Speaking at ExchangeWire’s Ad Trading Summit in Stockholm, Petteri Vainikka of Enreach voiced his company’s views on display automation, prerequisites for branding money to enter display, and the displacement of the almighty CTR as display’s dominant performance metric. Here he has assembled the first of a three part series. Continue reading the site over the week to see the final two instalments.

Automation delivers tangible advantages. However, for premium publishers, demand for automation is often decoupled from demand for RTB, or exchange based inventory trading at large. Truth is, automation alone only reduces transaction costs - it does not increase value. Increasing value on the other hand, either by expanding premium inventory (i.e., selling more as premium) or justifying higher pricing for current premium inventory (or both), is where the real business challenge lies.

Most premium publishers are struggling justifying the ‘premiumness’ of their current sold inventory in a marketplace best characterized by excessive over-supply on all display inventory tiers. Proposing exchange based trading as the solution to publishers’ core online monetization challenge is therefore best interpreted as a manifestation of how far apart the interests of intermediaries are from those of struggling premium publishers.

Equally worth understanding is that the future of premium publishers with intimate agency and advertiser relationships relies significantly on these relationships. Understanding the complex marketing challenges of their Top100 advertisers – along with willingness and ability to co-develop innovative and more efficient (display) marketing solutions – is equally vital to the survival of premium publishers as is maintaining investment in superior editorial quality.

Without the latter, there would be no engaging high impact media channels brand advertisers want – and need - to be seen in. Without the former, premium publishers are reduced to selling undifferentiated commodity advertising space and ‘blind clicks.’ In other words, selling eyeballs – with effectiveness measured using the most primitive one dimensional KPI available - instead of minds coupled with rich audience segment response intelligence.

Forward-looking premium publishers are therefore actively spending more time selling to - and engaging with - their key clients, not less. (And this despite a growing amount of planning, sales, campaign optimization, and reporting automation being implemented to support and increase the appeal of direct sales as the preferred buying channel for campaigns that stand out and make a difference.) As it turns out, automation is most applicable and valuable in supporting direct sales, not automating the sales interface.

Understanding automation as part of direct sales also opens up entirely new possibilities for publisher-side innovation to increase the value of display beyond introducing better targeting. Increasing the value of each ad impression’s life-cycle is ultimately what justifying and protecting ‘premiumness’ is all about, and this can be done both before an ad is displayed (targeting) as well as after an ad has been displayed (audience response measurement). While there is plenty of attention directed towards the former, the latter remains largely missing – and it is improving and enriching audience response measurement where premium publishers have a clear advantage to provide unique services and well differentiated advertiser value.

For those who strongly oppose the arguments made above, we encourage you to re-examine how those premium publishers, frequently heralded (intentionally to mislead) as early adopters of the automated channel, are using their private exchanges (note: not open exchanges), and you will find little or no bidding for inventory (the cornerstone of exchange trading and RTB), and instead, considerable emphasis on what can only be described as direct sales automation. This is of course no news to vendors offering private exchanges, but has thus far received remarkably little attention outside vendors’ private sales meetings.

Private exchanges are thus best seen as mechanisms for direct channel sales automation, but unless complemented by value-adding unique publisher data, or enriched audience response measurement and reporting abilities, private exchanges remain limited to reducing transaction costs – they have very little to offer in terms of increasing value, or justifying ‘premiumness'.