22 percent of programmatic will be automated guaranteed by 2020. Are you ready?

by Kumar Shah, director of business development, Adslot

According to the market study released by Technavio earlier this week, the growth potential of the automated guaranteed (AG) technology sector is “tremendous.” The study predicts that the sector, which addresses the direct sale of ad inventory between buyers and sellers via automation, will represent 22 percent of all programmatic buying by 2020, overtaking PMPs in the process and coming second only to open RTB.

Unknowingly, RTB itself probably represents the most significant block to AG’s growth. It has gained almost universal adoption because it efficiently solves a major industry problem: monetizing excess supply. Though well-documented concerns around ad fraud are an issue, those fears are outweighed by the advantages that RTB delivers, especially to the buy-side: low CPMs, scale, the ability to attribute their own value to an impression by introducing audience data to the equation and, perhaps most importantly, ascribing a margin to that value. As a result, trading desks have rapidly emerged as a major buying force.

RTB challenges automated guaranteed because it’s synonymous with programmatic. There’s an assumption within the industry that all forms of programmatic are RTB, and all types of inventory should be available through RTB. In reality, programmatic should be replaced by automatic to describe the various infrastructure solutions that can give buyers access to all forms of inventory in combination. Just as automated guaranteed does not use the RTB technology stack, media buying is not only about scale or low CPMs. It’s about finding the media that delivers the best outcomes for clients. Automation simply enables buyers to do this more efficiently, allowing buyers to shift their thinking from administration and process to value and performance, regaining lost time and aligning their focus to what clients value most: market insights, strategic thinking and a consultative approach.

The growth potential for AG is high because publishers believe other forms of programmatic turn their premium inventory into a commodity by auctioning it because the inventory is often undervalued through this channel. Publishers simply won’t relinquish control of their best stuff to the RTB stack as a result. They want to sell it to a known buyer at a price point they control for guaranteed revenue.

In other words, it is vitally important for the buy-side to use a technology platform that enables them to secure the best inventory in-market on a guaranteed basis. If they don’t, then they fail to capitalize on the advantages that automation offers for all types of inventory in market. As one Adslot trading desk client put it, “We use AG as a way to lock in inventory that we are not able to do non-guaranteed.”

Acknowledgement from the buy-side that the adoption of new technology platforms will be required to fulfill the full breadth of their buying requirements in an automated fashion is probably the first step towards AG fulfilling its growth potential.

The second is deciding where it will fit inside the buy-side’s business operationally. As AG is a form of programmatic buying, many see it fitting more comfortably with the programmatic teams who are excited to add this buying type to their arsenal. As Lucas Castillo, Account Manager at Amnet, puts it, “Automated guaranteed allows for programmatic to deliver on a full-funnel approach. Used in conjunction with RTB-based buying methods, such as open auction and private marketplaces, AG broadens our premium inventory pool and enables us to offer the best of what both programmatic and inventory guarantees have to offer.”

In contrast, given that AG technology effectively automates the RFP process, others believe it makes more sense to sit within the agency. Of course, the reality is that there is no right answer, but demand-side businesses don’t need to find a solution before adoption becomes widespread.

The third and last step is that the technology must fulfill its promise of enabling more efficient and more effective transactions across the full breadth of inventory that the demand-side wants to access. This is the irony of the current situation because the technology is already there. Given the very clear benefits of “guaranteed” forms of trading to the sell-side, the inventory is already substantially there. If it’s not, experience shows that supply moves to follow the demand. In other words, it’s a chicken-and-egg situation. Some of the chickens are already beginning to move. The only question now is how quickly the rest will follow.


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