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By Alexander Cherry - March 13th, 2015
There is scarcely a concept in the entire world of media transactions so often and so longingly invoked as the promised land of Premium. Brands and their agencies want premium inventory. Premium publishers sell premium content. Premium commands a premium price. But what does “premium” actually mean? And what value does such a slippery idea provide us today, in an increasingly data-driven, programmatic world?
(For more insight on programmatic and premium inventory, checkout the upcoming Incite Programmatic Summit, May 4th and 5th in New York.)
Take a stroll around the world of ad-tech blogs and programmatic Twitter feeds and you might be forgiven for concluding that there are many “premiums,” not just one. There is the premium of direct-sold, the premium of pre-bought guaranteed, the premium of content, and the premium of audience. One thing people do agree on is that premium inventory should command a higher eCPM than the rest, so questions surrounding premium are really a debate about what drives value in advertising. The content creed that sustained the pre-digital era is dying, but people are finding new ways to trade: this is not the end of high-value advertising, but rather a chance to redefine it in a world of new and shifting assumptions.
Below we will explore different aspects of premium and consider what effect they have on the buying and selling of media today.
Content as Premium
For us to work out where premium is going, it might be beneficial to take a quick look at where it originated. In the pre-digital world, inventory labeled premium was generally linked to content with high viewership or circulation. This concept still largely applies to broadcast TV, which we can take as an example. Here ”premium” refers to content that is broadcast during peak viewership hours, or primetime, which not coincidentally is also the content with the highest production values. However, while these higher production values generally lead to greater audience engagement (and with it more of a susceptibility to advertising), their chief function is to attract more viewers. Premium content in these cases has primarily served as a proxy for large, engaged audiences. The core justification for paying more has therefore been reach, insofar as reach is directly quantifiable, and the more nebulous notion of viewer engagement has been bundled together with this, often opaquely, to create an overall premium package direct-sold by an ad sales team.
Audience as Premium
In the new world of addressable media, content is no longer needed as a black box for total audience, as each audience member can be addressed individually. And the blackest box of them all – premium content – has been melted down into this sea of data and impressions, some of which are gold dust to marketers, many of which are worthless. The early ad exchanges gave advertisers the chance to pan this river of impressions based on audience data. However, these advertisers were largely panning blind: in this long tail of digital inventory they were not bidding on advertising opportunities per se, rather on a seemingly limitless stream of ad requests swelled by endless banners and fraudulent click farms. Programmatic initially unbundled the package of overall views and “engagement per view” and in doing so flooded the exchanges with worthless, zero-impact impressions. This glut soon forced down the eCPMs available through programmatic channels to levels that can only be described as sub-premium, in an infamous “race to the bottom”. For this reason many “premium” publishers, including ESPN, Hulu, USA Today and Turner, still refused as recently as 2013 to sell any of their inventory through automated channels for fear of cannibalizing their direct sales with a cheapened indirect offering.
Trading on Context and Engagement
The (re-)acknowledged importance of engagement per view, as opposed to just aggregating views for views’ sake, has spurred some of the innovations that now characterize the programmatic landscape. Brands want more control over context, something often lacking in open exchanges, so may prefer to buy from a shortlist of “premium” publishers. This desire is facilitated by private exchanges and programmatic direct solutions, where buyers give up some or all market pricing in exchange for certain assurances; the price of brand-safe context, guaranteed placement and higher engagement is, for now, set by the publisher.
This “programmatic premium” approach has burgeoned in popularity over the past 12 months but not without the occasional gripe. Some have commented that the inventory in the private exchange is often not inherently better than what lands on the open exchange and yet is propped up with a high price floor, though you might equally argue that the same inventory on the open exchange is being undervalued. In other cases a given reach can effectively be guaranteed on the open exchange through a clever bidding strategy, without having to pay the publisher an additional margin for direct access to their ad server. For this reason, private marketplaces and programmatic direct solutions cannot be labeled “premium” without further qualification.
The Marketplace of Everything
The fact that so much more can now be achieved using data than a few years ago can lull people into thinking everything is possible. While an exchange environment should in theory be able to set the price of every type of inventory based upon its performance, this presumes everything is suitably quantified and information distributed fairly. There remain numerous missing pieces in the attribution jigsaw. Programmatic price-discovery will not function with full efficiency until there are significant improvements in all of these areas.
In order to get effective (as opposed to merely low-price) advertising, brands need to think about how the different data points at their disposal – audience and context above all else – fit together, and thereby determine which impressions will actually have an effect in the real world beyond their campaign reporting. With their agencies’ support, brands must define granularly what value means for them. Those that stay put will likely fare worse than in the past where the black box of ”premium content” at least guaranteed a basic threshold of reach and engagement. Those that do make the investment though will increasingly have the potential to outmanoeuvre the competition with the savviness of their media buy alone.
Publishers expecting high eCPMs need to understand better what they’re selling and who they’re selling to. You will never find an antiques salesman who doesn’t know their exhibits inside out… But for too long buyers have been going round the publisher bric-à-brac picking out the prize pieces for a pittance. While programmatic ‘levels’ a lot of inventory across the web as a whole, the value of what it sets apart can skyrocket. So publishers shouldn’t sell their golden eggs to an omelette chef. Neither should they try to fob off their chicken eggs on the goldsmiths (they won’t buy!). Expect therefore to see greater adoption of data and yield management solutions by those publishers that want to stay in the game.
We’re at a point where the age-old debate about what makes advertising effective is moving beyond the coffee table. And programmatic, once the scourge of so-called premium publishers worldwide, may now be their unlikely champion: separating the digital wheat that actually grows brand corn from the click-farmed, bot-viewed, unseen-banner chaff.
The upcoming Incite Programmatic Summit will feature an hour-long panel dedicated to premium inventory, high-value content, private exchanges, guarantees, etc. A team of inventory experts – Katie Steiner from Media Group of America, Lauren Irvin from StubHub, Chris Williams from Magna Global, and Doris Daif from American Express – will share their insights and experiences surrounding private exchanges, programmatic direct, RTB, guaranteed impressions, and how to control the buying and selling of inventory. Make your media spend do more by learning to gauge what’s valuable and what’s forgettable. Check out the full agenda to see what else you'll learn.