Programmatic Advertising vs Direct Media Buying: Differences Explained
If you’ve been delving into digital advertising, it’s likely that you’ve heard programmatic advertising mentioned in almost every article related to the topic - and for good reason.
In a 2021 report by eMarketer, programmatic advertising’s share of market spending in digital display advertising has risen from 83.9% in 2019 to 86.5% in 2021, with a forecasted increase to 88.2% in 2022 (or even as high as 91.1% in a revised analysis).
There’s almost nowhere left for the chart to climb.
But while the numbers seem to tell a story of unparalleled usage and success for programmatic advertising, there’s more than ever to be said about the classic arrangements known as direct deals (also known as direct media buying) between publishers and advertisers.
This article unpacks the differences between programmatic advertising and direct media buying while covering the advantages that each method has to offer moving into the future.
Table of Contents
- What is programmatic advertising?
- What is direct media buying?
- Confusion Clarified: What is programmatic direct?
- Differences Summarized: Programmatic Advertising vs Direct Media Buying
- Advantages & Disadvantages of Programmatic & Direct Media Buying
- Considerations For The Future Of Programmatic
- Programmatic Advertising vs Direct Media Buying - Which Is More Effective?
What is programmatic advertising?
Put simply, programmatic advertising is an automated method of buying and selling media (also referred to as ad space) online through the use of technology platforms which handle everything from placing bids to choosing where ads are displayed.
Advertisers define the criteria for their ad campaign, often by using a demand-side platform or “DSP” - and different elements of the programmatic ecosystem including a publisher’s supply-side platform or “SSP” work together to take care of the bidding and ad placement process automatically.
Rather than determining every detail of an ad campaign through the time consuming manual process of negotiation and coordination, both publishers and advertisers are able to complete desirable transactions without ever engaging directly with one another (except in programmatic direct deals, which will be covered shortly).
What is direct media buying?
Direct media buying takes place when a publisher and an advertiser negotiate the terms of an advertising deal directly with one another (as the name implies).
While direct deals often involve fixed rates for CPM (cost-per-mile) prices which create a guaranteed deal arrangement, the terms of direct media buying, like any negotiation, are flexible between the publisher supplying the ad inventory and the advertiser making the media purchase.
So long as the sale of the ad space is negotiated directly between parties, it’s considered a “direct media buy”, or simply a “direct deal”.
Confusion Clarified: What is programmatic direct?
It wouldn’t be ad tech if there wasn’t a bit of confusion thrown into the mix.
Programmatic direct is a classification of certain types of programmatic advertising in which publishers and advertisers negotiate directly with each other initially to set the terms of their deal, prior to placing that deal on “auto-pilot” by letting programmatic technology handle certain details (such as ad placement, which types of users to serve ads to, and more).
In short, programmatic direct is a bit of a hybrid between programmatic and direct advertising.
Rather than being an approach to media buying itself, programmatic direct is a term which helps to identify certain subsets of programmatic advertising arrangements.
There are several different types of programmatic advertising that are used by publishers and advertisers in various situations.
Of these approaches, Programmatic Guaranteed and Preferred Deals are both classified as programmatic direct.
(While this chart is useful, it’s worth noting that in some cases, private marketplaces can also be considered as programmatic direct, as they can involve direct negotiations between parties over the terms of participation.)
We have a blog post dedicated entirely to the different types of programmatic advertising if you’re interested to learn more about why each type is used, and how they work.
There’s also a blog post specifically on how RTB (real-time bidding) works if you’d like to learn more about how auctioning processes are managed in digital advertising - and a post by WarRoomInc that helps to further distinguish the difference between programmatic direct and RTB.
Differences Summarized: Programmatic Advertising vs Direct Media Buying
From their definitions alone, it’s fairly easy to see the surface level difference between programmatic advertising and direct media buying.
However, there are a number of detailed differences between each approach used in modern ad serving. This chart provides a comparative breakdown.
|Method of Work||Manually conducted by human operations||Campaign criteria set manually, then fully automated|
|Type of Inventory||Typically Premium Inventory||Typically Remnant Inventory|
|Audience Reach||Determined by a single publisher’s available ad inventory||Determined by an advertiser’s audience criteria which is matched across thousands of publishers|
|Audience Evaluation||Conducted manually by advertiser||Conducted automatically by advertiser’s DSP and sometimes DMP|
|Method of Sale||Flexible, possible to purchase impressions in large volumes||Always conducted via auctions on an impression-by-impression basis|
|Pricing||Prices determined manually through negotiations for metrics such as CPM, CPC, or CPA||Determined through RTB auctions with fluctuating eCPM based on bidding strategy, auction prices, desired actions, user profiles, and other criteria|
|Number Of Impressions||Typically fixed / guaranteed||Non-guaranteed, determined by budget and inventory availability vs timeframe|
|Campaign Optimization||Conducted manually after reviewing performance||Conducted automatically by programmatic system|
Both direct media buying and programmatic advertising offer advertisers the ability to match their messaging to a niche audience of their choice.
The difference lies in how the ad space is purchased.
In direct media buying, ad impressions are purchased at a fixed rate by advertisers, and an agreement is made to have those impressions served to specific areas of a publisher’s website (typically in premium positions and on popular pages).
In programmatic media buying, advertisers specify their audience criteria and budget within their media buying platform (typically a DSP). Their ads are then automatically served across thousands of publisher websites whenever their bidding strategy wins an auction against other advertisers for an available ad impression that matches their campaign criteria.
Advantages & Disadvantages of Programmatic and Direct Media Buying
Programmatic advertising may sound like a favorable approach due to the convenience of automation, but purchasing media directly has its advantages.
Each method of media buying can be useful depending on the objectives of the parties involved in the process.
|Programmatic Advertising||• Time efficient for both parties.
• Highly effective for filling remnant publisher inventory.
• Efficient for high volumes of relevant audience reach.
|• Can require the services of an ad agency to configure for best results.
• Can be susceptible to widespread ad fraud.
• Can pose a risk to brand safety.
|Direct Media Buying||• Effective for publishers to sell their premium inventory for the best price.
• Allows advertisers to secure effective ad space on specific web properties that meet their objectives.
• Offers greater reporting transparency to combat ad fraud.
• Allows both parties to avoid walled gardens and intermediaries.
|• Negotiations can be time consuming and may not always pan out to a deal.
• Campaign execution can be cumbersome without the use of ad servers.
• Typically only used for larger advertising deals in modern ad serving, limiting its use for smaller publishers.
While both methods offer a range of desirable advantages, there are certain attributes of each media buying method that should be accounted for.
For advertisers with large budgets, ad fraud and brand safety are two factors to be aware of that can produce negative results when running a programmatic ad campaign.
Meanwhile, both parties will want to look into effective ad serving options when establishing direct deals with one another to ensure campaigns can be managed easily.
Considerations For The Future Of Programmatic
Programmatic media buying has been one of the most popular tools in digital advertising for many years, but there are a number of considerations to keep in mind for the future.
With the end of third party cookies slated for 2023, and new privacy legislations making online data collection far more difficult, the effectiveness of programmatic ad targeting will soon become significantly hindered.
Fortunately, it’s not all bad news.
Direct deals have always been more lucrative for publishers, and in many cases, more efficient for reaching certain advertising objectives.
There are already some strategies available that can help publishers and advertisers shift away from their heavy reliance on programmatic ads.
For instance, self-serve advertising platforms have become a popular option for allowing advertisers to create their own ad campaigns directly through publisher owned web properties - allowing both parties to reap the benefits of direct media buying with alleviated sales friction.
Additionally, contextual advertising solutions are flipping the tables on traditional targeting techniques by allowing publishers to tag their content, showcasing the types of traffic their web properties naturally attract.
When third-party cookies stop working, contextually tagged websites will allow advertisers to continue programmatically targeting their ads towards certain audiences, based on the tags a publisher has assigned to the pages on their website.
Combined, self-serve advertising and clearly categorized contextual content can create the perfect environment for publishers to capitalize on direct deals more than ever before.
Programmatic Advertising vs Direct Media Buying - Which Is More Effective?
We’ve already covered the advantages and disadvantages of each media buying method, so which one ends up being more effective?
In reality, both publishers and advertisers almost always end up using a mix of both techniques in their ad serving strategy.
Traditionally, programmatic advertising has been the more popular option out of the two due to its convenience and effectiveness at serving ads at scale - making it arguably the more “effective” option overall.
However, with the upcoming privacy changes to prepare for, this may not always be the case.
While it’s unlikely that programmatic’s popularity will drop for some time to come, publishers and advertisers may find that direct media buying techniques become more effective for accomplishing their objectives in a post-cookie environment.
If you’re interested in exploring ad serving tools that support both programmatic and direct media buying arrangements, you’re in the right place.
The AdButler team has over two decades of experience in providing and configuring ad serving solutions for both publishers and advertisers.
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