(This is Chapter 2 of the Adomik Programmatic Yield Management Handbook)
Programmatic Media has a complex and dynamic value chain that presents issues and opportunities at every step of the process
First, the basics:
Let’s first understand the entities evolving in the programmatic media ecosystem, what part they play and how the ecosystem fits together. And rather than rewriting the basics to get everyone up to speed, we will leverage the existing body of content by our friends in the ecosystem.
The diagram below from the IAB illustrates how the “sausage is made” (with the addition of programmatic analytics and yield management software in purple. Programmatic analytics absorb information from the exchange/SSP and ad server to provide fidelity on whats going on, while programmatic yield management software writes pricing rules back to either mechanism to manage yield on inventory).
This simple video overview illustrates how all these entities fit together:
And here is our own drill down on the individuals that will be used to illustrate lessons going forward:
Users: You, me, any individual surfing the web on a specific device, with his own profile, preferences and browsing history contained in an anonymous browser cookie
Ad network (acting as a buying, packaging and reselling entity)
Premium sales house: these are essentially brokers for premium inventory that work on behalf of sellers to package and sell ad inventory to buyers
Publisher coalition: programmatic entity co-created by multiple media groups in order to mutualize their inventory and centralize audience data, knowledge, and best practices
Premium publisher: this is a publisher of a website that attracts high-value users with quality content that commands a high Cost Per Thousand (CPM) price for ad impressions
Media trader: this is an operator that is generally not creating content, but is in the business of selling it only and earning from ‘buying low and selling high”
Each one of these media sellers has their own set of goals and constraints that define their operations. The nuances of each are governed by factors such as location, inventory age, audience, content quality, user quality, among others.
Ad network (see above)
Agency trading desk: the programmatic entity of a traditional media agency that implements buying and bidding strategies in their DSP
Retargeters: ROI-focus actors whose strategy is based on "high value" cookie-targeting on behalf of traditional agencies and brands
Supply Side Platforms (SSP)/Exchange: A transactional technology layer designed for media sellers to make their inventory (content and audience) available on a real-time basis to a marketplace of buyers. (NOTE In most cases, the SSP is an xxchange. Originally Exchanges were distinct entities.)
Demand Side Platforms (DSP): A transactional technology layer designed for media buyers to access a market of media sellers' inventory placed into the exchange and implement their buying strategy and targeting
Data Management Platform (DMP): A platform used by media sellers to identify and package their first-party data (i.e. all information gathered on their inventory’s audience - socioeconomic, demographic or geographic data), then synchronize it with the SSP/Exchange so that desirable attributes made available on the marketplace earn commensurately. (Note buy side operators such as Brands and Agencies also hire DMPs to help them model desireable audiences based on buyer first part data such as CRM tools.)
Analytics Providers: A specialized intelligence layer designed to enable media sellers to understand, visualize and analyze seller trading data.
Yield Management Providers: A specialized technology designed to understand what is happening in programmatic commerce and optimize programmatic packaging, pricing and strategy to maximize yield on programmatic inventory
Note that some actors in the programmatic ecosystem might span several of these roles. For example: AppNexus, Google, and Rubicon Project act as both SSP/Exchange and DSP. For further clarification in greater eye bleeding detail see the Display Advertising LumaScape: click here.
"Big data" meets media
As you can see (and probably already know), programmatic represents a very complex value chain throwing off a myriad of data within each stage of the process. Programmatic is truly a non-trivial "Big Data" challenge that most publishers have only recently (and reluctantly) admitted. As a result, media sellers are generally behind the ‘buy side’ in terms of both the staff they have to run programmatic and the tools and technology they have installed and use to "wrangle" the big data to deliver insights and drive decisions. Given the billions of transactions occurring every day, managing revenue at such scale has proven to be more effectively conducted with machine-mediated techniques and yield management specialists versus the editorial vision of old.
As the industry has transitioned, so too must sellers. Both the human and technical resources required to survive and thrive in this modern era must be deployed to insure the success of a healthy ecosystem of independent premium publishers.