The Brave New Era of Programmatic Upfronts

At first glance, the idea of an upfront sale, a staple of the TV ad world, makes little sense for programmatic online advertising. It seems to go against much of what automated trading has to offer, such as the ability to cherry pick audiences and ad impressions in real time, and to optimize campaigns and budgets on the fly.

But agencies say the idea of a programmatic upfront is an interesting one, if it gives them and their advertisers a first look at inventory or preferable ad rates in exchange for a significant financial commitment. At the very least, the upfront events such as the one being held by AOL during this year’s Advertising Week later this month and another planned by Yahoo should at least help to raise the profile of programmatic buying across the wider marketing industry, they say.

“There are a lot of advertisers out there that know what they’ll be doing next month, next quarter, or even next year. For them, it makes sense to buy a preferred CPM or a first look at inventory as and when it becomes available,” said Mediasmith CEO David Smith, in reference to opportunities around real-time bided ad inventory.

It’s unlikely direct-response-focused advertisers are going to shell out millions of dollars for a first look at media, though. For them, it’s all about audience-based ad buying. They care little where their ads show up as long as they’re reaching the right users, and they’re performing well. It’s the reason ads for major brands regularly end up on the longest of long-tail sites. It’s a numbers game.

But for “premium” or luxury brands, the ability to combine data with context might make an upfront commitment appealing, according to Media Kitchen President Barry Lowenthal, especially if they’re granted access to the type of inventory currently being sold direct by sales teams.

“You’ll never find luxury brands go full-on audience,” he said. “For them, context is always going to matter, so a programmatic upfront might be more appealing.”

It’s still early days, though. Marketers might see a potential upside to making upfront commitments, but that doesn’t mean they’re ready to sign multimillion dollar deals. At this point, it’s more of a concept than a defined offering.

AOL knows this. It’s not necessarily expecting to sell millions in media at its programmatic upfront event in New York later this month. It’s more about educating the marketplace and getting conversations started around the idea, CEO Tim Armstrong told reporters at a press event last month. That said, he expects large portions of online media to be traded through programmatic upfront buys in the next five years.

Yahoo, on the other hand, appears to be searching for advertisers that’ll sign on the dotted line. It’s out pitching agencies its own programmatic upfront deals for access to premium inventory and even opportunities like homepage takeovers. The problem is that few in the ad tech space have faith in Yahoo’s technology, or that they’d get a significant advantage by forking at $5 million in an upfront buy.

“I’m yet to hear of any significant value to justify that level of investment,” said Seth Hittman, CEO at demand-side platform Run. “The missing piece is why advertisers would do this. What is the value? What are we getting that we otherwise can’t get?”

Lowenthal also noted similarities between programmatic upfront deals and the intended purpose of private exchanges. Both essentially promise the same thing — the ability to give advertisers preferred access to inventory and pricing based on relationships.

But Hittman said he gives credit to both AOL and Yahoo for at least raising the profile of programmatic, even if they can’t demonstrate concrete value with their upfront propositions just yet.

“Programmatic is still new for buyers and brands,” he concluded. “At least, this forces conversations to happen.”

Image via Flickr

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