How publishers can leverage the programmatic advertising trend

MAGNA GLOBAL reports that 63 percent of all display advertising in the United States will be programmatic advertising in 2014, up from 50 percent in 2013. By 2017, MAGNA GLOBAL predicts other countries will be close to the level of the United States in terms of penetration of programmatic advertising compared to other digital display categories.

For example, the countries outside the United States with the predicted highest penetrations of programmatic advertising in 2017 are the Netherlands, 70 percent; United Kingdom, 59 percent; France, 56 percent; Australia, 52 percent; and Japan, 40 percent.

As these and other countries ramp up programmatic buying strongholds, publishers are recognizing the value in occasionally partnering with their longtime competitors in order to bolster their national advertising businesses.

The most important advantage of developing national networks is improving national advertising revenues. Publishers and broadcasters in many countries have seen their national advertising diminish. For example, national advertising in the United States dropped 11.7 percent from 2011 to 2012 alone. An advantage to developing advertising consortiums is to re-gain lost national advertising. The key is to aggregate as many publishers and geographies as possible to create a “national buy.”

National advertising networks are being built by publishers and broadcasters in many countries, in an effort to raise CPMs in their own ad networks, and in conjunction with ad exchanges that employ programmatic buying. Newspaper companies in countries including Brazil, Switzerland, Italy, the United States and Japan have creating ad network consortiums in an effort to improve revenues.

The Local Media Consortium, a group of 800 daily newspapers and 200 broadcasters in the United States, has partnered with Google in order to leverage its strength in numbers and quality of audience with the growing presence of programmatic ad buying. Members will have the choice of using Google’s two advertising products, the DoubleClick advertising network or Google AdSense contextual advertising. Together, the 1,000 media outlets serve almost 9 billion ad impressions per month.

The real draw for the partnership, launched in February 2014, is participation in the new private advertising exchange that was created to sell the publishers’ inventory through programmatic buying. “The vision is that this will be not just about remnant inventory, but a way for the consortium members to monetize their full businesses,” said Laurent Cordier, managing director of Americas Publisher Sales at Google, according to a Feb. 2014 article published by Neimanlab.org.

Some American media companies are conspicuously absent from the consortium: The New York Times, the Washington Post and News Corp. Each of these companies launched its own ad exchange in 2013 to leverage the programmatic advertising buying trend.

While programmatic buying is certainly an opportunity to make more digital revenue, traditional publishers and broadcasters still face a familiar conundrum: teaming up with the likes of Google, which stands to gain the lion’s share of revenue on the backs of publishers and broadcasters who own the content. However, on the positive side, many publishers are forming alliances with former competitors in order to build scale in their countries. These strategic moves are promising and have the potential to result in a healthier bottom line for media companies struggling to monetize their digital businesses. Time and effort will drive the success or failure of these ventures.

World Newsmedia Network has published Global Digital Media Trendbook each year since 2006. The 2014 trendbook contains 500 data sets and 230 pages of analysis about digital media usage and revenue patterns, including this data set. To download the GDMT free executive summary, go to www.wnmn.org