It seems that direct media buying in 2023 resembles stitching clothes with a needle while sewing machines are readily available. "Programmatic vs. Direct?" sounds like Captain Hindsight's question, so why do we still have doubts in these days of automation worship?
No prominent factory makes clothes with a needle in the 21st century. And even though 12-year old programmatic media buying technology can't compete with the sewing machine (which was invented in 1846), the pace of its adoption is still phenomenal.
By 2022, programmatic ad buying was predicted to represent 84% of the total digital advertising expenditure. Based on forecasts, this percentage will rise to 87% by 2026.
However, some companies still stick to buying direct media in 2023. For example, the number of clients who use the Epom Ad Server exceeds 300, and they are not going to abandon this solution in favor of programmatic sales, which is massively perceived as more sophisticated.
What's wrong (or right) with those companies and why direct media buying stays afloat? Why does programmatic reign over it? How to define which one is better to implement within your business strategy: direct-sold or programmatic? Check the answers to these and more questions below.
First, let's start with a brief intro to the concept of programmatic advertising vs. direct buying. If you already know what programmatic ad buying is, feel free to skip ahead. Table of contents at your service:
What is Direct Media Buying?
Just like manual sewing was a standard for industrial manufacturing back in the XVII century, direct media buying was the standard of online advertising since the emergence of the first banner in 1994. In case you are wondering, here is how it looked:
Direct sales definition hasn't changed much with time, and all the while was sounding like this:
Direct media buying is the process of finding the right publisher, negotiating the price, buying inventory, and finally serving the ad on the chosen website.
The process of traditional direct advertising is manual and involves much human communication. Like in any other sales position, you make calls, send emails, and close deals with publishers, but this time with regard to ad buying.
The price is always different, as it's negotiated with each new publisher from scratch. However, direct sold compared to programmatic is associated with higher CPMs, because the selection of the placement is custom and can be often considered a "perfect condition" for a particular advertiser.
This has a significant drawback: direct ads buying is slow and quite expensive. Aside from allocating budget on ad campaigns, you'll need to hire media buyers to handle those campaigns for you. The most precise targeting and premium inventory comes at a price: you invest significant time and resources to reap the finest fruits from the ad campaign tree.
For better optimization and time economy, many advertisers utilize software media buying solutions, one of the most powerful of which is an ad server.
What is a Third-Party Ad Server and Why Use It for Direct Media Buying
A third-party ad server is the cornerstone of modern direct media buying. This is a web server that stores your and the publisher's advertising data and places ads on websites directly, without requiring any intermediaries. It can also be a platform, which is used to set up new direct ad buying campaigns, optimize existing ones, and analyze the results of your activity.
An ad server's principle of work is based on matching ad tags pre-defined by the advertiser with a suitable publisher and with the website which is visited by the required audience. The ad server always selects the best source, unless there is a high-priority publisher whose inventory will be filled with ads out of turn.
There are some benefits of using an ad server for media buying:
- Ad server unites multiple supply sources all in one platform.
- Ad server provides detailed analytics on each campaign, so it's possible to monitor performance and timely eliminate sources that perform badly.
- Ad server gives you access to gigabytes of data coming from publishers. You can use it for further optimization.
- Ad server offers you 100+ targeting attributes to define your audience as accurately as possible.
- Ad server minimizes time spent on launching a campaign. Without the ad server, it could take weeks and months. With the ad server, you will see your ads running on the website within the same hour that you pressed the "launch" button.
What is Programmatic Ad Buying?
The first harbinger of such a great programmatic evolution that we are witnessing today was the invention of real-time bidding (RTB) technology in 2009. Actually, RTB is the foundation of programmatic, which is also called automated media buying.
Programmatic media buying is the process of buying ads via a real-time bidding auction, where advertisers place bids simultaneously and the highest bidder takes the inventory slot. It's automated and occurs with minimum intervention of a media buyer.
Looking back at our sewing analogy, it would be impossible to automate some processes without having mechanical machines that facilitate the seamstress' job. For apparel, we have an aforementioned sewing machine. For intangible digital ads, we have an adtech software called demand-side (DSP) and supply-side platforms (SSP), which together form a full programmatic advertising stack. Let's elaborate on both definitions.
Demand-Side Platform is an advertiser's tool that allows them to set up advertising campaigns and automatically buy ads from multiple publishers in real-time. With a DSP, you can buy an enormous amount of ads without spending hours on negotiating prices. Instead, you mention your CPM threshold and pay no more than you can afford at the moment.
Supply-Side Platform is a reverse side of a DSP. This tool is meant for publishers and automates monetization. An SSP allows you to manage, optimize, and sell ad inventory which is available on the website or inside the app. While the advertiser mentions the possible bid to win the RTB auction, the publisher defines the price floor, which is the minimum bid required to take the inventory slot.
The key characteristic of programmatic is that you don't have to evaluate the website's audience before buying inventory on this website. The DSP analyses each placement automatically based on your targeting preferences. You bid for a specific audience without knowing exactly which site the ad will be displayed.
Targeting options are specified in the DSP before the campaign launch. Each programmatic media buying platform features a user-friendly dashboard, which is usually less complex than the one belonging to the ad server. This makes it more suitable for an occasional advertiser who has little expertise in direct or programmatic media buying. This is how Epom Market DSP looks like:
In addition to the campaign overview, you have analytics and media planning tabs, where you can analyze and plan your future campaigns with this data in mind to achieve better value per each cent spent.
Aside from self-serve programmatic sales, there is such a concept as white labelling in advertising. It means that some company develops programmatic advertising software and resells it thereafter. Advertisers and publishers can buy the technology and set up their own DSP or SSP.
White label DSPs and SSPs allow you to connect multiple supply or demand partners to your network directly instead of trading ads via a pre-defined ad exchange. Moreover, all the data derived from your ad campaigns belongs to you, which is drastically improving your targeting and overall understanding of how to make your campaigns more cost-effective.
All the methods of buying ads programmatically that we discussed above are based on RTB, but not all programmatic is. There are more ways to purchase impressions with a DSP but without applying RTB technology:
- Fixed-price programmatic, also called programmatic direct. Here the advertiser doesn't get involved in an auction, the ad placement is negotiated in person, but the impression is bought through an API. In simple terms, programmatic direct is the biological child of direct + programmatic with a superpower to make one-to-one deals implemented programmatically.
- Private marketplace (PMP), sometimes referred to as programmatic guaranteed and so on. It is also based on an auction, but you need an invitation to participate. Premium publishers like Forbes, Bloomberg, and Inc. usually stick to this one.
If you want to learn more about the programmatic advertising definition as a whole, as well as the comparison of programmatic direct vs. private marketplace, we recommend that you read our comprehensive guide on the issue.
Programmatic vs. Direct Media Buying: Differences Summarized
You may notice on first inspection that programmatic advertising vs. direct buying have substantial differences between them. But to make sure you understand us properly and to reveal several not so obvious features of both, we compiled a table with all differences summarised. We will also include ad direct buying with the ad server and programmatic media buying with a white-label DSP.
|Direct with Ad
with WL DSP**
|Principle of Work||Manual. An advertiser contacts publisher in person and negotiates the terms of ad serving.||Manual + Automatic. Despite the price is still negotiated in person, the ad server helps to facilitate most of the job.||Automatic. An advertiser specifies targeting options, while a DSP matches it with the right source. An RTB auction occurs.||Automatic. The same as with a self-serve DSP, yet the advertiser avoids middlemen and can connect to a chosen SSP directly.|
|Human Part||Substantial||Minimized||Almost eliminated||Almost eliminated|
|Type of Auction||No auction||Waterfalling, Daisy Chain or No auction||RTB auction||RTB auction|
|Type of Inventory||Mostly premium nowadays||Depends on a chosen source||Standard + Remnants||Depends on connected SSP|
|Source Name||Known||Known||Depends on DSP||Depends on DSP|
|Audience Evaluation||Manual||Manual + automatic (based on 100+ attributes)||Automatic (based on 30+ attributes)||Automatic (based on 30+ attributes) + advantage of using bidstream data|
|Bulk Sales||Possible||Possible||Not possible||Not possible|
|Guarantees||Inventory can be guaranteed||Inventory can be guaranteed||Inventory can be guaranteed||Inventory can be guaranteed|
|Reporting||Manual reporting||Consolidated reporting, but not real-time||Real-time reporting||Real-time reporting|
|Optimization||Manual optimization||Manual + ad server automated algorithms, if any||Mostly automated||Mostly automated|
|Price Negotiation||In person||In person||Real-time bidding||Real-time bidding|
|Pricing Model||CPC, CPM, CPA||CPC, CPM, CPA||CPM||CPM|
|CPM Range||Medium to high||Medium to high||Low to medium||Low to medium, no bid markup|
*Direct with ad server - direct media buying with ad server software.
**Programmatic with WL DSP - programmatic media buying with a White Label DSP.
In short, programmatic sales is a fully automated solution that allows you to buy impressions in a kind of Kwik-E-Mart for advertisers. But this immediacy and lower price bring in some deficiencies such as a higher chance for fraud and overall lower quality of traffic coming from unknown sources.
This can't be the case with direct sales, as you are in charge of choosing the particular website and the particular inventory slot. Direct media buying of today is not always about tiresome sewing of 100 pairs of clothes with a needle. It's more of creating an exclusive handmade garment for a single customer. And that will always be beyond the machine's capacity.
Despite this fact, only a few need exclusive garments from premium brands. Or at least, you might have only one piece of clothing like that in your wardrobe. Most of our daily outfits consist of so-called mass-market apparel, and there is nothing wrong about that. This option is convenient, relatively affordable, and meets 99% of consumer expectations.
Still, apparel brands produce clothing of different quality. You can buy a shirt at H&M or opt for similar stuff in Tommy Hilfiger. If you use a self-serve DSP, you don't know which inventory you'll get - just like if you were shopping in a second-hand store. But I personally love second-hand stores, as only there you can find the best stuff for ridiculous prices.
Automated optimization and instant analytics & reporting are tempting as well. In 2019, time passes by twice as fast, so your media buying software solution needs to cut your output in half. And you always have a way to pick a "brand of your clothing" by yourself in a white-label DSP solution, where you have all the campaign data at your fingertips.
You can learn more about white label programmatic solutions using the example of a white-label DSP compared to a self-serve DSP.
Programmatic or Direct Sales: What to Use for Your Business?
We've just learned that direct media buying is not going extinct, but its presence on the advertising market will continue to fade away. Most companies can vastly benefit from programmatic, which now is simpler than ever to adopt. If you don't know the specific websites in mind on which you'd like to serve you ads, programmatic is the most viable solution for your business.
But if you have already established deep connections with several publishers and want to optimize your media buying, a third-party ad server is the one you will need. There is also a category of buyers who want to control each and every aspect of ad serving. For them, direct is a good call as well.
For the majority of businesses, though, a clear-cut choice is unreasonable. Nothing can prevent you from using both methods of media buying - direct and programmatic - at the same time. The scales might tip in favor of the automated experience with a self-serve or white-label DSP, as a small percent of people want to manage advertising for more than 20 minutes per day. Yet, some share of your impressions may come from direct, if you find the paradise on the web to advertise your business.