Incite Primer:

Programmatic
Advertising
5 publishers share
what advertisers need
to know to succeed
in the Programmatic
Marketplace

Katie Steiner
Director, Ad
Optimization

Media Groups
of America

Jeff Mayer

Senior Analyst, Inventory

and Programmatic
Advertising

Whitepages, Inc.

Chris Pirrone

General Manager,
Sports Digital Properties

USA Today

Matt Prohaska

Jeremy Hlavacek

New York Times

The Weather Channel

Programmatic Director
(former)

incitemc.com/programmatic

VP Programmatic

Incite Primer: Programmatic Advertising

Table of Contents
3 P rogrammatic Advertising: The biggest disruption of 2015
4 W hats the point of Programmatic Advertising?
5 Why are publishers streaming towards programmatic to offer advertising?
7 H ow will publishers change resourcing for programmatic in 2015?
8 O bstacles and Barriers: The most challenging part of the programmatic
landscape

9 H ow is Programmatic going to evolve at your company and how will it

influence the company itself?

10 Programmatic is the ANAs word of the year for 2014. Whats the word of
2015 going to be?

11 In Conclusion

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Incite Primer: Programmatic Advertising

Programmatic Advertising:
The biggest disruption of 2015
Programmatic was named by the Association of National Advertisers as their word of the
year for 2014. Its clearly a big deal.
And its poised to only get more popular in 2015.
We at Incite are always skeptical of buzzwords. The popularity of a buzzword is a dangerous metric to define
goals and priorities. As exciting and shiny as they are, marketers hardly face a dearth of buzzwords and they
often bear little relation to the key issues facing executives in marketing departments around the world.
Programmatic, however, is unique. Its moved from a buzzword to a legitimate priority for marketers, agencies
and publishers in the year ahead.
According to eMarketer, the US programmatic advertising market will jump 137% to
$10bn in 2015, and double that number in 2016.

Programmatic
marketing
accounts for

75% of executives we polled in December 2014 said that they expect to begin
buying programmatic advertising directly cutting out agencies in the future.

of non-search
advertising
in the USA

It represents a huge opportunity for brands eager to profit from the efficiencies
promised by a programmatic buying strategy (and even bringing the whole process
in-house), yet cautious about the lack of transparency and potential risks of moving
too far too soon.

47%

Programmatic marketing accounts for 47% of non-search advertising in the USA.

Programmatic represents a major disruptive force for the industry. Agencies are
scrambling to ensure they can deliver to their clients the expertise and functionality
they increasingly demand.

And it can be a massive prospect for publishers able to both shift low-value
inventory, and get access to far more marketing spend from brands and advertisers
for their highest value stock.
Its why were running our first Programmatic Advertising Summit in New York in May,
where well bring together senior executives from the publishing, agency and brand
world to debate how this maturing technology will and should impact practices
in the year ahead.

Its also why weve reached out to some of the biggest publishers in the world to get their views on how the
programmatic revolution will impact their relationship with brands and agencies, and how to get ahead in a
new programmatic world.
So read on for their insights on why brands should be interested in programmatic, how publishers like USA Today
are beginning to integrate programmatic technology into their ad sales departments, and how programmatic
will continue to influence brands, agencies and publishers in the years ahead.

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Incite Primer: Programmatic Advertising

Whats the point of

Programmatic Advertising?
Efficiency, scale, speed and relevance are all on offer
Obviously, programmatic advertising means different things to different organizations in the ecosystem. For
advertisers, the risks and opportunities are quite different than those of the publisher. In this section, we cover
both:

Advertisers
If someones considering advertising using programmatic technology, they should be interested because its
a more efficient way to scale and reach their audience according to Katie Steiner, Director of Ad Optimization
at Media Groups of America.
Matt Prohaska, formerly Director of Programmatic for the New York Times, agrees: Advertisers should
definitely be interested in programmatic. It provides efficiency in selling and buying through transaction speed
and audience targeting, combined with contextual relevance and brand association.
Chris Pirrone, General Manager of Sports Digital Properties at USA Today highlights exactly what efficiency
savings an advertiser can expect: Brands budgets and DR are moving into the programmatic space, so
brands can increase administrative efficiencies with media buys, and layer on their first party data to target ads
and better achieve their marketing goals.
Of course, there are risks and they tend to be around the prevailing opacity of programmatic buying practices.
Steiner points out that there are still fraud and viewability issues.

Publishers
On the publishing side, the advantages and opportunities are no less evident and tend to cluster around
an increasing ability to lift revenues from existing inventory options. According to one publisher we spoke
with, the possible increases are profound For publishers, programmatic advertising has the potential for
a profound lift in revenue. Efficiency, ease of transaction, and surging advertiser interest, coupled with the
supply/demand equation, mean programmatic ads are a lucrative opportunity.
Katie Steiner from MGA agrees Publishers should be interested in programmatic because its a way to
increase the value of your unsold inventory. And in some cases, its the only way to run certain advertisers
that are now running programmatically exclusively. They should be uninterested because there are a lot of
middlemen in the landscape that take large chunks of dollars between the amount the advertiser initially paid
and what the publisher ends up getting in revenue.
Jeff Mayer, who is the senior analyst of inventory and programmatic advertising for Whitepages, said that:
From a publisher perspective, programmatic advertising offers several advantages and disadvantages. One
advantage is the introduction of new and elastic revenue opportunities not available through direct channels.
We had already been augmenting our direct sell-through rates with programmatic RTB demand via the Open
Auction, but now with Private Marketplace, we are able to provide buyers more scale with brand safe inventory
at premium rates through Preferred Deals and Private Auctions.

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Incite Primer: Programmatic Advertising

We have also re-categorized our inventory away from Premium vs. Remnant, and toward either Direct Sold
vs. Indirect Sold or Guaranteed vs. Non-Guaranteed as each impression delivered maintains an inherent
value based on the audience being targeted. It is just a different method of transaction.
One main disadvantage is that programmatic advertising revenue is inconsistent due to non-guaranteed
deal types and fluctuating CPMs. This has made it more difficult to confidently forecast revenue, as we have
less transparency into buyer strategy, budgets, audience valuation, or campaign targeting. Additionally,
programmatic is more of a reactionary tool rather than a proactive one for publishers to execute, manage, and
optimize a campaign.

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Incite Primer: Programmatic Advertising

Why are publishers streaming towards

programmatic to offer advertising?
Most publishers we spoke to are, like Chris Pirrone at USA Today, aggressively implementing support
for programmatic, and seek[ing] to be on the cutting edge of supporting programmatic trends.
USA Today are indeed at the vanguard, currently able to offer programmatic buying of ad space across not
only the typical online desktop display inventory, but also mobile and video properties.
One publisher characterized their activity as aggressive. Thats unsurprising, considering the company has
seen proven results and increasing returns each year, while Jeff Mayer points out that Whitepages
already have a robust offering of programmatic deal types, and are continually looking to expand our
Private Marketplace deal offerings...and are actively optimizing Open Auction to
improve yield.

programmatic
has been
a very
successful
growth
channel
for us

Jeremy Hlavacek says that The Weather Channel has heavily embraced
programmatic and echoes other publishers success stories, who share that
programmatic has been a very successful growth channel..
Katie Steiner at Media Group of America goes into a little more detail:
As a publisher, we are using it to fill our unsold inventory. Programmatic to us is just
a fancy way of saying RTB, which has been around for quite a few years.
In our opinion, private marketplaces do not have staying power. You cannot hold
an advertiser to a certain level of spend, so they end up cherry picking impressions
that may have gotten higher bids in the open auction.

Jeremy Hlavacek,
VP Programmatic,
The Weather Channel

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Incite Primer: Programmatic Advertising

How will publishers change resourcing

for programmatic in 2015?
At the moment, discrete programmatic teams within publishers are relatively small with an
average of 3 executives working on programmatic specifically across the group of publishers we spoke with.
Yet the majority point out that while this number is relatively small, many more across the sales team have some
responsibility for, and knowledge of, the programmatic offerings at their company.
Most publishers, like The Weather Channel, expect to be adding resource to drive more programmatic revenue
across 2015. Yet, again, rather than increasing the number of staff working on programmatic offerings, major
publishers expect to instead train up existing staff to understand and then sell programmatic packages to
advertisers:
Increased headcount is always ideal, but our focus is more geared toward training in-house sales staff. They
should have a working knowledge of programmatic advertising and how to work in tandem to best offer our
inventory to the marketplace.
Jeff Mayer agrees, pointing out that rather than growing a discrete programmatic sales team, the responsibility
will fall to currently operational sales groups: We dont silo our Ad Ops or our Ad Sales departments by
transaction type or by platform, so all programmatic will fall under current operations workflow. We are
all allocating more time as a daily responsibility across our team and setting more aggressive goals for
programmatic revenue.
I believe there is little need for a dedicated programmatic team, and as programmatic becomes a primary
transaction type, it will just become a standard requirement for all staff to understand and execute with.
Hopefully, we will be using the word programmatic less in 2015 as a result.
Chris Pirrone is the lone point of contrast from our group, stating that USA Today will build and develop
a discrete team with specific programmatic expertise in 2015: We are investing in relationship/sales and
account management that understand and will support programmatic. We also need to have ops personnel
that can implement it.

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Incite Primer: Programmatic Advertising

Obstacles and Barriers:

The most challenging part
of the programmatic landscape
A few common obstacles were highlighted by the publishers we spoke to.
First, and somewhat inevitably, come the technological problems. According to Jeff Mayer at the Whitepages,
the technology is still not fully functional and has not yet been built with an operations team workflow in mind.
There are too many troubleshooting issues that, unfortunately, cannot be resolved by publishers due to black
box tech.
Chris Pirrone agrees the technology is not yet ready to support the complete seamless vision of
programmatic. Buys still require many steps Buyer to ATD to DSP to SSP to Publisher. Theres work to do
before programmatic buying becomes an effortless process, and thats a focus for 2015.
All these technology based problems cost money, too with Katie Steiner highlighting a technology tax which
acts as a disincentive for publishers considering jumping into the programmatic space: The technology
tax which is all the fees different ad technology companies charge in between you and the advertiser.
Sometimes, these add up so high that its not worth it.
Other challenges spring up based on the fact that programmatic represents a pretty fundamental shift towards
increased automation, and that has inevitable knock-on effects on existing workflows and responsibilities
with transparency between the different players in the ecosystem also somewhat lacking. As Jeff Mayer points
out, there is a lack of clarity on ownership of budgets and accounts at agencies, or trading desks, or DSPs.
Theres also a lack of transparency on both Sell & Buy side in terms of audience, targeting settings, inventory
forecasting, appropriate pricing or rates, and undisclosed tech fees, to name a few.
Matt Prohaska, former Programmatic Director for the New York Times also highlights the communication
challenges between the different parties involved in a programmatic buy: Managing the expectations
between buyers and sellers [is a challenge]. They need to be clear on what programmatic is today and what
the tech companies in between are able to do to allow for more sophisticated transactions and transparency.

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Incite Primer: Programmatic Advertising

How is Programmatic going to evolve

at your company and how will
it influence the company itself?
From our conversation with publishers, the advent of programmatic
advertising is having a seismic impact on how said companies do
business and plan to in the future.

We expect
automated
buying to
account for

50%

of business, so
we need to hire
and allocate
resources
accordingly

One publisher we spoke with expects programmatic technology to be incorporated

into far more than standard digital display ad inventory. They expect programmatic
to infringe upon most, if not all, digital product offerings they have. Eventually,
they believe their programmatic strategy will permeate into the TV portion of their
business as well.
Chris Pirrone sees programmatic buying to form a huge segment of future incomes
and thus change how the entire sales team operates: We expect automated
buying to account for 50% of business, so we need to hire and allocate resources
accordingly.
Jeff Mayer echoes the prevailing opinion that more sales, and programmatic buy
types, are coming shortly but sounds a note of caution about focusing too much on
programmatic sales delivery: With more control and customization of technology
platforms, we will be able to provide more deal types and increase our programmatic
direct sales revenue. However, I do not believe that publishers should shift all focus
to programmatic. Our direct sell-through is extremely important in order to maintain
competitive demand within the exchanges.

Chris Pirrone,
General Manager,
Sports Digital Properties,
USA Today

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Incite Primer: Programmatic Advertising

Programmatic is the ANAs word

of the year for 2014. Whats the
word of 2015 going to be?
Evidently, publishers see the shifts precipitated by programmatic, and the resulting

buzzworthiness of the topic, to continue well into 2015. Its surprising to see quite how many in our
group suggest the word (or more accurately, phrase) of 2015 should also include the term programmatic
and suggests that we are still in the early stages of the impact programmatic tech will have on advertising
buyers and sellers alike.
A top publisher from the TV industry asked: Can I say Programmatic 2.0? With great industry focus coming
on this segment of our industry, I feel that we are still a while away from realizing the utmost potential of it. I
think 2014 served as a runway for take-off in 2015 and 2016
And Jeff Mayer, senior analyst of inventory and programmatic advertising for White Pages gives multiple
suggestions:

1. Programmatic Guaranteed, or Programmatic Direct.

2. Programmatic Video/TV

3. Publisher Trading Desk.

4. Viewability and Fraud.

I also believe that there will be a convergence, if not 2015, then possibly in 2016, where programmatic,
viewability, fraud, video, mobile, television, audience, cross-platform, cross-device all begin to coalesce into
a single identity.
Finally Katie Steiner of Media Groups of America sounds a refreshing note of cynicism:
Isnt every year usually the year of mobile?

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10

Incite Primer: Programmatic Advertising

In Conclusion:
It seems safe to say that programmatic is poised to continue its meteoric rise. With more

inventory being bought and sold programmatically, it moving into new channels like mobile and TV, and
budget and revenue for programmatic expanding, 2015 will surely be a monumental year for the industry.
As these publishers demonstrated, if youre not already in the game then youre missing out on a huge
opportunity. The efficiencies and reach that programmatic allows for advertisers is unparalleled in the industry,
and all signs point to the continued evolution of capabilities and technologies.
So what does this mean for the next six to twelve months? First and foremost, you need a road map to
determine what you company can accomplish today and the tools you need to unleash the full potential
of programmatic. It also means that you need to prepare yourself for a future of quicker decisions, smarter
customers, more devices, and tighter budgets so that you dont find yourself being left behind in a quickly
changing industry. Finally it means deciphering who you need to partner with internally and outside your
company to stay agile and make this disruptive technology work for you.
Learn all that and even more on programmatic at the Incite Programmatic Summit in New York on May 4th and
5th. Well bring together senior executives from the Publishing, Brand and Agency world to debate how this
maturing technology will and should impact practices in the year ahead. Get the skills you need and the
tools to succeed in 2015 and beyond.

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11

The Incite

Programmatic
Summit
May 45, New York City

The here-and-now of
programmatic marketing
and frictionless
ENGAGEMENT
Senior Executives from brands, agencies and publishers answer
your questions on the future of programmatic advertising

what youll learn:

Disruption
and agility

Programmatic
everything

Video as the
new display

Customer data
& user behavior

What needs to
happen internally for
programmatic to thrive
at your company

Move beyond just

digital and prepare
for programmatic to
take over TV, mobile,
outdoor and more

Prepare to flourish
in new forms of digital
advertising

Data to serve your

business goals

Speakers:
Brands, Agencies and Publishers all in one place, including:

Wells Fargo
Michael
Lacorazza

IPG
Mediabrands
Matt Seiler

Activision
Jonathan
Anastas

Senior Vice President,

Brand and Advertising

Global CEO

Vice President, Global

Brand Marketing

USA Today
Chris Pirrone

Lenovo
Gary Milner

General Manager,
Sports Digital
Properties

Director, Global
Digital Marketing

MEET AND WORK WITH MAJOR BRANDS:

The Weather
Channel
Jeremy
Hlavacek
Vice President,
Programmatic

Cadreon
Arun Kumar
Global President

Prudential
Anna
Papadopoulos
Vice President,
Integrated Media
Services