Programmatic Advertising vs Direct Buying: Tips to Solve the Dilemma

With the growing popularity and wider adoption of streaming solutions, marketers have had to adapt their TV advertising strategies for the digital era. Alongside this shift, the ad buying processes became more automated and complex. As connected TV is still in its early stages, many marketers stick with direct media buying when investing in CTV – as it’s familiar to them from linear television. But with more viewers joining the ranks of CTV content, programmatic buying grows.

In a forecast, presented by eMarketer, US programmatic digital display ad spending will continue to grow, and is expected to reach nearly $133 billion by 2023. This will be possible thanks to automation, whose benefits include accurate ad frequency and reach management, as well as superior targeting possibilities. Because of these processes, manual media buying will eventually disappear, so it is important to embrace programmatic ad buying to remain competitive in the industry.

Direct Buy vs Programmatic – What Are They?

Even at this stage, if we place direct buy vs programmatic advertising, the benefits of the latter are evident, and what’s with the former? Let’s dive deeper into the issue to explain the key differences and some nuances of programmatic vs direct buying.

What is and How Does Direct Buy Work?

Direct buy advertising has been the online advertising standard since the early days of the Internet – when the first banners came into being in 1994. The definition of a direct buy has not changed in almost three decades: it involves finding the right publisher, negotiating the price, acquiring inventory, and the end goal leads to the ad being served on the chosen medium.

This process is manual and naturally requires human communication. This is just like any sales position in fact: calls, emails, closed deals with media owners, only involving ad buying. The price is subjective, as it is determined during negotiations with each new publisher. It is worth noting that direct sales translate into higher CPMs thanks to custom placement selection, hence an “ideal condition” for that advertiser. 

Benefits of Direct Buying

Does direct buy still exist? It does, so there must be other reasons why direct buying has stuck around for so long. In general, it’s mostly about customization in direct display advertising. On the other hand, programmatic advertising is all about efficiency and speed, with fewer customization possibilities. Therefore, if an advertiser requires something big and extraordinary for their ad units that really stands out, or the publisher is certain this is the best way to drive revenue, then there are benefits to buying direct vs programmatic.

Direct buying is also a publishers’ gateway to big brands with hefty budgets that are hard to come by in the programmatic world at this stage. Global brands usually have their own trusted publishers and for the smaller ones it will be a hard time to get there.

What is Programmatic Ad Buying?

The great programmatic revolution became possible thanks to the invention of real-time bidding technology (RTB) back in 2009. RTB is the cornerstone of programmatic, also known as automated media buying.

So what is programmatic ad buying in relation to direct buying? In this process, ads are bought via a real-time bidding auction, with multiple advertisers placing bids simultaneously and the highest bidder taking that particular inventory slot. The whole process is automated and barely requires intervention on the part of the media buyer. Commonly, three main players are involved: supply-side platform (SSP), ad exchange and demand-side platform (DSP), which in turn form a fully programmatic advertising stack. For more on supply path optimization, follow the link here.

Benefits of Programmatic

Due to automation, programmatic ad buying via RTB is done within milliseconds. Compare this to the old-fashioned negotiations, involving numerous stages: requests for proposals, tenders, quotes, and further human interaction. Naturally, programmatic saves a lot of time.

Programmatic ad buying relies on algorithms to determine when and where to show the ad content to the target audience. And the accuracy only gets better with time as more data is collected from thousands of individual users, and detailed buyer profiles are created by matching user behaviors, characteristics and more. With access to the power of data management platforms, marketers can set up algorithms to target specific buyers. DMPs collect and analyze data to provide insights and connect with third-party ad exchanges and networks. As programmatic advertising operates in real-time, it provides immediate data about an ad placement that can help advertisers fine-tune their campaigns on the go, which is something unheard of in traditional ad placement.

Programmatic Advertising vs. Direct Buying: It isn’t One or the Other

At the same time, programmatic advertising and direct buying advertising are in no way mutually exclusive. Depending on the needs of the advertisers, there may well be benefits of taking both routes. Sometimes it may be better not to choose direct vs programmatic advertising but combining them

But the reality is that few publishers can afford to set up both direct ad sales and programmatic properly, so the dilemma remains. Moreover, if a publisher has bandwidth constraints, there is no option – it is either one or the other. In this case, an intermediate option may be the safest choice: programmatic guaranteed, which has the best of both worlds. This option can be a lifesaver for those who don’t want to put all their eggs in one basket.  

Takeaways

So as we have seen, the direct vs programmatic battle is not actually much of a battle. While direct media buying is not going anywhere yet, the general automation trend will eventually leave it on the sidelines. With solutions like TVP Connect – an advanced private ad exchange for CTV publishers, programmatic can benefit most companies already, and simplified adoption means the big switch is due soon. But fear not, the advantages of direct buys will be disregarded – as ad tech advances, the drawbacks will be minimized, while the benefits from both will be merged to an even greater extent. Besides, superior targeting tools, like contextual and behavioral targeting advertising available on programmatic, make sense even from the point of view of budget optimization.