Will We See a Digital Direct Resurgence in 2024?
posted by Michael Stoeckel on January 19, 2024
With 2024 well underway, two industry developments of 2023 remain top of mind: MediaMath’s bankruptcy and the latest ANA Programmatic Media Supply Chain Transparency Study. While we may or may not expect to see a reduced reliance on programmatic, these events could signal an opportunity for another strategic shift in ad spend—toward digital direct.
A look back at the rise of programmatic
Even though I started my advertising career working with some of the world's most esteemed publishers, I never agreed with Wenda Harris Millard’s initial analysis of programmatic when she infamously warned that “we must not trade our advertising inventory like pork bellies'' at IAB’s 2008 Annual Meeting.
Perhaps this is because, around this same time, I was first exposed to programmatic—and its vast opportunities—when I encountered a startup called MediaMath. As a math guy who stumbled into digital ad operations and was intrigued by yield optimization—and bored with most other ad ops tasks—MediaMath’s mission was invigorating to me. I went on to lead programmatic teams on both the buy and sell sides while staying close to my Digital Direct base. I learned to appreciate the role both could occupy in the maturing digital advertising market.
While digital ad spending’s rise to surpass print and—eventually, linear TV—was somewhat predictable, the prevalent emphasis on programmatic as a digital ad revenue driver was a bit more of a surprise. Still, from my vantage point, it was clear to see the primary factors for its rise in popularity, especially over Digital Direct:
The opportunity to target audiences at scale was unmatched, especially with the ability to use advertiser-generated and optimized attributes.
Opting for programmatic executions meant bypassing many of Digital Direct’s time-consuming, error-prone, and inefficient manual processes, namely those “Evil I’s”—I/Os and invoices.
While, as an industry and again around 2008, we tried to mimic e-business (EDI) ad guidelines of other mediums, most of our efforts to automate Digital Direct processes were stymied.
Where programmatic falls short, Digital Direct offers opportunity
As we know, supply chain transparency has been the primary pitfall of programmatic—long before any discussion of cookie regulation. The ANA’s Programmatic Media Supply Chain Transparency Study estimated that only 36 cents on every ad dollar actually “reaches the consumer,” leaving “$22 billion in efficiency gains” available for the buy side. So while programmatic offers the opportunity for extreme reach in a digital age—with the average campaign able to run on a staggering 44k websites at a time—the cost of these campaigns—bloated by DSP, SSP, and other vendor fees—does not always translate to value. Compounding cost issues, knowing where your ad will end up is often impossible. Considering additional losses generated by a lack of emphasis on publisher quality and sustainability and data optimization issues, programmatic advertising teams are often left with much to be desired when it is time to calculate return on ad spend.
In many ways, Digital Direct presents inherent solutions to programmatic challenges. While there are levels of scale and cost opportunity that DD cannot reach, and suggesting a wholesale swing away from programmatic would be oversimplistic, there are opportunities to improve ROI by giving this old ad execution method a second look. For one, a great deal of opportunity is available by converting private marketplaces with a manageable volume of large sellers to Digital Direct. Two, automating Digital Direct buys makes it possible to bypass the need for SSPs and DSPs altogether via the migration of Automated Guaranteed programmatic executions.
Third-party cookie deprecation may offer a new starting line
Want to dive deeper?
Let’s talk! Reach out to a member of our expert team to discuss your media team’s goals and how we can help.
But perhaps most importantly, Digital Direct sellers will need to close the audience targeting gap, especially for BYOA or “bring your own audiences” advertisers. Google may help bridge this with Chrome’s upcoming deprecation of third-party cookies. With the parallel rise of data clean rooms, publishers who more intentionally invest in their audience data management will have the opportunity to match with advertisers and develop second-party audiences at scale. Since first-party cookies will, hopefully, exist in perpetuity, such publishers can target advertiser-specific attributes in the same manner they have delivered ads to seller-defined audiences for decades.
Even if you agree with these propositions, we must do a great deal as an industry to make Digital Direct a more manageable digital frontier. Still, over time, it is quite possible to make it as easy to buy Digital Direct media as it currently is for programmatic—without the baggage and with the proper supply chain optimization.
About the Author
Michael Stoeckel
Head of Platform Partnerships, Hudson MX
Michael is a digital advertising executive with diversified business and technology skills at the intersection of media, mathematics, and organizational leadership. With a strong reputation for navigating diverse stakeholder needs and mobilizing resources, Michael has over 3 decades of experience effectively partnering with technology, marketing, and sales teams to drive innovation in disruptive industries. Michael lives on the Jersey Shore with his wife and daughter. He enjoys sports activities like golf, softball, bicycle riding, body surfing, attending athletic and music events, and traveling with friends and family. Connect with Michael here.
