Direct vs Programmatic Advertising
In the world of digital advertising, there are two primary ways to buy media: direct and programmatic. While both methods have advantages and disadvantages, understanding their key differences can help advertisers make informed decisions about their campaigns.
In this article, we will explore what programmatic and direct advertising are, their differences, and when to use each approach. We will also discuss the benefits of combining programmatic and direct advertising and why working with a media execution partner can help ensure success. Whether you're a seasoned marketer or just getting started, this article will provide valuable insights into the world of media buying.
What is media buying? According to experts at Pathlabs, it's procuring and purchasing ad space to field media content and ad copy to target users. Media buying is made possible by owners of websites, apps, audio, and video platforms, and even billboards.
This is because they have a ton of space: in the margins, bottom, or top of webpages, before or after videos, on signs by the highway, etc. So, they sell this space to advertisers willing to pay to plug in their content and reach more users.
This ability to buy media space helps advertisers generate traffic to their websites. They can capitalize on the established target audiences who visit and interact with other successful pages and locations.
However, there are many different ways to place a media buy, which is more challenging than one may think. In this article, we will hone in on two specific media buying methods, direct and programmatic, explaining their key differences and how to use them together.
What Is Programmatic vs. Direct in Media Buying?
Direct advertising is a media buying method that some marketers view as old-fashioned: buying media ad space via manual negotiations and transactions.
This means that to place a media buy and plug ad content into a website or other location, the marketing team has to reach out to the ad space vendor, express interest in placing an ad, and negotiate price, timelines, etc.
Marketers commonly use direct advertising when negotiating ad placements for billboards, TV commercials, radio, special events, or even more unique and interactive ad integrations. However, direct buy usually is available for all channels, platforms, and placements, if needed.
Programmatic advertising takes direct advertising and automates it, allowing marketers to plug their campaign info and goals into a programmatic platform. Then, the platform executes the media buying for them, using real-time bidding artificial intelligence and machine learning.
Programmatic vs. Real-Time Bidding
The marketer's programmatic platform is a demand-side platform (DSP), where they plug in their campaign basics: who they are targeting, their primary audience identities, length of campaign, budget, etc. This makes them the publisher.
Then, the demand-side platform taps into digital ad exchange auctions, which connect DSPs with supply-side platforms (SSPs), the platform ad vendors – the publishers– use to sell their ad inventory.
When a user clicks and waits for the ad space vendor's webpage to load, their connected SSP will contact the ad exchange and multiple DSPs, notifying them that a user is trying to access the page.
The DSPs, in real-time, will analyze the target audience alignment and past behaviors of the user and then place a bid on them in the ad exchange based on their assessment. The highest bidder wins, and the SSP fields the winning ad to the user when the page loads.
Marketers use programmatic buying primarily for digital ad mediums like display, search, native, and other digital-based marketing methods.
“Programmatic is great because it allows us to have more control of our targeting parameters and segments. While direct media buying is good for when you want to run on specific inventory, they are very good at putting together deals that are going to work best for your campaign.” - Michael Tonkin, Campaign Analyst
Direct vs. Programmatic Advertising: Key Differences
The main distinguisher between direct and programmatic buying is that direct buying relies on a person to handle the ad placement, while programmatic ads rely on technology.
Under the direct buying model, the marketer identifies optimal ad spaces, reaches out to ad vendors, and handles the negotiation. This can take time, and back-and-fourth negotiation. In addition, the media buy is only as good as the expertise and contacts of the media buyer. However, they have more control over the precise time and location for placing the ad since they are more heavily involved in the placement process.
Alternatively, the programmatic model is strictly tech-based, using real-time bidding, machine learning, and artificial intelligence, all wrapped into a single platform. The marketer plugs in their campaign info and selects the audiences the platform will target – often not personally interacting with a single ad vendor.
Once the marketer activates the campaign, the platform will autonomously analyze and find the most relevant target users. This is great because it promotes accuracy and efficiency in the campaign, but the marketer has no direct control over where and when the platform fields the ad. They have to hope the programmatic platform will execute everything correctly; it often does, but this can require tweaking and optimization.
The extent of personalization also differs between the two methods. Programmatic ads have many data and audience identities marketers can choose to target. At the same time, direct ads may appear on a billboard, in newspapers, or in tv commercials that reach broad audiences. This also complicates chances for attribution. Programmatic platforms can track and provide insightful data into which touchpoints users interacted with before clicking on the programmatic ad. In contrast, direct marketers have fewer ways to track impressions viably.
“Another important difference is that through direct buy the number of impressions are guaranteed, which could be very important for highly competitive targeting. Also, some niche placements could be available through direct buy only. There are many downsides of direct buy. Usually there is a budget minimum, which not all advertisers can afford. Programmatic usually offers variety of targeting options, while direct buy is more limited and each additional layer of targeting often bares additional cost.” - Olga Voevodina, Sr. Campaign Analyst
Lastly, programmatic and direct ads have variable price models. This usually goes by CPM for programmatic platforms, but the bid price varies based on how likely the user will convert. If there is a high conversion rate, the CPM price will likely increase, and vice versa for less desirable conversion rates.
While for direct, the marketer may pay a flat fee and receive a guarantee they will reach a certain number of impressions. Advertisers can also negotiate prices based on the bargaining power and rapport between the marketer and vendor. One challenge that can occur here, is that direct buys may have a minimum, which not all advertisers can afford.
When to Use Programmatic Advertising vs. Direct Buying
Advertisers should consider using programmatic advertising methods in their media buying when they are over capacity, looking for outsourcing options, or wanting to use this tech to speed up their processes and optimization.
Since programmatic platforms work autonomously and harness AI and ML, the marketer handles setup and reviews insights once the campaign is complete. The machine learning in these platforms will also collect campaign performance metrics to optimize and promote more successful future outcomes independently.
In addition, teams with a robust understanding of their target audience should consider programmatic methods. Programmatic platforms can tap into some of the richest audience databases available, meaning they have prebuilt audience identities marketers can choose from. If a marketer has a great scope of their audience, they will more likely select the correct identities that the programmatic technology will best target.
Another signal that a team should harness programmatic buying is if they want to push their audience to complete a specific action. Programmatic is an excellent method for finding those users who are lower in the funnel and need a little push to convert. Consider a user who has browsed a specific business's web page but has yet to make the final purchase. Programmatic platforms pick this past behavior up and can target this user to provide another push until they convert. Compare this to direct methods with more passive billboards or TV commercials.
Now, when should marketers use direct? This is useful when a team's campaign can't reach its target audiences with programmatic methods. For example, if the primary audience identity is an older generation, trying to reach them with display, mobile, audio, video, etc., may not work.
Many marketers use direct ads when they have great connections with ad vendors. Contacts accumulate over the years, and the well-connected marketer may have to pull a few strings to execute their ads in some great spaces.
Lastly, direct is ideal when campaigns have fundamental, expensive, unique ad placement needs and require heavy oversight. Think about businesses trying to advertise during important sporting events or partnering with a large organization to launch an interactive campaign. Their marketing teams spend thousands to millions in ad budgets to execute these ad space buys. Therefore direct may be better to promote more oversight.
Programmatic is best when you want more control of your targeting and CPMs, and direct is great when you want to run on a certain platform or in a specific location. - Michael Tonkin, Campaign Analyst
Media Buying Campaigns: Using Programmatic and Direct Advertising Together
After reading the different use cases for direct and programmatic ads, marketers can maximize their integrated campaign reach when they harness both.
They can go about this a few different ways. The marketing team may utilize programmatic methods as its main driver for lower funnel conversions, while the direct ad placements are to generate general awareness for the business or firm.
Alternatively, the marketing team could emphasize their direct buying methods, spending lots of time negotiating placements and developing connections with ad vendors; while using programmatic methods as supplementary, additional layers to stimulate campaign growth continuously.
At Pathlabs, we have seen many advertisers use programmatic ads to this extent. Examples include bidding on specific target user identities or using methods like dynamic search ads to trap and target a few additional users throughout the campaign.
Finding the right combination of direct and programmatic ads is going to be up to the discretion of the marketer, and they should not think that they have to choose one over the other. Both can be useful and complementary.
Marketers should, however, take causation and know that when they experiment with more mediums and methods, this can put constraints and challenges on executing campaigns in time, meeting ad spend requirements, and adjusting for attribution. So take it slow and have something to justify using either method, whether that be data or market insight.
Why Work With a Media Execution Partner?
Media Execution Partners (MEPs) are full-service digital media teams that partner with agencies or businesses to plan, launch, optimize, and report on advertising campaigns. MEPs combine the best of both worlds between in-house teams and vendors. Working with a media execution partner can provide valuable insights and expertise to help ensure the success of campaigns.
Compared to a standard media buyer who only handles the negotiation and placement of ads, MEPs will do this, in addition to strategizing at the digital tactic level, identifying target audiences, tracking and analyzing data, and campaign optimization. They are a full-service partner for agencies and teams.
Teams should consider working with an MEP when going about their media buying endeavors because they will have access to an entire team of experts and go-getters who know how to navigate direct and programmatic media buying environments. In addition, they have access to some of the most competitive programmatic platforms and direct buy vendors available on the market.
Those who partner with MEPs also benefit from the same campaign performance, if not better. The only difference is that the MEP is the outsourced team with the bandwidth and expertise to guide the campaign, while the in-house team faces less strain and can provide an oversight role.
“We are THE digital advertising professionals. We have run so many different kinds of campaigns that there are always multiple people who know the best strategies and tactics to ensure the campaign goes above and beyond the clients' expectations.” - Michael Tonkin, Campaign Analyst
In Conclusion…
Moving into the future, advertisers see a fork in the road between programmatic and direct marketing methods. Some want to embrace programmatic completely, leaving manual ad buying in the past. At the same time, others want to stick to the direct methods leveraging their contacts and more traditional ad mediums.
At Pathlabs, we argue that there is no fork in the road. These methods are helpful if marketers use them at the right time.
Understanding the differences between direct and programmatic advertising is crucial for marketers to make informed decisions about their media buying strategies. While both methods have their advantages and disadvantages, knowing when to use each approach can lead to successful advertising campaigns. Additionally, combining programmatic and direct advertising can maximize the benefits of both methods. And finally, working with a media execution partner can provide valuable insights and expertise to help ensure the success of your campaigns. With this knowledge, you'll be equipped to make the most effective decisions for your brand and achieve your advertising goals.
Want to learn more about working with MEPs? Contact Pathlabs to see how we can be an extension of your team.
