 and this dynamic has changed. RTB-based buying from DSPs and ATDs has accelerated and taken market share from the ad networks, reversing the market position of 2010. During this transition, our Unified Auction has calculated about 34 trillion bids on behalf of our publisher customers, with RTB-based buying performing on average at around a 200% improvement over ad networks.

More importantly, other buying models are now critical within our Unified Auction. Private Marketplaces have accelerated over the last 18 months to become a meaningful contribution to a publisher’s monetization strategy. For some publishers, PMPs contribute more than 35% of their programmatic revenue, up from 5% less than 12 months ago. And we now welcome the next buying model with the launch of PubMatic’s Automated Guaranteed, allowing a new set of buyers to participate within the Unified Auction, accessing inventory and audience on a guaranteed impression basis. Our question as we look at OpenX’s “groundbreaking new approach” is how do their publishers access this premium demand and maximize yield when this is absent from their auction?

Publishers are increasingly focused on the programmatic channel, but whilst Automated Guaranteed provides long-term increases in buying efficiency, publishers want to understand relative performance of direct and indirect channels. Launched in 2012, PubMatic’s Decision Manager integrates with a publisher’s ad server, allowing programmatic demand to compete with direct sold campaigns on a real-time basis. The publisher defines when indirect wins in order to ensure that their direct sold campaigns and delivery objectives are satisfied. What’s interesting of course is that when this truly dynamic management of demand is implemented, we of course see dramatic improvements in publisher eCPM across their inventory set, in the range of 30-50% over a period of several months.

To our current and future publisher customers operating their businesses in 2014, please continue to evaluate your technology vendors with care, as all innovation is not what it seems. Have a clear view of your business challenges and opportunities and ask your vendor to be very clear on how they are solving these for you. And if they can’t answer those questions, perhaps you’re speaking to the wrong team.

PubMatic Rings In The New Year With Our Continued Commitment To Innovation and The Evolving Needs of Branded Publishers

Kirk McDonald, President
Kirk McDonald, President

One of the best things about transitioning from one year to the next is the opportunity to take stock of everything that occurred over the previous 12 months. In newsrooms and living rooms alike, we compile “best-of” lists, pick the year’s winners and losers, sum up trends and predict new ones.

When it comes to the advertising technology industry, the most tempting thing would be to speak in terms of sheer growth: look at the new clients we’ve all signed up; the IPOs that have launched not only individual companies but the industry as a whole to new heights; and the technological advances introduced this year, and you’ve a portrait not only of significant achievements but also of a promising future.

But the numbers tell only half the story. The greatest thing that happened to the industry this year does not appear on anyone’s balance sheet: it is the fact—impossible to prove empirically, but also impossible to deny—that 2013 was the year we finally stopped questioning programmatic.

We stopped because it became obvious. For years, our main challenge was making the case for the merits of programmatic advertising strategies. Our technology, we had to insist, wasn’t a fad. It will benefit advertisers and enhance, not harm, publishers’ abilities to monetize their inventory. It will not, and was not designed to, replace human judgment and human interactions. It will foster new kinds of creativity. Even as our industry blossomed, we still had to begin most business meetings and most interviews with something that sounded a lot like a defense of our very existence.

No more.

This past year, due largely to the aforementioned technological and market-size breakthroughs, programmatic has crossed the “If” chasm. From this point on, I suspect, we will no longer be talking about whether programmatic is an advisable strategy, but how best to harness it in the interests of all sides. This is a major shift, and like all major shifts, so too will this one have implications we probably won’t be able to see for years to come. But several changes are likely, and we’d better pay attention to them if we are to start 2014 on the right foot.

For one thing, the complete immersion of programmatic in the publishing cycle means that we are likely to see new and exciting partners entering the fray. With innovative platforms allowing any content provider to target the right audience and offer up the most relevant ads, the very definition of what it means to be a publisher is changing in front of our eyes. From the small magazine that delivers content tailored to its niche readership to the huge corporation that uses its data to provide its customers with specific and highly relevant offerings, we are all publishers now.

That being the case, we need more and better-trained specialists to help us through the process of programmatic adoption. Far from eliminating the need for human expertise, the surge of programmatic has brought people back to the forefront. It will take the best and brightest among us to apply the wisdom and experience of media best practices to the efficiency of algorithms and technology supported workflow. The combination will determine new winners and re-shape the advertising industry in the process. At PubMatic, we call it the Human API, and are confident in the fact that its application is the future.

As we put on our party hats and welcome the New Year, let us take a moment and celebrate the thought that the future looks truly bright, and we are blessed to have a part to play in shaping the outcomes.

The Impact of Multi-Bid: Decreasing Deadweight Loss

Andrew Baron, Director of RTB and Revenue Operations
Andrew Baron, Director of RTB and Revenue Operations

Last year, we unveiled “multi-bid,” a forward-thinking protocol that improves performance on the buy and sell-side of the ad ecosystem by increasing the volume of bids in the marketplace. We projected the effects, but now we have the data to prove impact as well as lessons learned. The key takeaway is that multi-bid decreases marketplace frictions, which in turn creates efficiency. Said more dramatically (and while wearing a pocket protector), multi-bid decreases deadweight loss.

First a quick review. How does multi-bid work? PubMatic first sends the bid request to DSPs describing the potential impression and DSPs then respond with multiple bids, each of which has a description for potential creative. PubMatic’s system then evaluates these bids against publisher settings and other bids and selects the winner.

Buy-Side Benefits

In a multi-bid environment, advertisers and agencies first benefit from increased inventory exposure or access. We saw buyers increase their participation rate by 40-100%. With this increase in participation, we saw a subsequent increase in the buyer’s importance to the publisher’s business: a 115-130% growth in the buyer’s share of the publisher’s advertising revenue.

From the technology provider’s (read: DSP’s) perspective, multi-bid increases response effectiveness and business intelligence. The best efficiency metric that we can measure on behalf of a DSP is its throughput, as defined by media spend/QPS, which grew 10-15%. The primary driver here is an improved win rate, which grew 45-100%. It’s important to note that a growing win-rate does not just deliver short term ROI benefits, but also increases the DSP’s business predictability. While foresight is a critical piece of building business intelligence, another is learning from past experiences; through multi-bid, DSPs have increased their auction results feedback by 30-40%.

Sell-Side Benefits

With regard to multi-bid, publishers are primarily focused on increased marketplace liquidity. Bid density grew 40-100%, which drove 5-10% growth in fill rates, the end result being a 10-15% increase in publisher advertising revenue. Premium publishers accrued a disproportionate share of value. DSPs used multi-bid to go after higher valued audiences in higher valued contexts, evidenced by a 20-70% price difference between impressions attracting multiple bids and those attracting single bids. Lastly, publishers grew their lost opportunity insights by 30-40%, which is valuable in effectively managing a healthy discretionary revenue channel.

What We Have Learned

How was multi-bid effective? It helped reduce publisher imposed frictions (read: brand controls). In an environment where more bids are available, advertiser blocklists, advertiser category blocks, and even advertiser whitelists could continue delivering strategic value without sacrificing as much revenue. Premium publishers tend to use these brand controls most heavily, and DSPs are aptly concentrating their multi-bid efforts on these high-valued contexts and audiences. Multi-bid value accrues to the industry’s head.

We’ve seen both successful and less successful tactics in avoiding brand control frictions. DSPs should submit a variety of advertisers and advertiser categories in each multi-bid response—in other words, don’t submit multiple bids from the same advertiser and don’t submit multiple bids on behalf of advertisers all from the same vertical, for example.

Multi-bid has proven to be the most efficient means to securing the most valuable content and users. In the absence of multi-bid, a buyer depends on a feedback loop of past actions to achieve future successes. Since publisher brand controls are dynamic, and not always transparent, the aforementioned feedback loops repeat, iterations multiply, and direction forward may not be clear. People and infrastructure costs consequently increase. Multi-bid allows buyers to realize efficiencies ahead of these feedback loops – it’s like learning to fish while eating a salmon dinner.

In conclusion, it’s early days for multi-bidders. It’s still a buyer’s market where early adopters and power users are capturing much of the value created. As adoption and usage continue to grow, we expect to find an efficiency plateau at some point in the future, but we aren’t there yet. Win-rates continue to increase—and do so at an increasing rate—with each additional bid submitted. Said differently, the eradication of deadweight losses is accelerating!


To read more about the advantages of a multi-bid RTB environment, you can download our whitepaper: “The Advantages to Publishers, Advertisers and the Ecosystem of a Multi-Bid RTB Environment (Q4 2012).”