Guide

Beyond Print Toolkit: Programmatic ads

June 27, 2024

As publishers move away from print, and lean into their digital inventory, they may have more advertising than they can sell directly to clients — especially at first. That’s usually where programmatic advertising comes into play. Today, it’s one of the fastest-growing categories of advertising, comprising around three quarters of all digital ad spending, according to MediaRadar.

Programmatic is an automatic advertising auction where a publisher’s website communicates with a third party, which matches their ad inventory with an advertiser, typically at the highest price. This process happens within fractions of a seconds, and it has become a mainstay in publishing ad revenue. Programmatic advertising spans all formats, too — display, video, newsletters, and audio.

That said, since these ad deals are done through a third party or an auction alongside the rest of the internet, there’s downward pressure on price — and the CPM, the cost per 1,000 impressions,is much lower. Direct-sold ads garner $10-20 CPMs, while programmatic ads have a $1-$5 average CPM, according to Google News Initiative. But if these ads aren’t otherwise being sold, it’s better to offer them up programmatically than let that inventory go to waste.

One note of caution: When you sell ads programmatically, you may inevitably lose control over the product — and ad quality can suffer. When readers (or even your own newsroom!) complain about annoying — or even inappropriate — advertisements, they’re likely talking about programmatic. That’s why, even for an automated process, many publishers have in-house resources devoted to ad quality control and negotiating deals with programmatic providers.

The essentials: How it works

A publisher with advertising inventory available for programmatic will typically work with a “supply-side platform,” or SSP. On the other end of the deal, an advertiser with a campaign works — typically through an agency — with a “demand-side platform,” or DSP.

The two meet in the middle via an Ad Exchange, which then uses Real-time Bidding (RTB) to complete the deal. The winning campaign is delivered to the page. Publift, an SSP, explains this in more detail here with some helpful diagrams.

How does the advertiser know what they’re buying? Typically, there are two ways: Contextual relevance (a national liquor chain seeks alignment with content on cocktails) or user behavior, usually through cookies (more on the future of cookies later in this section). The latter is why, for example, after shopping for a hotel, you’ll see advertisements throughout your internet pages for lodging services. Often this is serviced with a Data-Management Platform, or DMP, on the buyer’s side.

Some buyers actively block news content because they view it as unsafe for brands. As Digiday points out, during the pandemic many advertisers blocked ads on pages that included the keyword “coronavirus.” This became an issue when nearly every new page on the internet mentioned the pandemic, and some of the content was actually positive, such as heart-warming stories on the community response to Covid. Unfortunately, there’s not much publishers can do about blocking except prepare for it, especially during intense election years (another commonly blocked content is politics).

Types of programmatic advertising deals:

There are a few types of programmatic advertising with key distinctions. The following is a summary from AdPushup:

Open Auction: This is exactly what’s described above, and it’s the most common type of programmatic deal. In short, the highest bidder wins. The upside is that it’s an easy and efficient way to fill inventory; the downside is that it’s like the Wild West of ad sales — neither side has visibility into the ads or what pages their ads appear upon.
Private Marketplace (“PMP”): This is a “private auction” in which clients (or DSPs) are by invitation only, and everyone has visibility into the players — publishers and advertisers. In this type of auction, you’ll have more control over the ad quality because you’re in control of which clients/buyers are at the table.
Preferred Deal: When buyers get an exclusive, first-look (and first right-of refusal) at the publisher’s inventory, usually at a fixed price, before it goes to the programmatic market. Here, you’ll have even more choice over who is buying your inventory and, therefore, what kinds of ads will run on the page.
Programmatic Guaranteed: The publisher and buyer deal directly, though the buyer gets to choose what inventory they want to purchase from a reserved pool.

Tests

Step 1: Start small – but start

If you’re not already doing some programmatic advertising, such as Google Ads, then start small with a single partner and a batch of unused display inventory (Publift, another programmatic platform for publishers, lists several more potential partners here.) This will help with understanding the basics of the programmatic market. You’ll want to start by picking a reputable SSP that offers the right pricing and quality controls.

This stage is all about testing your capabilities. You’ll be experimenting with tagging (the code on the page that dictates the ad sale) and other levers and, in the process, you’ll take stock of your own website’s ability to target content and users. Also important: You’ll want to make sure your website’s user agreement allows third-party pixels or cookies and adheres to any local privacy laws.

Step 2: Look for additional partners

Once you feel comfortable with your testing inventory and system, you can explore other SSP partnerships with more revenue potential. Of course, you’ll want to look for a partner with favorable terms, technical systems matches, and good customer support. You’ll also want to reconsider ad quality at this stage, too, by working with reputable partners that have strong quality controls.

Step 3: Add new formats to the mix

Once you have the hang of the display ad market, try experimenting with different advertising formats — including native, video and rich media. You’ll want to see which formats fit best with your publication and the technical capabilities of your website (page load time, etc.), keeping in mind any disclaimers or other notices that you’ll need to give the reader to ensure they know this is advertising (“The following are paid posts from our partner…”).

Step 4: Consider and optimize news events

There are major news events that drive traffic — think Super Bowl, Election Day, etc. You’re probably already leveraging these holidays in your direct-sold deals. If they don’t all sell, then try to maximize these dates with programmatic partners, too.

Try adjusting your pricing and auction strategies for these dates. If the news event involves a content vertical (sports or politics, per the example above), make sure your pages are tagged correctly to maximize inventory, too. Remember, however, that these are also when the most readers come to your website, so ad quality matters especially too.

Implementation

The future of programmatic

There are two trends in technology that will undoubtedly have an impact on programmatic advertising, and they’re worth mentioning here.

First — and this is a big one — is the future of the cookie. As mentioned above, programmatic advertisers utilize user behavior to effectively track their ads to the right pages, typically by third-party cookies. (Consider the hotel shopping example above). Google Chrome — by far the dominant internet browser in the US — has said it plans to eliminate cookies in 2025, though this has been delayed a few times already. This will make programmatic ad spending less effective for buyers, at least in the short-term.

Though the market is already coming up with new tech solutions, publishers with first-party data on their readership will have an advantage. If your publication has strong data on its subscribers, you could benefit from this, since you will be able to provide any clients with the best data on your audience. Also, the ability to target ads by content will become more important, with either publishers being able to supply this information, or third parties offering solutions on the DSP/client side.

The second trend is the increasing amount of content on the internet produced by artificial intelligence. Not long from now, the internet will be dominated by pages created by A.I. — pages made for raking in advertising dollars.The proliferation of these pages will likely have downward pressure on price, so publishers with high-quality, human-created content will be competing against automated web pages that are intended to bring in programmatic dollars. While this happens frequently today, too, the advent of A.I. will accelerate this dynamic.

This will probably make programmatic less lucrative for publishers. Again, all the more reason to consider having data about your own audience that only you can provide clients.

Additional resources:

Publift has a great breakdown on programmatic, albeit from a provider. They also have a detailed glossary of terms and a diagram of how it works.
AdPushup has a breakdown of the four types of programmatic deals, including a handy chart of what each entails.