The biggest decision to consider in digital advertising today is how the advertising budget is spent. It is the reason brands hire agencies like ours, after all – to research, coordinate, and execute an advertising strategy that will get them the best return on their investment. Today’s digital media landscape offers a myriad of options from search to social media, audio streaming and connected-TV, to augmented reality. However, for the most familiar form of digital ads like banners and video, advertisers are on the fence about the best way to purchase the media.
Direct Buying had long been the traditional way of online advertising. Advertisers dealt directly with a Publisher’s sales team to place their digital ads, locking up ad dollars one insertion order at a time. Then ad networks popped up giving advertisers the ability to buy clusters of sites owned and sold by a single source. It was not until 2011 that real-time bidding (RTB) began to go mainstream and programmatic became the buzzword in every advertiser’s marketing plans.
There are advantages and disadvantages to both, but to know what is best for your campaign, you must understand the difference:
Direct Buying - the advertiser works directly with a publisher to purchase ad space on the publisher’s website. Prices are determined by fixed rates from the publisher’s rate card and there is often a minimum spend commitment to buy inventory. Dates are negotiated for when the impressions will serve and the ad space is reserved. An insertion order is signed with the publisher days, or sometimes weeks, in advance of the campaign.
Programmatic Buying - the advertiser purchases inventory through an automated ad-buying platform. Impressions are transacted within milliseconds based on the targeting parameters in a process known as real-time bidding. Programmatic is fundamentally an auction-based model in an open market with other advertisers. Each advertiser is able to set a price they are willing to pay for the impressions and the highest bidder is rewarded. There are other opportunities, as well, in the programmatic space that include exclusivity and fixed pricing for advertisers known as Private Marketplaces.
With both buying processes defined, we can now explore the pros and cons of each. There are three main areas to consider: targeting, inventory, and cost.
Targeting – Websites vs Audiences
DIRECT
Pro:
- An advertiser sensitive to where their ads are placed knows exactly when and where their ads will appear.
- For niche audiences, direct buying provides an opportunity to reach a unique community of users.
- Exclusivity. Not all publishers are available programmatically.
Con:
- An advertiser buys impressions in bulk thus all impressions are restricted to the publisher’s website and limits reach.
- Optimization delays due to insertion order revisions. Since the targeting is based on the IO, publishers must update IOs with every change and re-confirm availability.
PROGRAMMATIC
Pro:
- Programmatic provides targeting at scale. Instead of buying the website, advertisers target at a demographic, behavioral, and/or contextual level across a multitude of websites.
- Efficiency. Optimizations are made across the campaign in real-time without negotiations.
Con:
- For advertisers who want to visit a website and see their ads, programmatic makes it difficult, but domain reporting is available post-delivery.
Inventory – Guaranteed vs Non-Guaranteed
DIRECT
Pro:
- Inventory is reserved by the publisher. The advertiser is guaranteed a specific number of impressions based on the fixed rate listed on the insertion order.
- Direct buys present opportunities for unique creative elements that only the publisher can deliver on such as page takeovers, advertorials, and page-skins.
Con:
- Limited amount of inventory depending on the size of the publisher.
- Scheduling conflicts due to human error. The impressions are still guaranteed, but the dates may change.
PROGRAMMATIC
Pro:
- Since there are no guarantees, the advertiser is not held to any spend commitment. Spend goals can be achieved by expanding the targeting or increasing the bid.
Con:
- There are no guarantees. In an auction-based environment, inventory is available, but the advertiser is not guaranteed to win the impression.
Cost – Insertion Orders vs Real-Time Bidding
DIRECT
Pro:
- Advertisers know the rate they are going to pay because of fixed CPM rates.
Con:
- Buying direct comes at a premium. Rates are set high and can range from $10 - $100 CPMs to cover overhead and sustain profitability of the publisher.
- Spend minimums set by the publisher create commitment levels of $5,000 to $10,000 or sometimes higher.
PROGRAMMATIC
Pro:
- The advertiser bids what they are willing to pay for the impression; $2 CPMs are not uncommon.
- Effective CPMs, because of the auction-based nature of programmatic, are the dynamic value as a result from the individual prices paid for each impression.
- Flexible spending. Unless the advertiser is involved in a private marketplace deal, the advertiser can choose when to spend – or when not to spend – money. Advertisers can enable or disable spending typically with the switch of a button as well as enter daily and monthly spending caps.
Con:
- For advertisers who want to visit a website and see their ads, programmatic makes it difficult, but domain reporting is available post-delivery.
So where do your advertising dollars belong? Direct offers advertisers peace of mind to know where their dollars are spent. Programmatic advertising gives advertisers the control over how their dollars are spent. MayoSeitz Media endorses both. To achieve scale and find efficiencies, programmatic media is the most effective use of ad dollars. Direct buys are a great complement to programmatic campaigns if a publisher owns exclusive inventory or offers high-impact ad units that are unavailable in the programmatic ecosystem. The point is to be open to both.
When working with clients, MayoSeitz Media wants to understand what is most important to them. Our goal is to execute a campaign that delivers results. Whether that is to create awareness of a brand, spark conversation among consumers, or generate new leads, it all starts with a firm understanding of the clients’ ultimate goals.