Four Myths About Programmatic OOH That Every Media Owner Should Ponder

Programmatic OOH continues to rapidly gain adoption, driven by a myriad of benefits for both buyers and sellers. On the demand side, programmatic allows marketers to easily access the entire universe of OOH supply with unprecedented automation and flexibility, leverage advanced targeting capabilities, measure business outcomes across the funnel, and unify management of OOH with other programmatic channels. On the supply side, programmatic enables OOH publishers to tap into significant incremental revenue streams via turnkey integrations, with full control over demand and pricing. It’s no wonder the pace of programmatic OOH growth is mirroring the historical trend seen in other channels such as online and mobile.

But as with any new innovation, misconceptions abound. This article lays out four myths that we have seen OOH media owners struggle with when it comes to programmatic, as well as the data that we see from Place Exchange’s vantage point as a supply-side platform (SSP) that dispels each myth. In addition, since many myths can trace their origin to some distorted experience of the real world, we offer some insight into why each myth has come about.

MYTH #1: Programmatic just cannibalizes existing media owner sales

The facts: The majority of spend we see in Place Exchange comes from digital advertising budgets (which represent nearly 70% of all ad spend in the US) and not from traditional OOH budgets (which represent about 3-4% of total US ad spend). Our media owner partners confirm that these “omnichannel” buys are generally not buys that their direct sales teams have visibility into. They are new money coming into the OOH ecosystem.

Where did the myth come from? Perhaps from the fact that the OOH specialist agencies who manage a large share of traditional OOH budgets are also actively embracing programmatic, looking to leverage greater efficiency, flexibility, and data-driven targeting and measurement for their clients. Buyers are always looking to embrace new technologies that can improve performance, and sellers must do the same. Historical OOH budgets are not entitlements, and media owners must keep pace with innovation to maintain and grow share.

It is also important to keep in mind that some SSPs also operate their own OOH DSPs that compete with omnichannel DSPs, making it harder for them to tap into new, omnichannel budgets. Media owners relying on those platforms may see an even greater share of spend coming from traditional OOH buyers, amplifying the perception of cannibalization.

MYTH #2: Programmatic will drive down pricing

The facts: Since we’ve been in business, the CPMs (cost per 1,000 impressions) we’ve seen for OOH inventory in Place Exchange have been consistently equal to or greater than direct-sold CPMs (we publish these twice annually in our Programmatic Out of Home Trends Report). Perhaps the best-kept secret about OOH media is that it is inexpensive compared to other channels, especially when layering in the benefits of buying programmatically. There is simply no reason why OOH media transacted programmatically should be any cheaper than direct-sold, and in our experience, it isn’t.

Where did the myth come from? Unfortunately, some platforms in the space — especially those that play both sides of a transaction as an SSP and a DSP — have the ability to engage in non-transparent arbitrage. Imagine if a buyer makes a $10 CPM bid for inventory, but the platform in the middle communicates a $3 CPM bid to the media owner, pocketing the $7 difference, with neither the buyer nor the seller having visibility into the true economics. The media owner may be happy to realize a $3 CPM for inventory that would otherwise be unsold, but this scenario destroys potential value for both the buyer and seller.

The ANA, which has long called for full transparency in the programmatic media chain, has cited PwC estimates that more than 70% of a typical advertiser’s budget does not result in media that reaches the end consumer. Simply put, platforms that guarantee sellers full end-to-end transparency around every single transaction deliver higher CPMs to sellers. Those engaging in opaque arbitrage, hidden fees, and markups will deliver much lower CPMs.

MYTH #3: Programmatic is just for “remnant” inventory that wasn’t sold direct

The facts: Media owners working with Place Exchange typically make most if not all of their inventory available programmatically. That includes premium inventory from Times Square to spectacular billboards to prime retail, transit, and entertainment locations. As noted above, programmatic can deliver new demand at equal or higher prices than direct sales. So it only makes sense that media owners, with full control over demand and pricing, would allow the market to compete to let the highest prices win and maximize revenue.

Where did the myth come from? Likely from a combination of myths 1 & 2. If you think programmatic will cannibalize your existing sales at lower prices, it wouldn’t make sense to use it other than as a fallback to soak up perishable inventory at the last minute that would otherwise go unsold. The sooner a media owner can find a partner to bust myths 1 & 2, the sooner they will learn that, in reality, media owners are price makers and not price takers when it comes to programmatic, and that making all inventory available programmatically will greatly enhance overall revenues and yield.

MYTH #4: Programmatic buyers don’t care about OOH formats and venues, and just want “bulk impressions”

The facts: 97% of transactions on Place Exchange occur via private deals, whereby the buyer knows exactly what inventory they are buying, and from which media owner. Programmatic OOH campaigns involve careful up-front planning to determine the media that will best reach the advertiser’s audiences and achieve their business objectives. Far from blind bulk buying of impressions, it is a curated process where quality media rises to the top.

Where did the myth come from? This is, unfortunately, also an outgrowth of myth #2, specifically coming from sellers’ experiences with arbitraging platforms that play both sides. Imagine a budget handed by an advertiser or agency over to a middleman platform to run as they see fit, with no obligation to provide transparency to either side into the actual economics. The middleman is actually incentivized to buy the cheapest inventory they can, allowing them to pocket the majority of the budget while still delivering the required volume of impressions. The agency or advertiser is none the wiser, but they were robbed of the opportunity to deliver a high-performing OOH campaign across high-quality inventory.

Fortunately, this scenario simply doesn’t exist when working with platforms that provide full transparency into every transaction. In a transparent environment, buyers are highly attuned to the quality of the inventory and how it aligns with their goals, and sellers have control over each transaction and knowledge of the true economics behind every impression.

Busting the Myths

Our advice to media owners is simple: Demand to know the full budget behind every campaign, the true bid behind every auction, and all fees taken by the programmatic platforms you work with. Demand that for every type of transaction, including open auction transactions and campaigns operated by a platform (rather than directly by an agency or advertiser), as those are where the likelihood of non-transparent practices — that led to these myths in the first place — is greatest.

Working with fully transparent platform partners, many media owners have seen firsthand how these myths have been busted and have reaped ample rewards. Without transparency, it’s easy to get lost in the myths, which can lead to confusion, hesitation, and even viewing the programmatic channel as a threat.

At the end of the day, programmatic is simply a technological pipe to more demand — a pipe that can offer both buyers and sellers compelling and powerful benefits. Media owners should have no less transparency and control over programmatic than they do over any other sales channel. With that transparency comes the ability to realize the full potential of a powerful sales channel that will continue to drive growth for our industry.