Programmatic Direct – Everything You Need to Know

Updated on: January 4, 2024
By working directly with advertisers, programmatic direct enables publishers to maximize their ad revenue potential. Let’s learn more about it.

If you’re reading this, you must already know the power of programmatic advertising and love it as much as we do. With its lightning-fast automation, programmatic has made buying and selling digital ads a breeze. Gone are the days of traditional ad buying, where publishers and advertisers would spend hours haggling over ad space. Instead, programmatic has streamlined the process, making it easier, faster, and more efficient.

Now, if programmatic advertising were a sports team, real-time bidding (RTB) and private marketplaces (PMPs) would undoubtedly be two of its star players. However, there’s another player quickly rising through the ranks – Programmatic Direct.

By working directly with advertisers, programmatic direct gives publishers like you greater control over your ad inventory, pricing, and overall strategy. With programmatic direct, you can maximize revenue further by cutting out the intermediary and increasing transparency. This means you can offer your audience more targeted, personalized ads while streamlining the ad-buying process for advertisers. So, if you want to take your ad game to the next level and stay ahead of the curve, it’s time to learn about programmatic direct.

What Is Programmatic Direct?

Programmatic Direct is a programmatic advertising technology that enables publishers to sell their ad inventory directly to advertisers through an automated platform. You can sell your ad spaces without intermediaries like ad exchanges. This method gives publishers greater control over pricing and ad inventory, allowing advertisers to target specific audiences with tailored messages.

For example, let’s say you run a travel website and have a page that attracts much traffic from people interested in booking flights to Los Angeles. Using programmatic direct, you can offer that ad space to a Los Angeles airline looking to target users interested in traveling to Los Angeles. The airline would buy the ad space directly from you, allowing you to set the price and have more control over the displayed ads. This direct relationship between the publisher and advertiser ensures more relevant ads for your audience and maximizes your revenue potential by cutting out the middleman.

The term “Programmatic Direct” comprises two keywords – Programmatic and Direct. The word “Programmatic” signals that the buying and selling of ad inventory will take place using programs/software/technology in an automated manner. The word “Direct” means that the deal for buying and selling this inventory has been made directly between the publisher and advertiser.

How Does the Programmatic Direct Deal Take Place?

Here is how the programmatic direct deal takes place:

  1. Setting up the Deal: Publishers and advertisers agree on the terms of the deal, including the type of inventory, targeting criteria, pricing, and delivery schedule. Publishers set up their inventory with their sell-side platform (SSP), and advertisers set up their campaigns with their demand-side platform (DSP).
  2. Negotiating the Deal: Once the terms of the deal have been agreed upon, the publisher sends a proposal to the advertiser’s DSP. The advertiser can then negotiate the terms of the deal or accept the proposal as is.
  3. Approval and Launch: Once the terms of the deal have been finalized, the advertiser approves the proposal, and the campaign is launched. The publisher’s SSP then sends the ad impressions to the advertiser’s DSP, and the DSP decides which ad to serve based on the targeting criteria.
  4. Reporting and Optimization: Throughout the campaign, the publisher and advertiser can track the performance of the ads and make adjustments as needed. The publisher can optimize the ad inventory based on the advertiser’s performance goals, and the advertiser can adjust their targeting criteria to improve the effectiveness of their ads.

Let’s understand with a deal in action:

Let’s say a publisher has a website focused on travel and wants to sell ad inventory to a travel company. The publisher sets up their inventory with their SSP and agrees to sell 100,000 impressions at a CPM (cost per thousand impressions) of $10. The travel company sets up its campaign with its DSP and agrees to target users who have searched for flights or hotels in the past 30 days.

The publisher sends a proposal to the travel company’s DSP, which includes the terms of the deal. The travel company negotiates the terms of the deal and eventually approves the proposal. The campaign is launched, and the travel company’s DSP decides which ad to serve based on the targeting criteria. Throughout the campaign, the publisher and the travel company track the performance of the ads and make adjustments as needed.

Fun Fact: While SSPs and DSPs are technically intermediaries, they are not the same as ad exchanges or other third-party vendors that typically take a cut of the ad spend. In the case of programmatic direct deals, the SSP and DSP are platforms that enable the direct connection between the publisher and advertiser without additional fees or commissions.

Why Programmatic Direct?

The share of Programmatic Direct has constantly been increasing in the whole programmatic ad pie because of its multiple advantages to the publishers and advertisers.

  • Transparency – Compared to open market auctions where the publisher and advertisers are far away from each other with various third parties standing between them, the one-on-one interaction in programmatic direct brings much transparency in the process flow.
  • Security – There are more chances of fraud when an ad has to travel a long and complex route from the advertiser to the user. Programmatic Direct shortens this route; sometimes, the ads are delivered directly from the publisher’s server. 
  • Brand Safety – The advertiser and the publisher determine the placements for the campaign in the deal. Due to this, the advertiser can be assured that the ads will appear in a brand-safe environment, and the publishers can be assured that the displayed ads are safe for the website’s brand too. Running the campaign from an open market auction cannot provide such assurance.
  • Higher CPMs – The CPM for the campaign is pre-negotiated in Programmatic Direct. This CPM is also higher than the open market auction rates because direct deals are made for premium inventory. Therefore, publishers enjoy fixed and higher CPM.
  • First-Party Data – Publishers remain cautious about exposing their first-party data to an open marketplace for safety reasons. Still, in private deals, the advertisers can access this data as publishers feel safer sharing the first-party data in a closed setup.

Programmatic Direct Vs. Programmatic Guaranteed?

Because of the similar names, sometimes people think that Programmatic Direct and Programmatic Guaranteed are the same. While it is not completely wrong, it is not completely right either. A Programmatic Direct deal can be guaranteed or non-guaranteed. When a publisher guarantees a fixed volume of inventory and the advertiser agrees to a specific price and terms, it is a Programmatic Guaranteed deal. However, if both parties cannot enter a guaranteed deal, they can opt for a Preferred Deal.

Programmatic Direct Vs. Real-Time Bidding

Programmatic advertising has transformed how publishers sell their inventory, and programmatic direct and real-time bidding (RTB) are two popular methods. 

Programmatic direct is a direct deal between the publisher and the advertiser, where the publisher sells a portion of their inventory to a specific advertiser at a fixed price. This option is ideal for publishers with high-quality audiences who want to sell their inventory at a premium price. In contrast, RTB is a type of programmatic advertising where advertisers bid on ad inventory in real-time, and the highest bidder wins the ad placement. This method is ideal for publishers with a large amount of inventory that can be sold to various advertisers.

Both methods have their benefits and drawbacks, and publishers must carefully consider their inventory availability, technical expertise, and pricing strategy before deciding which option is best for their advertising needs.

Why Isn’t Programmatic Direct for Everyone?

Here are a few reasons why programmatic direct may not be the best option for every publisher:

  1. Complex contracts: Programmatic direct contracts can be complex and time-consuming to negotiate. Publishers must determine the pricing, inventory availability, and other terms of the agreement, which can be challenging if they don’t have experience in the field.
  2. Unfilled Inventory: Even with programmatic guaranteed, publishers can still have unfilled inventory. This occurs when advertisers do not purchase the agreed-upon ad impressions, leaving the publisher with unsold ad space. This can result in lost revenue and make planning for future ad sales difficult.
  3. Access to Ad Server: Programmatic direct gives advertisers direct access to publishers’ ad servers, which can be a double-edged sword. While this can give advertisers more control over their ad campaigns, it also requires a lot of coordination between the publisher and advertiser for integration. This can be time-consuming and complex, requiring technical expertise and resources not all publishers have.
  4. Single Channel: With programmatic direct, the publisher commits their website inventory to a single advertiser, taking away the flexibility of having multiple demand sources. This means that if the advertiser cannot fill the entire inventory, the publisher has no other sources to fall back on, which can result in lost revenue.
  5. Limited to Big Players: Programmatic direct is unsuitable for all publishers as it requires huge traffic to enter such deals. At the same time, only advertisers with big marketing budgets can afford the premium prices of direct deals. Smaller publishers and advertisers may not have the resources or audience size to make programmatic direct a viable option.
  6. Technical expertise: Programmatic direct requires certain technical expertise to set up and manage. If you don’t have a team with the necessary skills and experience, you may struggle to implement programmatic direct effectively. This can lead to technical issues, errors in ad serving, and lost revenue.

How to Set up Programmatic Direct in Google Ad Manager?

If you wish to manage your Programmatic Direct deals by yourself through Google Ad Manager, then follow these steps:

  • Ensure you have linked your primary Google Ad Exchange account to Ad Manager.
  • Enable Programmatic Direct by going to Admin > Global Settings > Features. Find the Programmatic Direct button and toggle it on. Save the settings.
  • Go to Sales > Deals Settings and create your Publisher Profile so buyers can see you in the marketplace.
  • Configure your inventory types by going to Admin > Global Settings. Configuring your inventory will help your sales representatives specify the inventory type during negotiation.

Now your sales team can start sending and negotiating proposals with buyers and receive requests for a proposal from the buyers.

Programmatic Direct and Your Path to Success

If you’re a publisher with a highly engaged audience and a large volume of ad impressions, programmatic direct can be a game-changer for your advertising strategy. By inking direct deals with brands for premium ad placements, you can command premium prices and gain greater control over your advertising campaigns. 

However, it’s important to consider the potential drawbacks, such as unfilled inventory and the need for coordination with advertisers. If you’re not yet a big enough publisher, auctions from ad exchanges or ad networks may better fit your needs. Regardless of your strategy, the landscape of programmatic advertising is constantly evolving, so staying informed and adaptable is essential. As always, our team is here to help you set up your programmatic direct campaigns and make the most of your ad inventory. Let’s work together to achieve greater success in the exciting world of programmatic advertising.

FAQs

Q1. What is programmatic direct?

Programmatic direct is a type of ad buying and selling process that allows publishers to sell ad space directly to advertisers through automated systems without needing an intermediary.

Q2. What’s the difference between programmatic direct vs. RTB?

Programmatic direct is a method of buying and selling digital advertising inventory directly between publishers and advertisers. At the same time, RTB involves an auction-based system where ad inventory is sold to the highest bidder in real-time.

Q3. What’s the difference between programmatic direct vs. programmatic guaranteed?

Programmatic direct is a method of buying and selling digital advertising inventory directly between publishers and advertisers through automated means without an auction. Programmatic guaranteed, on the other hand, is a type of programmatic direct that guarantees ad impressions to the buyer, often with fixed pricing and delivery guarantees.

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