Arvind Kesh

Contributing Writer | adbeat.com

4 min read

Programmatic Ads vs. Direct Buying: Which to choose?

Programmatic buying and direct buying are different methods used to buy display-advertisement inventory. When display advertisement became a thing in the 1990s, advertisers bought ad space in bulk by striking deals with publishing websites. This expensive method is called direct buying.

Things have changed. These days, advertisers can use software to purchase ad space with the help of data as opposed to traditional manual methods like human negotiation, manual insertion orders, etc. This method is called programmatic advertising and can be broadly categorized into two types:

  • RTB ( real-time bidding): RTB is an auction-based model in which each ad impression is bought individually.
  • Programmatic direct: Programmatic direct is very similar to direct buying when it comes to purchasing ad space. After the purchase, the entire campaign works with the help of technology and data.

Today, we’ll compare RTB, direct buying, and programmatic direct so that you get a better idea of what to go for.

Which method is user-friendly?

Direct buying is prone to miscommunication and human errors, while programmatic has no such issues. Also, running multiple ad campaigns and modifying existing campaigns can be a very tedious process in the case of direct-sold. The same tasks can even take days for nonprogrammatic.

That is because direct buying is a completely manual process. Everything from contacting the publisher to the final negotiation, and even after, involves tons of emails and phone calls. Things are much simpler in programmatic.

In programmatic RTB, almost everything is automated, though some manual interaction is required only for ad-quality review, billing, and technical support. Programmatic direct is a bit similar to direct buying in terms of acquiring the ad space. But if there are no negotiations, it’s as seamless as RTB. Also, everything after buying the ad space works with the help of technology.

Which method gives better targeting options?

Programmatic gives you insane targeting options that are simply not possible with direct buying.

In direct-buy display advertising, ad impressions are presold in bulk. You are basically betting on the publisher to attract a certain kind of audience that you are interested in. For example, if you want to sell tech-related stuff, it would make a lot of sense to run ads on TechCrunch.

In programmatic, you can hypertarget your customers. For example, you can target iPhone users who use the Gmail app and bought frozen meat in the last 30 days. This kind of targeting gives you a lot of power. For example, The Economist was able to achieve an ROI of 10:1 thanks to such hypertargeting:

The Economist Ad

Is my ad delivery assured?

Your ad delivery can be assured in both direct buying and programmatic direct.

In these two cases, the ad inventory is presold at a fixed CPM, and future delivery is promised. When it comes to programmatic RTB, auctions happen in real time, thus there is a possibility that your ad might not be delivered at all if you bid too low.

The slightly unpredictable nature of RTB can put off some advertisers. But then, as each impression is sold separately, you can easily increase your bid in real time and increase your chances of getting displayed. But this would also mean that you need to be constantly on your toes.

How volatile is the cost per impression?

The cost per impression will be uniform when it comes to direct buying and programmatic direct; that’s not the case with programmatic RTB.

In the first two cases, bulk ad inventories are sold at once. There is a prefixed CPM and thus no room for change.

For programmatic RTB, each impression can have a different price based on how you decide to bid for each. You have the opportunity to bid high for a particular impression that you deem very important. Usually, the eCPM (effective CPM) is calculated to understand the net CPM over tons of individual impressions.

What’s the barrier to entry?

The barrier to entry for all three—direct buying, programmatic direct, and programmatic RTB—is pretty high compared with ad networks. When it comes to direct buying and programmatic buying, you have to commit to buying a minimum amount of ad space, which can sometimes mean six-figure contracts. For example, a single ad space in the business section of the Los Angeles Times can cost up to $1,080 per day.

Advertisers using programmatic RTB might be paying per impression, but the total ad spend is always huge. That’s because they require a demand-side platform (DSP) like MediaMath, which helps them automate the whole process. For the free maintenance of the DSP, your ad spend should be at least $5,000–$10,000 per month.

Which method offers better ROI?

Programmatic advertising is great for long-term ROI when compared with direct buying. The advantage of using software is that it learns and gets better with time. This ensures maximum ROI in the future. That is why nearly 70% of B2B marketers decided to increase their programmatic ad spend in 2017.

When it comes to direct buying, there is an element of luck. There is no guarantee of conversions. Moreover, you also don’t get much insight into the type of people viewing your ads when compared with programmatic. It is very similar to traditional TV advertising.

Final thoughts: Which one should you go for?

Direct buying and programmatic direct is perfect if you have a set budget and want to ensure complete spend of it. While direct buying is fine if you’re just starting out, once you expand to more than one publisher, programmatic direct is the way to go. You get to see everything under one dashboard and can also play with more data.

If you’re not looking for assured ad placements in specific publishers, programmatic RTB is a good choice. However, here everything depends on your bidding. If you are just starting out, check out our guide on programmatic advertising to get a better overview.

Arvind Kesh

Contributing Writer | adbeat.com

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