Direct vs. Programmatic for Improving FAST Fill Rates and CPMs
FAST and AVOD are struggling to fill inventory and CPMs are sagging in much of the CTV world. Is programmatic the problem or the solution? Is brand or direct advertising better equipped to turn the tide? Would a hybrid strategy work better? Fremantle’s Laura Florence, Roku’s Charlie Goodman, Philo’s Aulden Kaye Yi, and Vevo’s Melissa Sofo debate the best solutions to free streaming’s fill and pricing problems in this clip from Streaming Media Connect 2025.
Is Programmatic the Problem, or Just Not the Solution?
Fremantle SVP Global Channels Laura Florence kicks off the conversation with a dispiriting commentary on the state of FAST advertising and forthrightly places blame.
“On average, we’re seeing fill rates only hover now for available inventory between 20 to 40% across the board from the majority of our partners that we have entrusted to sell the inventory,” she says. “Programmatic, as a fact, is not filling the need right now for our inventory.”
Pointing to Head of Roku Ad Exchange Charlie Goodman, she asks, “What would you say to that?”
Goodman contends that looking for a single, across-the-board solution to the problem, be it programmatic, brand-direct, or something else, is the wrong approach. “As a publisher, I would say, you should have a multi-demand [approach], and it is not all binary,” Goodman says. “I think that if you look at the whole thing, you should have direct brand ads, managed service for sure. If I’ve got [Major League] Baseball, great. Pick up the phone, sell position one, make that via direct. But position two could be PGs [Programmatic Guaranteed]. You could look at PMPs [Private Marketplaces]. There's even open exchange. Or in the case of Fremantle, great, we work with you. We have an ability for you to buy your content within the Roku Channel with supply extension.”
Though Goodman maintains that this diversified approach will deliver the best results, he still considers programmatic a particularly strong option. “You can’t depend on one or the other, but programmatic to me has so many more advantages in that it can drive meaningful success for the advertiser in real time,” he argues. “Not just trying to fill airtime, but actual media outcomes.”
Boosting Sinking CPMs
In full “Well, allow me to retort” mode, Florence turns her attention to pricing, and what she regards as programmatic’s causal relationship with a downward trend in CPMs.
“Currently, with the amount of inventory available on the market, the price has consistently come down for programmatic, to some all-time lows,” she says. “We're seeing that linear audience really migrate to CTV, which is good for all of us, but it is an open challenge right now. Programmatic pricing is the lowest it’s ever been. Even if you’re filling it, you're bringing down the bottom of the market.”
“There’s no question that there’s been a drop in overall effective CPMs if you’re a publisher,” Goodman concedes. “But I don’t think that the way to combat that is to say that it has to be direct and brand ads only. And in fact, as an example, the strategy you can do is to say, ‘Great, here's a CPM for managed service. I'm going to make that a floor.’ I know that optimization and being able to say floor-plus is the number one optimization capability that an advertiser has in a DSP [demand-side platform]. Great. That seems like a great pricing strategy. I think that there's a lot of ways for you to do that and still make the yield. Also, not everything has to be just filling airtime. Video on demand should have collapsible ad units. If you're a distributor like Roku, Philo, et cetera, then there's a lot of ways that you can be able to use that slate for really important messaging as well. I don’t think it has to be just based on fill rate.”
“I would also say I think that the pricing situation is not just a programmatic thing. It’s an ecosystem thing,” argues Philo Head of Advertising Partnerships Aulden Kaye Yi. “I mean, there's a lot of premium inventory out there right now, and it is about showing the value depending on what an advertiser is trying to achieve. And so there are different things like prioritization. So I just think that the concept of the pricing being a programmatic issue—I think that the pricing [issue] is broader than that.”
An Evolution in Valuation
Goodman contends that one reason simple binaries don’t apply to assessing the state of CPMs and fill rates and arriving at a solution for them is that “an evolution” has happened in marketers’ accountability, how campaigns are evaluated, and the kind of responsiveness that’s expected.
“It used to be just about rating points: Who's your audience? What's their gender? What's their age? Great. And then I'm going to do that in a closed loop system on linear and just blast it out and be like, ‘I did a good job for your buy.’ I think what we're seeing now--at least what I'm seeing at Roku--is that a lot of these marketers are being held to accountability on those budgets. I wouldn’t say return on investment, but they’re being held to accountability, in which case, I don’t think you can just call up and lock up a budget. I think that that ability to have real-time responsiveness is something that everybody's holding us accountable to. And I think from there, pricing is pricing, fine, but at the same time, our inventory is even more valuable and impressions are going up.”
“But the pricing is going down because of the bundling,” interjects Vevo VP, US Sales Melissa Sofo. “It’s not all 100 percent premium, and when you prioritize that premium content for direct and for sponsorships, then it’s just basically what's left.”
“But if you look at an entire catalog, you do have tentpoles for sure,” Goodman says. “You have also commoditized licensed content. We have original titles. I think all of those have different pricing based on content profitability, audience scarcity, all of those things. I think that there's a real way to be able to do that. I also think that in programmatic, you shouldn't just have one deal. There should be a PG for certain cases. There should be a separate deal for sports, there should be a separate deal for viral moments. But I think there's a lot of ways to be able to do that, and it should all be based on packaging. I think that for things like direct, et cetera, where technically what makes the most sense is moments of really high concurrency like live sportsm where latency will kill you. That's really bad. Or even the case of something really hyper-targeted. Sometimes see I/Os where I should probably just fly to Seattle and go to a parking lot and put postcards on cars. When they’re that specific, I say direct all day because that’s just something that has to be pre-decision. But for the rest of it, I think everything that you can do in direct minus those limitations, you can confidently do through a variety of programmatic strategies.”
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