The Great Time Suck

Nearly 70% of the $9 billion display media market still occurs in the “transactional RFP” channel. Source: Arkose Consulting

Nearly 70% of the $9 billion display media market still occurs in the “transactional RFP” channel. Source: Arkose Consulting

Why Publishers Hate the Transactional RFP Business 

I have been thinking about, and trying to solve, agency digital workflow problems since 2008.

Given the complexity of digital media, the variety of creative sizes, millions of ad-supported sites, and dozens of ad servers, analytics platforms, order management and billing tools, it goes without saying that the digital marketing stack has been hard for any agency to put together.

Recent research has tracked the immense level of complexity involved in digital media planning (more than 40 steps) and the tremendous expense involved in creating the actual plan (up to 12% of the media spend). It all adds up to a lot of manual work for which agencies are not willing to pay top dollar, along with frustrated agency employees, overbilled clients and a sea of technology “solution providers” that only seem to add to the complexity.

Media planning on the agency side is a big time suck. Yet some agencies are still getting paid for it, so it’s a problem that is going to get solved when the pressure from agency clients increases to the point of action, which I think we’re just now hitting in 2013.

But who is thinking about the publishers? Despite dozens of amazing supply-side technologies for optimizing programmatic RTB yield, there are only a few providers focused on optimizing the 70% of media dollars that flow through publishers’ transactional RFP channels.

DigiDay and programmatic direct software provider AdSlot and recently studied the transactional costs of RFPs. The sheer numbers stunned me. Here’s what one person can spend on a single RFP:

  • 5.3 hours on pre-planning
  • 4.2 hours on campaign planning
  • 4.0 hours on flighting
  • 5.3 hours on maintenance
  • 3.3 hours post-campaign

That’s more than 22 hours – half a business week – spent creating a single proposal and starting a campaign, which, according to the study, has a less than 35% chance of getting bought and a staggering 25% chance of getting canceled for performance reasons after the campaign begins. The result is a 25% net average win rate. That’s a lot of work, especially when you consider how easy it is for agencies to lob RFP requests over the transom at publishers. On average, publishers spend 18% of revenue just responding to RFPs, which translates to 1,600 man-hours per month, according to the study.

So, we have a situation in which agencies, which are firmly in control of the inventory procurement process, are not only wasting their own time planning media, they are also sustaining a system in which their vendors are wasting numerous hours comporting with it. In short, agencies spray RFPs everywhere, and hungry publishers respond to most. The same six publishers make the plan every year, and a lot of publishers’ emails go unanswered. What a nightmare.

 A Less-Than-Perfect Solution

To combat this absurdity, many publishers have placed large swaths of their mid-premium inventory in exchanges where they realize 10% of their value but avoid paying for 1,600 hours of work. The math isn’t hard if you know how agencies value your inventory. Publishers aren’t stupid. Inventory is their business, and most work very hard creating content to create those impressions. These days, every eyeball has a value. Biddable media has made price discovery somewhat transparent for most[CO1]  inventories. Programmatic RTB is great, but not all publisher inventories[TH2]  are created equal. A small, but highly valuable percentage will never find its way into an SSP.

Publishers will always want to control their premium inventories as long as they receive a greater margin after transactional RFP labor costs. Publishers who actually have strong category positioning, contextual relevance, high-value audience segments and a brand strong enough to offer advertisers a “halo” have to manage their transactional business so they can maintain control over who advertises and what they pay. This looks the year that demand- and supply-side software solutions may finally come together to solve the problem of “transactional RFP” workflow.

A couple of new developments:

Demand-Side Procurement Systems Are Evolving: Facing significant pushback from clients and seeing new and accessible self-service media buying platforms gain share, agencies are looking hard at tools to gain efficiency. Incumbent software systems like Strata and MediaOcean are modernizing, while new, Web-based tools are gaining adoption among the middle market. Suddenly workflow efficiency is all the rage and agencies that spend 70% of their money in the transactional RFP space want a 100% solution.

Supply-Side Direct Sales Systems Are Available: A few years ago, there were lots of networks and marketplaces for publishers to put inventory before going directly into exchanges. Many were more generous than today’s exchanges, but still offered low-digit CPMs and not much control over inventory. Now there are a variety of systems that plug directly into DFP and enable publisher sales teams to have real programmatic control over premium inventory. AdSlot, ShinyAds and iSocket are rapidly gaining adoption from publishers that want another premium channel to leverage, without giving up pricing control. To succeed, these publishers’ systems must be connected to the platforms that manage demand.

Who Put Peanut Butter Into My Chocolate? What is slowly happening, and will continue in a huge way in 2014, is that demand- and supply-side workflow solutions will come together. What does that mean from a practical standpoint? Planning systems will be able to communicate with ad servers, eliminating double entry work; ad servers will be able to communicate with order management and billing systems, eliminating even more duplicative work; and the entire demand side system will be able to communicate orders directly into the publisher workflow systems and ad server.

Simply put: Agencies will be able to create a line item in a media plan, electronically transmit an order to a publisher, which the publisher will electronically accept, and the placement data will be transmitted into the publisher’s ad server. A line item will be planned, and it will begin running on the start date. Wow.

That’s what we are starting to call programmatic direct. It’s a world with a lot less Excel and email, with thousands of hours that won’t get wasted on transactional RFP workflow for agencies and publishers.

What kinds of amazing things can do with all that extra time?


[This post originally appeared in AdExchanger on 11.14.13]

Smarter Video?

smartTVWill the rise of Smart TV Change Where Marketers Place their Ad Dollars?

Recently, the perfect storm of the oncoming football season and a broken TV sent me to Best Buy for a flat screen upgrade. I came home with a Vizio 60-inch “Smart TV.” I was pleasantly surprised by the great audio quality, high-definition picture, and the price (cheap, at $900). However, what really shocked me was its installed “app store.”

As a deeply committed believer in on-demand video, I immediately started enjoying my Amazon Instant Video and Netflix subscriptions—now accessed on a huge, 60-inch HD screen. YouTube videos now were available right from my remote control—as was Pandora, and other streaming music applications. All of the sudden, Verizon FIOS had a lot less to do with what I was watching in my living room.

As someone who is fairly up to date on advertising technology trends, I already realized that cable providers and broadcasters were being disintermediated by new technology—but seeing it in 60 high definition inches really convinced me that we are living in a new world, and the implications for advertisers are huge.

First of all, for those who haven’t played around with one of these new sets, let me tell you what works and doesn’t work at this early stage of the game:

What Works:

  • YouTube: It was simply amazing to watch YouTube videos on the big screen. I queued up some “Key and Peele” from Comedy Central, and some clips of comedian Louis CK and, before I knew it, an hour had gone by (a commercial-free hour, by the way). Smart TV might just take YouTube and other video-specific sites to a whole new level. Now, anyone can “broadcast themselves” right into your home.
  • Amazon Instant Video: It was great to watch all of the Prime content on my big TV, and I began immediately catching up with “Under the Dome” using Amazon’s elegantly designed UI. Amazon is one to watch in this space. They know how to do VOD.
  • Netflix: Again, video on demand was born for the Smart TV application. (I thought I might re-subscribe to binge-view House of Cards!) Watch for more streaming providers to produce more and more original content that can drive subscription sales.
  • Pandora: This one surprised me. With the right audio system, your TV may be the only thing you need to provide great sounding music with endless variety in your home.

What Doesn’t Work:

  •  Twitter: The news feed was quite limited, and at times expanding a tweet to access a link or video content did not work. Plus, do you want your individual Twitter feed broadcast to everyone in your home?
  • Facebook: Same thing as Twitter. I wonder if high-engagement applications—and specifically ones that promise an “embarrassment factor” – will succeed on the TV screen.
  • Skype: This app is convenient for users who depend on it for their primary communication, but typing on the remote (even with a full keypad) can be challenging.
  • Yahoo Fantasy Football: Great for checking stats, but hard to manage your team via the cramped interface and small remote control buttons.

I asked Tom Hespos of Underscore Marketing, who has tackled this topic before, what he thought, and he captured what I was thinking in a few sentences: “It seems pretty evident what’s going to succeed on app-enabled TV sets. Anything that’s ‘lean back’ in nature will likely do well. Things that require engagement or are subject to an embarrassment factor if projected for the whole family to see will not.”

For advertisers, Smart TV will prove challenging. Not only are subscription services like Amazon Instant Video and Netflix ad-free, but the amount of time-shifted and VOD viewing makes available eyeballs a scarce commodity. Look for CPMs for real “appointment viewing” shows such as NFL football and popular hits like Breaking Bad to rise dramatically. In my experience, I did not see any pre- or post-roll ads on YouTube, but they are coming. Recently-public companies like YuMe and Tremor are depending on an aggressive roll-out of interactive video, and their business models are 100% advertising-supported.  CPMs there will be high, considering the relatively low inventory volumes available.

So, if “lean-back” video applications make it more expensive to reach scarcer eyeballs on connected TVs, than what about the interactive social apps? Is there room for more display banner ads on Smart TV? I think the answer is probably yes—but only for so-called “native” advertising, like Twitter’s sponsored posts. Users will be more likely to “lean back” and access their social newsfeeds on connected TV, but will be less likely to post new content from their remote control. That means the tablet will still be in hand during viewing times. It’s early days, but look for more apps that exploit the trend in “double vision” viewing (as reported by Nielsen):

88 percent of tablet owners and 86 percent of smartphone owners said they used their device while watching TV at least once during a 30-day period. For 45 percent of tablet-tapping Americans, using their device while watching TV was a daily event, with 26 percent noting simultaneous TV and tablet use several times a day. U.S. smartphone owners showed similar dual usage of TV with their phones, with 41 percent saying their use their phone at least once a day while tuned in.

Those are big numbers, and it’s hard to see how they will diminish, even as more options are added to television. So, the big question remains: Where should advertisers stick their ads? If you believe that consumers will continue to “lean back” and enjoy Smart TV content just as they watch TV (but with a lot less ads), then the obvious choice for aligning brands with TV content is social media on the tablet. Twitter wins big here. If you believe that networks like YuMe and Tremor can leverage Smart TVs to make access to great HD content in your living room free, then put your money down on those stocks, and hope they find the right advertising model that makes “paying for” content with ad viewing worth it.

Either way, the maturity of connected, smart, app-enabled televisions means less ad inventory for advertisers—and the need for better channels to access fewer, but more addressable, eyeballs.

[This post originally appeared in eMarketingAssociation.com on 9/11/13].