A majority of publisher inventory in 2019 is available for sale programmatically. Despite downward pricing pressure—the most widely raised concern with programmatic—virtually all publishers expect programmatic revenues to increase next year. Integrating programmatic sales into your advertising revenue equation requires a review of the new programmatic story.
It’s no longer a story of remnant inventory for pennies on the dollar filling the void left by direct selling’s wake. The sources of programmatic revenue increase are rapidly evolving. The open auction, an efficiency play and still the dominant channel for programmatic ad revenue, is slowly yielding to private marketplaces (PMP) or guaranteed deals, an effectiveness play.
I. Embrace the Complexity; Don’t Fear the Change
Programmatic is becoming more complex. Two key structural changes highlight the new programmatic story.
First structural change: PMP and guaranteed are slowly eroding the traditional, open auction sale as they provide better prospects to drive revenue and relationships. The new appeal of programmatic is targeting, not efficiency. Buyers are increasingly willing to pay for brand safety and assurance against fraud—services they get in these so-called walled gardens, or private marketplaces. In exchange, they expect execution excellence.
Second structural change: Open auction formats are changing too. First-price auctions (where you pay what you bid) are becoming the norm, replacing second-price auctions (like eBay, where you pay what the second highest bidder bid). Ensure your sales teams understand the nuanced benefits and limitations of each. Not knowing the difference is a quick way to burn through advertising dollars using a second-price strategy in a first-price auction.
II. Who Sells Programmatic?
Publishers struggle with defining roles and responsibilities for programmatic sellers and integrating them into their overall advertising revenue equation. Many assumed programmatic talent could graduate from more automated sales motions like open auctions or PMP to more direct sales motions, like guaranteed. However, they discovered that each of these two programmatic specialists required different skills and talent profiles. The latter requiring much more of the traditional, direct, client-facing soft skills. Ironically, the real work in programmatic sales begins after the sale. Setting up the buy requires quite a lot of time.
These specialists are some of the most broadly involved roles across the sales process. They are externally and internally facing and split their time almost evenly across pre-sales, sales, and post-sales. Until the sales force at large is programmatic capable, specialists will continue to play a critical roles in programmatic sales.
III. Who Carries the Quota? Who Gets Paid for Selling Programmatic?
The specialists carry either (1) an organic quota (only the specialist get the quota and gets paid on programmatic sales), or (2) an overlay quota (the specialist and somebody else gets the quota and gets paid). The struggle with setting and crediting overlay quotas is determining how much quota to assign, and to whom. There is no shortage of quota/credit permutations: single, split (predetermined or negotiated on a deal-by-deal basis) and double. Stick to an approach that reinforces the desired, and necessary, level of teaming. As most publishers look to streamline the number of partners they work with—to better control their inventory and minimize the ad tech tax (spend on intermediary, tech vendors)—it’s imperative that the core seller and programmatic specialist work well together and that the sales compensation and quota programs reinforce that behavior. A double quota double credit approach typically strikes the right balance and ensures that programmatic is integrated into the overall sale and the team is driving towards one total number.
Learn the new programmatic story. Embrace the complexity and the change. And use these insights to structure and reward your core sales force and programmatic specialists.
Need help? Contact an Alexander Group Media Sales practice lead.