As Programmatic Gains Traction With Marketers, Publishers Require More Information And Sophisticated Tools To Thrive

1. A Forrester Consulting
Thought Leadership Paper
Commissioned By Index Exchange
November 2014
Greater Transparency Is
Critical To Programmatic
Success For Publishers
As Programmatic Gains Traction With
Marketers, Publishers Require More
Information And Sophisticated Tools
To Thrive

2. Table Of Contents
Executive Summary ...........................................................................................1
Programmatic Is Gaining Traction...................................................................2
Lack Of Transparency Creates Obstacles Across The Ecosystem ............4
Publishers Have Scarce Insights And Resources.........................................5
What Transparency Looks Like For Publishers.............................................5
Key Recommendations .....................................................................................6
Appendix A: Methodology ................................................................................7
Appendix B: Supplemental Material ................................................................7
ABOUT FORRESTER CONSULTING
Forrester Consulting provides independent and objective research-based
consulting to help leaders succeed in their organizations. Ranging in scope from a
short strategy session to custom projects, Forrester’s Consulting services connect
you directly with research analysts who apply expert insight to your specific
business challenges. For more information, visit forrester.com/consulting.
© 2014, Forrester Research, Inc. All rights reserved. Unauthorized reproduction is strictly prohibited.
Information is based on best available resources. Opinions reflect judgment at the time and are subject to
change. Forrester®
, Technographics®
, Forrester Wave, RoleView, TechRadar, and Total Economic Impact
are trademarks of Forrester Research, Inc. All other trademarks are the property of their respective
companies. For additional information, go to www.forrester.com. [1-RLDZKD]

3. 1
Executive Summary
In the 20 years since the first banner ad ran, the vast
majority of ad tech innovation has been on behalf of
advertisers, leaving publishers scrambling to keep up. Key
among these innovations is programmatic buying, the
stated buying process preference today among highly
influential first-mover advertisers with large budgets. Smart
publishers equipped with the right tools and information, and
the bandwidth to take advantage of them, have an
opportunity to thrive in programmatic environments.
Identifying the right tools and accessing the pertinent
information remain a challenge.
In July 2014, Index Exchange commissioned Forrester
Consulting to evaluate the state of programmatic selling
among publishers. Forrester developed a hypothesis that
tested the assertion that the lack of transparency in
programmatic environments and the sophistication of buyer
systems limit publishers’ ability to monetize their inventory to
their greatest advantage.
In conducting 13 in-depth interviews with senior publishing
executives responsible for generating revenue through ad
sales, Forrester found that these companies are keenly
aware of the challenges that the lack of transparency forces
upon them and the toll it takes on their revenues, marketer
performance, and the ecosystem as a whole.
KEY FINDINGS
Forrester’s study yielded four key findings:
› Lack of transparency costs publishers much-needed
revenue. Marketers judge campaign success or lack
thereof based on publisher performance against a set of
criteria. They typically don’t share those criteria with the
publisher. Without that essential insight, publishers cannot
adjust campaign execution strategies to achieve the
necessary goals, which often results in diminished
performance. And the result of that is lower CPMs the
next time around.
› Lack of transparency also results in less than optimal
performance for marketers. Marketers set out to be as
effective and efficient as possible. They aim for success
with every initiative. But because they deny publishers’
critical insight into campaign goals that would influence
execution strategies, the result is often
underperformance, which does not serve the marketers’
best interests.
› Transparency is in the best interests of marketers and
publishers alike. When publishers are armed with
complete knowledge of marketer goals, they can adjust
ad campaign execution strategies to deliver the best
performance to marketers.
› The rapid pace of ad tech innovation presents an
ongoing challenge to publishers to stay informed and
abreast of the latest trends and developments. A
regular diet of industry-related reading, conference
attendance, and conversation with vendors/partners helps
executives across the spectrum stay up to date.

4. 2
Programmatic Is Gaining Traction
Publishers that want to thrive today and in the future need to
grasp and maximize the opportunities that programmatic
selling offers because, as a share of total digital advertising,
programmatic is growing at a significant pace. Forrester
predicts that the digital advertising market is expected to
experience an 11% compounded annual growth rate
between 2014 and 2019. Display advertising will keep pace
with that overall market growth rate and account for close to
$38 billion in 2019 (see Figure 1).
Today, programmatic accounts for 27% of display on a
volume basis; it is expected that by 2019, 40% will be
exchange-sold, which includes both the open auction and
the full array of private marketplace transactions (see Figure
2).
There are several diverse drivers of this evolving landscape,
but all are grounded in an emerging understanding of the
changing patterns of consumers. Today’s “always-on”
consumers expect to access information and entertainment
on their preferred devices whenever they choose. This
presents an opportunity for publishers to create content that
attracts consumers, and to enable the context in which
marketers engage with their customers and prospects
across platforms. Drivers of programmatic include:
› Clarity on consumer expectations, leading to device-
specific experiences. Consumers have a variety of
devices at their disposal and use them for specific
purposes. And they are migrating away from desktops in
favor of mobile devices. Publishers and marketers alike
are gaining insights into consumer expectations on a
device-specific basis and creating products that answer
consumer needs and interests.
› Brand budget migration to digital. Brand marketers
have been reluctant to commit to digital, preferring instead
to focus on television. But the enhanced targeting
capabilities that digital offers and the continuing decline of
television’s scale will combine to convince brand
marketers to allocate greater portions of their advertising
budgets to digital and, within that, to programmatic.
› The promise of personalized messaging. The ability to
apply data to media buying and selling to achieve true
one-to-one, personalized marketing that simply cannot be
executed in any nondigital platform will compel marketers
to experiment, test, and learn, and will inevitably lead to
greater digital ad budgets.
FIGURE 1
Digital Marketing In The US Is Expected To Grow By 12% By 2019
Note: all numbers rounded down
Source: “US Digital Marketing Forecast, 2014 To 2019,” Forrester Research, Inc., November 4, 2014
Digital
marketing
spend
(US$ millions)
Social media
Email marketing
Display
advertising
Search marketing
Total
2014 2015 2016 2017 2018 2019 CAGR
Social media
Display advertising
Search marketing
$7,518 $9,736 $11,724 $13,511 $15,359 $17,342
$19,801 $23,680 $27,916 $31,281 $34,477 $37,574
$27,899 $31,622 $34,995 $38,470 $41,890 $45,386
18%
8%
13%
10%
12%$57,285 $67,305 $77,101 $85,928 $94,593 $103,370
Percentage of all
ad spend
24% 27% 30% 32% 33% 35%
Email marketing $2,067 $2,266 $2,466 $2,665 $2,865 $3,067

5. 3
PUBLISHERS VIEW THEIR AD SALES BUSINESSES
HOLISTICALLY
Publishers, who once considered real-time bidding as
synonymous with a race to the bottom and business-
endangering erosion of CPMs, are today viewing their
inventory holistically. They are examining their markets,
mining their first-party data, packaging and pricing their
inventory to create scarcity, taking advantage of private
marketplace opportunities, and generally designing their
offerings to maximize their revenue.
The majority follow a classic waterfall strategy, reaping the
bulk of their revenue through direct sales, which can
account for as little as 40% and as much as 80% of overall
inventory at high-demand times of the year (like the fourth
quarter). They then create private marketplace opportunities
and use real-time bidding to monetize the remainder. Some
more innovative publishers, through conversations with their
advertising customers and observation of their unique
business patterns, have identified anomalies in their
customer base and are testing alternative structures in
response to their particular marketplace demands. The
lesson learned is that while classic patterns have emerged
because they suit the needs of most marketplaces, smart
publishers are keenly observing their market structures and
responding appropriately.
“Allocation is determined by three
core things: The first is sponsorships
with 100% share of voice and
guaranteed audience targeting. The
second is private marketplace, where
the choosiest get the most choice at a
high CPM. And the third is standard
direct, driven by fill in the
marketplace.”
— Programmatic sales executive at a national publisher
TAP INTO NEW OPPORTUNITIES
Publishers that have evolved and position programmatic as
part of their overall advertising offerings find that it opens up
new streams of previously untapped revenue. One local
market publishing executive explained: “It’s tapping into
resources that we don’t usually have access to. It’s a
tremendous opportunity to access a demand source outside
our area that sees appeal in our audience.”
Another elaborated on the concept that programmatic
expands their advertising customer base: “Yes, definitely.
We’re working with a number of advertisers that have never
worked with us directly for content reasons or audience
FIGURE 2
Exchange-Traded Spending Will Account For 40% Of Desktop Online Display By 2019
Source: “Forrester Research Online Display Advertising Forecast, 2014 To 2019 (US), Q3 2014 Update,” Forrester Research, Inc., September 19, 2014
$0
$2,000
$4,000
$6,000
$8,000
$10,000
0%
8%
16%
24%
32%
40%
Exchange-traded spending
As a percentage of desktop
online displayadvertising
2010 2011 2012 2013 2014(F) 2015(F) 2016(F) 2017(F) 2018(F) 2019(F)

6. 4
reasons, but who have had success through programmatic
channels.”
“We’re stealing dollars from search.”
— National publishing executive
A third was even more specific: “Prior to programmatic, we
relied more on whether our ad partners had a good month.
Ad networks were all about the effectiveness of sales
teams. It drove our success. Now, allocating across
exchanges, we have access to all of buyers’ budgets; the
environment has opened up. CPMs have been heading up
since 2012 because we have access to that demand.”
AND DEPLOY MULTIPLE RESOURCES
Multiple platforms and a variety of offerings create
complexity. Publishers are finding it best to move beyond
reliance on a single sell-side platform (SSP) or exchange,
and are contracting with multiple vendors, setting up
competitive environments, and tapping into the widest
possible array of demand sources. And that is the case for
both national and local market publishers.
As one local market publishing executive explained: “We’re
big believers that the bulk of the opportunity is local direct.
That being said, [multiple vendors offer us] a significant
opportunity to optimize revenue. We have a plan, so we’re
putting [all the vendors] on the table and examining the flow.
It’s a trial and error approach. I let performance dictate how I
turn the dials up and down.”
But while complexity and variety may create remunerative
competitive environments, they do come with a price, as
one executive with a national publisher noted. “Variety
creates obstacles in workflow and setup that can outweigh
the benefits,” he explained.
Lack Of Transparency Creates
Obstacles Across The Ecosystem
The past five years, since the inception of real-time bidding,
have been a whirlwind of innovation, the vast majority of
which has been on behalf of the buyer and at the expense
of the seller. The result has been an asymmetry of
information favoring the buy side over the sell side, which, in
turn, has resulted in a lack of transparency in programmatic
trading that does not serve the best purposes of either the
buyer or the seller. Publishers charged with executing ad
campaigns without full knowledge of the campaign’s goals
are denied the opportunity to manipulate execution strategy
to deliver optimum performance to the buyer. Buyers punish
underperforming publishers by paying the lowest possible
CPM, costing publishers much-needed revenue. And
marketers watch as campaigns fail to achieve their
maximum results.
Some publishers adopt a philosophical approach, grateful
for the business they have. A senior executive explained: “I
am 70% comfortable with what transparency we have.
Thirty percent not knowing what they bid . . . there are some
key pieces still left out. I think it’s improving, but we still have
a long way to go. As a publisher there are still a lot of things
I want to know.”
“The demand side has way more
information. They have a bazooka
and we have a knife.”
— Senior national-level publishing executive
Others are more frustrated that the lack of trust and
transparency results in an inability on the part of publishers
to contribute with data and/or strategy to the delivery of
successful campaigns. When asked whether buyers and
platforms were transparent, this publishing executive took a
more militant stand: “Absolutely not! For targeting, any buy-
side transactions, we never know what they are doing. They
blame us when they can’t see. It’s easier for them to get
data rather than pay us to include what they want in our
targets. We’d all have an easier time if they would just tell us
what they are looking for.”
“If we don’t perform and we really
don’t know why, we aren’t given an
opportunity to improve packages or
targeting.”
— National publishing executive
There are some elements of the ecosystem that may
actually benefit from the transparency asymmetry,
according to publishers polled. But that era may be coming

7. 5
to an end as the influx of brand dollars exerts a positive
influence, according to one national publisher: “Trading
desks benefit from a lack of transparency. But brands are
starting to demand specifics as to what they are actually
buying.”
Publishers Have Scarce Insights
And Resources
Specifics are hard to come by, even when it comes to
staying informed and up to speed on what’s new in the
market, what’s working and what isn’t, and who’s enjoying
success and who isn’t. Publishers find that they are on their
own when it comes to staying informed. One publisher
explained it this way: “A lot of it is reading and staying up to
date. With my title, a lot of ad tech vendors come my way.
I’d say 90% of the time, I learn a little with every
conversation. I pass on information as I get it.”
Vendors that have risen to partner status and are endowed
with a view across a broad swath of the ecosystem should
be a wealth of information, and they should share this
information freely with their publisher clients. However,
publishers report that, more often than not, that isn’t the
case. While the vendors have the information and insight,
they aren’t sharing it proactively. One publishing executive
described the situation this way: “I pride myself at trying to
be informed. And I’m a computer scientist, so I can dive
deep. Unfortunately, I don’t get enough from my partners. At
a meeting last week, I said, ‘You are not doing a good job of
keeping us informed about your technology, never mind the
rest of the ecosystem.’ I don’t think they owe me anything,
but they kind of owe it to themselves to keep me better
informed. “[They could provide me with] new pricing
technologies or something else that might help me optimize
revenue.” Since optimizing publisher revenue is in the best
interests of vendors that operate on a rev-share basis, the
lack of information sharing remains a mystery.
What Transparency Looks Like For
Publishers
What would transparency look like from a publisher’s
perspective? How would it change behavior and, more
importantly, results?
The publishers Forrester spoke with all asserted that they
are as transparent as necessary, offering up all the
information “an agency might require.” One publishing
executive described what would be most helpful: “As a
seller, I’m looking for transparency on the buy side. The
more I can see what an advertiser is doing, the better I can
make decisions around how to manage our inventory.”
Another explained that transparency around campaign
goals could change how publishers conduct the campaign.
“It’s in the interest of both sides to share as much
information as they can. The buyer needs to know if they
can reach their audience. And the publisher needs to know
they can offer the right thing.”
“If people showed their hand more, we
could work together to find the right
match. It opens up doors to talk about
other opportunities to work with the
buyer. To get creative. To get them to
be more of a partner.”
— Local market publishing executive
And still another noted: “We, as a publisher, are being as
transparent as we can be. It depends on what they’re
showing us. There needs to be better transparency in the
middle so both sides understand how to work together
better.”
But it’s not just the publishers that are penalized. One
publisher noted that he’d be happy to offer financial
incentives, if only he had some insight into who would
benefit: “I would naturally give a [big buyer] a discount, but
I’m shooting in the dark. The lack of transparency is hurting
them and me. It’s a missed opportunity for everyone,
advertisers included.”
The bottom line, according to another publisher, is that the
lack of transparency affects advertiser bottom lines: “If they
shared more, they might get a better ROI.”
So why doesn’t it happen? What prevents open sharing of
information? The publishers Forrester spoke with have clear
opinions. One explained: “It starts with the buyer but is
largely agency-focused. They operate behind closed doors
and have added layers. Agencies control the dollars and
need to make the market more comfortable. If they don’t, I
believe demand-side platforms (DSPs) will start to take
more in-house.”

8. 6
Key Recommendations
Change is inevitable. The black box approach to the process of buying and selling digital advertising is a vicious circle
of suspicion and distrust and is not serving the best interests of either advertisers or publishers. The lack of
transparency on the part of buyers means that the publisher is ill-equipped to adjust campaign strategy to deliver the
best results to advertisers. The result is inefficiency and a lower ROI. The lack of transparency costs publishers money
because they’re judged and can charge on the basis of their effectiveness in delivering results to advertisers. Without
the necessary upfront targeting and goal information, publishers don’t have the necessary tools to tailor campaigns
and drive success for their advertisers and for themselves. The ecosystem suffers because inefficiencies and even
suspicion abound.
All participants need to decide if they will be change agents or obstruct the path to the future. Will they embrace
transparency or cling to the old ways that benefit only a few at best? When brand marketers invest in digital at a
significant level, and there are few ad tech participants who aren’t eagerly awaiting those brand budgets, they will
impose their expectations of transparency across the ecosystem. The winners will be those participants who have led
the way to a clean and well-lit digital advertising environment. Take these steps and you will be in the vanguard:
› Publishers: Reach out and build relationships on a one-to-one basis with your marketers. Overcoming
distrust requires face-to-face conversations with those marketers who are or could become your best customers.
Make sure that your salespeople are knowledgeable and can discuss the pros and cons of transparency, and
then charge them with converting your customers into full-transparency advocates.
› Marketers: Insist that your targeting criteria and KPIs are shared with your vendors and publishers. You
may meet resistance along the way, but it is in the best interests of the success of your ad campaigns and your
overall ROI that your targeting and campaign KPIs are shared with all your publishing partners. They will use that
information to customize their execution strategies to deliver the best results.
› Publisher vendors: Aggregate the insights you amass across your practice and all that you hear and
learn in your transactions across the ecosystem, and share it with your clients. It’s in your best interests
that your publisher clients conduct their business in the smartest possible fashion and maximize their revenues.
They will be better equipped to make informed decisions about pricing, partnering, and new product development
if you help to keep them fully up to speed and on top of industry innovation, trends, and taboos. Admit it: You
haven’t been very good at sharing up until now. Change your ways and reap the rewards.
› Marketer vendors and agencies: Abandon resistance. Recognize the inevitable, adjust your business
practices, and enforce transparency that will lead to greater success for your marketer clients. Their satisfaction
will build their allegiance to your services, and you will find yourself on the right side of ad tech history.

9. 7
Appendix A: Methodology
In this study, Forrester interviewed 13 digital content provider organizations in the US to evaluate publishers’ views on
transparency in programmatic. Survey participants included decision-makers in digital publishing and programmatic selling
for digital. Questions provided to the participants asked basic background questions about their digital inventory, how they
manage and sell it, what SSP vendors they work with, and their view on transparency in programmatic. The study began in
August 2014 and was completed in October 2014.
Appendix B: Supplemental Material
RELATED FORRESTER RESEARCH
“US Digital Marketing Forecast, 2014 To 2019,” Forrester Research, Inc., November 4, 2014
“Programmatic Selling Drives Publishers’ Revenues,” Forrester Research, Inc., October 15, 2014
“The Digital Media Buying Playbook,” Forrester Research, Inc.