When The New York Times discontinued in February its director of programmatic advertising position, held by Matt Prohaska, partners and advertisers wondered how this would affect the publisher’s programmatic initiatives.
Certainly the Times sought to alter its structure, saying in a statement it was “re-imagining and growing [its] programmatic organization and strategy with a focus on yield optimization and process automation.” Michael Zimbalist, SVP of advertising products and research and development, the statement added, would head this effort.
Political intrigue aside, the Times’ decision to “re-imagine” its programmatic operations less than one year after hiring Prohaska underscores the difficulties many publishers have reconciling the traditional, high-touch way of selling advertising with new-fangled programmatic concepts.
Definitional Divide
Part of the problem is understanding what programmatic is. For many people who work in advertising, “programmatic” is synonymous with real-time bidding (RTB). “Real-time bidding is only one piece of programmatic,” said GroupM’s worldwide director of digital platforms, Jack Smith. “That’s a big mistake that a lot of companies make: They focus on that part of it.”
This is a notion that Alanna Gombert, GM of Condé Nast’s CatalystDesk, wishes she could dispel.
“Across the board in the industry, in any team, be it an agency, publisher or vendor, programmatic is not just bidding,” she said. “Bidding is only a part of the solution.” For instance, a programmatic system can also automate the traditionally paper-heavy invoicing process following a direct sale, or it can be used to single out buyers allowed to purchase exclusive inventory.
These might not seem like difficult concepts for seasoned advertisers to grasp, but there are a couple of inhibiting factors. The first is that because the ad tech industry is in its infancy, it’s full of competing parties – agencies, consultants and vendors – all fighting to distinguish themselves by providing their own unique spin on programmatic. It makes the whole ad tech industry look like a slapdash structure built out of buzzwords.
“When something new hits there are so many different definitions about what it means,” said Patrick Dolan, EVP and COO of the Interactive Advertising Bureau (IAB). “And we find that whenever we start dealing with something like this, we want to establish a baseline of definitions.” As the market matures and vendor consolidation continues, this issue will likely work itself out.
The second inhibitor is more complex in that it centers around human nature: A sales staff with decades of success traditionally selling ad inventory might be reluctant to learn new processes. But this isn’t due solely to stubbornness.
“There is an understandable concern on the part of any media organization that making one’s inventory available on an open exchange, to all buyers, without minimal prices, will cannibalize a premium sales business,” said Michael Smith, VP of revenue platforms and operations at Hearst Magazines Digital Media.
Certainly this has been the Times’ complaint. “Digital advertising continued to experience challenges in the quarter from programmatic buying issues, which led to pressure on ad rates,” said the Times’ CFO James Follo during the company’s Q4 earnings call.
But it’s an argument that Kaylie Smith, head of Seller Cloud at ad tech provider Rubicon Project (which doesn’t have a business relationship with the Times), feels is a bit dated.
“That’s a criticism that speaks to programmatic two or two and a half years ago when programmatic really was a remnant play,” she said. “The industry has changed a lot since then. Now we are monetizing premium formats: video and mobile and rich media.”
Jack Smith of GroupM said the Times’ criticism indicates it has RTB tunnel vision. “The larger component for us are the direct and private deals,” he said. “We’d like nothing better than to have large deals in place and fulfill them using programmatic because it takes a lot of operational burden off of us and off of the publisher too.”
But Rubicon’s Smith also acknowledges the biggest concern among publishers is the sales channel conflict that programmatic can create. As she put it: “How do I develop a strong programmatic business and where does that fit in with my overall sales strategy?”
There is, unfortunately, no one particular way of doing this. “We’ve heard there are ways of compensating the sales teams to make sure the channel conflict is not as painful on them, as far as commissions are concerned,” said the IAB’s Dolan.
While there’s no one-size-fits-all solution, however, it’s notable that both Condé Nast and Hearst Digital Media have positioned their respective programmatic practices as consultancies within the ad sales unit.
Gombert was initially brought into Condé Nast to educate the publisher’s sales team on the programmatic market. As that partnership grew, Gombert’s unit evolved into an in-house consultancy.
“We consult with the corporate sales team and the brand sales team,” she said. “We don’t really clash because we have different comp structures. There’s no competition for client money. The clash comes in when there’s competition. We’re a consulting group so all we do is we help.”
For similar reasons, Hearst Digital Media hired both Smith and CRO Todd Haskell (who came from the Times) last summer.
“What used to be very distinct, black and white differences between our premium organization and the programmatic side of the business has across the industry become increasingly blurred,” Haskell said. “Mike (Smith’s) team of sales engineers [and Hearst’s programmatic unit] work very closely not only in monetizing our inventory in the programmatic marketplace, but also working with our sales people to make the most of our direct relationships, leveraging private exchanges or programmatic technologies or what have you. We look at it as being a tightly woven partnership between the two teams.”
Old Perception On Programmatic At The New York Times?
This brings us back to the Times. Because Matt Prohaska was unavailable for comment and because the publisher wouldn’t offer more than its two-sentence statement, it’s unclear the extent to which programmatic’s role within the Times’ ad sales team has shifted. Media agencies that have worked with the Times haven’t noticed a significant change.
“From what we can tell, in our work with them and in the way we communicate with them as well as a lot of other publishers like them, there hasn’t been a shift in their approach,” said Mac Delaney, SVP at VivaKi, adding that the Times has double-downed on its native ads, which take the form of sponsored content. Delaney believes these units are performing well for the Times, and other sources also indicated that the Times’ sponsored content was lucrative.
If this is accurate, it would explain why the Times seems to have prioritized sponsored content over programmatic, the latter of which Delaney said isn’t totally up and running.
“They don’t feed their inventory into multiple exchanges,” he said. In contrast, Hearst’s inventory is available on Google Ad Exchange, PubMatic, OpenX, a newer exchange called bRealTime run by CPXi and, most recently, Zenovia. “[The Times is] not incredibly progressive in programmatic as of right now,” Delaney said. “But we don’t see any indications they’ll be pulling back or even going in an opposite direction.”
Clues around the Times’ direction exist in a white paper published last year by the IAB called “Building a Programmatic Sales Capability.” Condé Nast’s Gombert chaired the sales group that wrote the paper and Matt Prohaska contributed. The paper taxonomized the various structures of programmatic teams.
In short, the first stage focuses on revenue-based incentives rather than sales volume. The second stage focuses on a separate programmatic sales team, positioned against the direct sales team. And the third stage positions the programmatic team as a consultative unit within a publisher’s ad sales apparatus.
There are two things to account for here: First, the Times’ publicly stated focus on yield-management gels with the first stage of programmatic evolution, as described in the white paper.
Second, Prohaska was brought into The New York Times by Todd Haskell, before Haskell’s migration to Hearst. After Haskell left, Prohaska reported to the Times’ executive vice president of advertising, Meredith Kopit Levien.
Haskell is in the midst of building out a more advanced programmatic vision at Hearst, one whose properties reflect stage three in the IAB white paper. (Haskell said he “did not have a major role” in the development of that paper.)
“In some cases, we might be working with a large client who in addition to doing their direct business is also looking to include a data-enabled programmatic layer to match their user population to our user population, and looking to target them across our platforms,” Haskell said. “In other cases, we might leverage the programmatic technology to make the direct relationship stronger. We get on the call with one of our sales people or one of Mike’s sales engineers and collaborate with the customer in order to bring more effective solutions to bear. That results in more share of the budget for Hearst.”
With Hearst, programmatic is not just about RTB to sell off bottom-of-the-barrel inventory. It’s about using data-driven principles from the programmatic unit and applying them to all areas of ad sales. One can extrapolate that this was Prohaska’s vision for the Times – one that the Times, after Haskell left, no longer shared.
So what’s next for the Times? It seems content to segregate, though not end, its fledgling programmatic practice. In the end, this might be self-defeating. Certainly the new native advertising units the Times is so excited about could benefit with a programmatic data overlay.
Moreover, the Times risks setting itself back as its peers move forward. After all, the three stages of sales team development outlined in the IAB white paper, Gombert said, are evolutionary. She expects more stages will emerge organically as programmatic matures. “This document was a reflection of: ‘Here’s what most of the publishers have done,’” she said. “There isn’t a next step yet. We don’t have that. But we’ll have it, soon.”
But will The New York Times be among them?
