Inside Hearst’s Programmatic Play

Hearst, which only rolled out its exchange last June with Pubmatic, wants to learn from some of those disappointments. The Hearst version is open to everyone without having block lists or price floors. The publisher wants to cast a wide net — and find new sales leads for its direct-sales team in the process.

The hope is that this creates a middle tier of advertising. Welker sees four levels. There’s premium direct and “remnant” via real-time bidding, but then there’s “premium exchange,” inventory sold through the private marketplace and via deals done directly with agency trading desks.

The strategy is working, according to Welker. She won’t reveal CPM levels, but she makes the case that the embrace of programmatic has not eroded premium CPMs but instead has lifted low-end exchange CPMs and begun to create the elusive middle tier of inventory.

Buyers, speaking on condition of anonymity as to not tell other buyers how much they pay, said that pricing typically ranges between $2 and $4. This is cost-efficient, as premium inventory typically runs between $15 and $20.

“We’ve created a strategy that allows our advertisers to work with us on more than one level and to align with inventory and audiences through those four layers,” Welker said. “The private marketplace layer is the incremental layer — premium programmatic and doing different work with an agency.”

The main goal behind the exchange is to create “maximum scale” between its newspaper properties, like the San Francisco Chronicle, and their magazines, like Esquire.

“The focus is more on the quality of their audience and sites, and their ability to extend that reach in complementary spaces,” said Adam Shlachter, svp of media at Digitas.

The interesting thing about Audience Exchange is that it’s plugged into its data-management platform, Red Aril — now Core Audience — which it bought through its digital agency iCrossing. Hearst has developed 50 segments over the past year — like food enthusiasts or the super shopper — and packages them for marketers.

“Programmatic creates a platform that allows us to do more with our marketing partners, not less,” Welker said. “There’s also a benefit to our user. Depending where they are in their journey, it allows us to provide more relevant experiences for them. We have to work hard to prove value to marketers.”

Hearst is leaving content-driven strategies like sponsorships with its direct team. It is building out an audience team, tasked with pulling in data to have smarter display or work with trading desks. Welker wouldn’t disclose how many are on each team.

There are still some kinks to be worked out on the sales front.

“When we approach Hearst, we get a list with all their product offerings, which is great because they’re thinking horizontally,” said Stephanie Prager, managing director at MEC Global. “But I have a point of contact at direct and indirect, and have to go to each to get answers. It causes a bottleneck.”

Centralizing that and having a sales team to speak across its portfolio would make things more efficient and effective, Prager argued. She, however, added, “They are best positioned right now across these types of publishers. In the competitive set of Meredith and Conde, Hearst has the pulse of what’s going on and feet on accelerator. They are in the right direction. It’s just putting it together more comprehensively; that’s what we’re looking for.”

“They’re definitely driving in the right direction in understanding their readers and how to personalize that experience in delivering relevancy,” said Prager. “That’s important to our clients, as well. We’re fishing where the fish are. We can deliver messaging with no waste. Their heads are in the right place, but it’s still new, coming off the ground.”

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