Media Buying · Media Planning · Programmatic Direct · Programmatic Premium

The Four Keys to Programmatic Direct Success

SuccessI was recently talking to the Chief Digital Officer of a large agency that does a lot of digital media buying. He has been working closely with a number of software providers to standardize his operations on a media management system. Getting all his vendor information, order management, and billing information has been a huge undertaking. Apparently, half the battle at an agency is getting paid (getting paid in less than 120 days is the other half)!

We were talking about some of the upfront processes behind putting together a media plan, which were mostly manual: putting the actual plan together in Excel, trading e-mails back and forth with vendors in the RFP process, trafficking ad tags, collecting screenshots, etc. Wouldn’t it be valuable if computers could streamline much of that work, and connect buyers and sellers together more seamlessly?

He agreed that it would truly transform his business, but accepted much of that manual work as part of the cost of doing business (paid for, incidentally, by his clients). The real way to transform his business, he said, was to answer the following questions. If “programmatic direct” technologies simply nailed down these four things, the payoff would be enormous. I paraphrase his answers below:

How much should I buy?  “I basically know that I am going to have AOL, Yahoo, Facebook, and GDN on almost every plan. For my more vertical clients, in auto for example, I also know 95% of the sites and networks I am going to be on. Sure, I use research tools to validate those recommendations to my clients, but media discovery is not a huge pain point. Where we struggle is answering the question of media investment allocation. Should I spend 30% of my budget with Facebook? 40%? I really don’t know, and often don’t have the right mix until the campaign is nearly over. It would be great to have some business intelligence built into a system that recommended my guaranteed media mix programmatically.”

What should I pay? “I also have a pretty good idea what things cost, thanks to the RFP process. When you RFP 40 publishers in a vertical, you find out pretty quickly what your best pricing for guaranteed media is, and you can leverage that information to insure you are giving your clients competitive rates. Unfortunately, it feels like we go through this exercise every time on every RFP. We have the historical pricing data, but it’s all over the place in spreadsheets—and often in the planner’s heads. It would be great if this information was in the same place, and if a system could make pricing recommendations up front in the process, which would also shorten the negotiation process with publishers.

Why am I recommending this?  “The biggest thing we struggle with is justifying our media choices to our clients. When we present a recommendation, often we are asking our client to invest hundreds of thousands or even millions in an individual vendor. My deck has to have more in it than basic audience information. I have to talk about the media’s ability to perform and hit certain KPIs for the price. It would be really useful to have recommendations come with some metrics on how such placements performed historically, or even some data on how other, similar, investments moved the needle in the past. Right now, getting to that data is nearly impossible, and usual resides with your senior planner in the account. The other obvious problem with that is employee turnover. My best planners, along with everything they’ve learned over two or three years walk out the door along with my data and relationships. The right system should store all of that institutional knowledge.”

You need that when? “The other thing a system can help with is speed to market. Publishers hate it when we ask them for huge, innovative proposals—in 24 hours. The reason we do that is because our clients ask us for amazing and innovative media recommendations in 48 hours. The pressure to deliver plans is huge, and you can easily lose large chunks of business by reacting to such requests too slowly. What programmatic direct technology may be able to help with is giving planners access to tools that compress the pre-planning process down, and enable agencies to deliver thoughtful, data-backed recommendations out fast—and at scale.”

Especially for larger agencies, programmatic direct technology has to be more than just workflow efficiency tools and automating the insertion order. (Although that has to come first). The next generation of programmatic efficiency or guaranteed media has to include serious business intelligence tools that can solve the “how” while simultaneously answering “why.”

[This post orginally appeared in AdExchanger on 2.11.14]

Advertising Agencies · Programmatic Direct · Programmatic Premium · Publishing

The Transactional RFP Business is Dying

Image“80 percent of the publishers getting an RFP don’t even stand a chance.” – Doug Weaver, Upstream Group

Direct mail is an amazing thing. It costs something like $750 CPM to put a glossy catalogue in the mail, but somehow direct marketers make those numbers work. Mailing lists are constantly optimized to make sure they hit the right houses, fresh lists acquired to create new demand, and non-performing lists ruthlessly culled if they don’t meet certain KPIs. Direct marketers actually can tell just how much money a mailing will produce in sales.

Contrast that with a banner campaign, in which “good” performance means a 0.05% click-through rate, 40% non-viewable inventory, and fairly dim transparency. Some of the greatest companies in the space, newly public and boasting hundreds of millions in run rates, are still challenged to justify spending to their marketing clients. Thankfully, last click attribution hasn’t gone anywhere. I recently overheard a marketer at a conference saying that 70% of clicks on her last campaign with a big, popular “platform” came from Yahoo Mail subdomains. It doesn’t take a genius to figure out that the marketer’s e-mail program was creating sales, but the fancy platform’s banners were making sure they were “last viewed” before the purchase.

So, how to get display advertising more like direct mail?

It must start with procurement. Marketers should be able to tell how much the media costs, who will view it, and who to buy it from. Unfortunately, unlike almost every other form of media on the planet, that doesn’t exist today for the digital marketer. Marketers can name their price in the programmatic RTB channel, but if they want access to directly sold inventory (making up as much of 70% of all digital media spend today), they need to purchase via the “transactional RFP” process.

I don’t know whose fault it was, but publishers didn’t help themselves when they decided to hide pricing information from agencies. With an endless supply of inventory (some 5 trillion impressions per month, according to Eric Picard), banner sales has always been a bit more art than science. Buy 1,000,000 homepage impressions at $20 CPM, and I’ll throw in 5,000,000 “ROS” impressions. Presto! You get a reasonable eCPM of just over three bucks. Everybody’s happy….except for publishers. In the long run, such practices devalue their inventory.

Media prices are still opaque in the transactional RFP channel, and agencies like it that way. In order to get basic pricing and availability information, they send out “requests for proposals,” which send publisher sales teams scrambling. According to recent research by Digiday and Adslot, publishers spend an average of 1,600 man hours a month on RFPs, and 18% of their revenue churning through RFPs that have an average “stick rate” of about 25% (campaigns that will deliver the contracted amount).  Ouch! A lot can happen in 1,600 hours.

Peter Naylor, the IAB’s Publisher in Residence, speaking to publishers at a recent conference summed it up nicely when he said, “Agencies take the information they receive in RFP’s to get a view of the market.”  In other words, agencies get access to all the pricing information, and publishers are left to wonder who they are competing with—and at what price.

Despite this, agencies would also like to see this procurement methodology perish also. They want to buy impressions at scale, control the price they pay, and be able to “out-clause” on demand. Programmatic RTB offers all of the above—but only on lower classes of inventory. New programmatic direct technologies seem to be the answer to the problem of transactional RFPs. Whether they leverage existing RTB pipes (private deals) or are API-driven solutions connected to the publisher’s ad server, more and more higher-class inventory is starting to find its way to programmatic channels. That’s a good thing. Sure, there will still be RFPs for sponsorships, but sooner or later, all commoditized banner inventory (including “mobile” and video) will likely be purchased programmatically.

The question for publishers is whether or not they are going to take a part in deciding what the next stage of digital media procurement looks like. Will it still be driven by the demand side, or can publishers have a bigger seat at the table, and help build the process by which they expose and sell their “premium” inventory?

The RFP is dying, and publishers may applaud the last breaths of an over complex and inefficient process. But they should be careful of what may take its place.

[Originally publisher in AdExchanger on 1.2.14]

Advertising Agencies · Media Buying · Media Planning · Programmatic Direct · Programmatic Premium

The Nuts and Bolts of Programmatic Direct

ImageAn interview with Econsultancy’s Monica Savut and me, on the recently published programmatic direct whitepaper.

Econsultancy: Why now? In other words, why has this “programmatic direct” trend been on the radar lately? What’s driving all of the conversation the space?

Chris O’Hara: It’s really something my boss Joe Pych calls the “Sutton Pivot,” inspired by the famous thief Willie Sutton who robbed banks “because that’s where the money was.” Over 70% of digital display dollars are transacted in a very manual way today. Despite all the LUMAscape hype over RTB, most of the digital money still gets transacted through the request-for-proposal (RFP) process. Everybody wants a piece of the action, hence the “Sutton pivot,” in which all the ad tech companies are running to try and provide automation technology for directly sold deals. It’s actually a good thing. Today’s process for buying guaranteed digital media can take over 40 steps and suck up over 10% of media budgets just in man hours.

Q: The concept of “programmatic direct” or “programmatic premium” is a relatively new phenomenon, but it’s really just about automating the buying process for digital media, right? What makes it different from the automation happening in real-time bidding? What’s the difference?

A: Real-time bidding, or what we are starting to call “programmatic RTB” has been a real boon to the industry. We now have a set of “pipes” which connect demand- and supply-side platforms that make the digital media procurement process hugely efficient. Today’s systems are modern, cloud-based, scalable, and super low latency. We are seeing the type of liquidity and deal flow that happens in systems like NYSE and NASDAQ. That said, 70% of buying that happens in digital is neither “real time” nor “bidded.” It’s just two organizations trying to make a deal. You need different technology to enable that kind of guaranteed transaction, and marketers are starting to wonder why they are paying so much in transactional costs to access higher classes of digital inventory. RTB proved that efficiency can happen in digital, and now marketers want faster and more efficient access to more than just remnant inventory.

Q: You say that agencies have a “perverse incentive” to embrace efficiency in buying. It would seem counter to everything that is happening in the programmatic space at the moment. How do demand side business models need to adapt for programmatic direct to become a reality?

A: Agencies make money when plans take 400 hours to create. Manually trafficking line items in an ad server, and cutting and pasting publisher insertion orders pays the bills for agencies who charge on a “cost-plus” basis. Digital media agencies have been operating that way for years: hire cheap, work the “23 year old media planner” hard, and earn a mark-up on their labor. Nothing wrong with work-for hire, but the RTB phenomenon—and marketers experience with easy-to-use programmatic platforms in search and social marketing—have changed the dynamic entirely. Agencies have to do more than heavy lifting now to survive. They need to hire fewer, smarter, people to leverage systems—and more great creative and analytical people to make sure they are driving digital messages that inspire—and meet KPIs. The days of getting paid to traffic ads in MediaVisor are over. That’s a big time cultural change for agencies. A lot of shops won’t survive the transition, and that’s a good thing.

Q: What are some of the things—beyond cultural change—that need to happen to create this new era of programmatic direct efficiency? What’s missing?

A: We tend to think of digital as this highly advanced form of marketing, but it’s really the most backwards. Direct mail costs something like $750 per thousand (CPM) to put a catalog in the mail—and marketers like LL Bean make that number work consistently. Digital struggles to make $10 CPA goals work on $5 products. That’s really lame. Part of the problem is the lack of basic information available to the marketer. If I want to buy a direct mail list, I can find out how many folks in the list live in San Francisco, and have purchased a product by credit card in the last month. I can find out how much it costs to by that list—and who sells it. Until recently digital media has had no such directory. Not only that, but the industry lacks even the most basic set of electronic ordering protocols, that can enable systems to understand each other in electronic transactions. The good news is that more work has occurred on this front in the last two weeks than has happened in the 5 years the IAB has been promoting “eBusiness” initiatives. Look for some significant announcements in this area soon.

Q: Who benefits most from adopting programmatic direct strategies? Publishers? Agencies? The marketers themselves? Are there winners and losers if this new tactic sees adoption at scale?

A: It’s easy to say that “everyone’s a winner” with programmatic direct adoption at scale, but that’s not entirely true. I think publishers are the big winners, because they are starting to take some control back over the procurement process from the demand side. I think longer tail sites that depend on RTB revenue streams will continue to be able to get access to demand at scale through RTB systems, and still get their AdSense money. But what really excites me is seeing high quality publishers that own high quality real estate on category specific properties finally get more control over pricing and partner selection. This will be even more critical as publishers expand their offerings cross-channel, into video. Publishers need a programmatic way to sell their higher classes of inventory, and not be so dependent on prevailing procurement methodologies which overvalues biddable, commoditized inventory. Agencies who value higher class inventory also win, of course.

Q: Right now, the conversation (and action) seems limited to display media. How does “programmatic direct” impact cross-channel buying?

A: Everything digital will be bought “programmatically” in 5 years. Some will be RTB display, and some will be display, native, and video inventory purchased through “programmatic direct” platforms. Addressable television, digital out-of-home (DOOH), and other channels will also factor in. Once we can get a true unique identifier that makes sense from a technology and privacy standpoint (big question, obviously), then marketers will really be living in programmatic heaven.

Q: You’ve been working in the “programmatic direct” space for a long time (staring at TRAFFIQ in 2008), and yet there seems to be fairly little adoption of the concept among agencies. Are you crazy? Why keep doing it? Will there be a big payoff in the end?

A: Change is really hard, especially when the pace of change is as rapid as in digital ad technology. When I was on the publisher sales side, there was always something that bothered me about getting a $200,000 insertion order for digital advertising through a fax machine. That stuff still happens today. Ultimately, I so believe that true process automation will happen in digital media, and that we can free people in the space to stop doing a lot of manual grunt work, and start being truly creative. I was watching a documentary the other night, and an engineer was talking about why he loved his job. He said he spent the last three years building a bridge that eliminated 10 minutes from the commute for some 20,000 people a day. “I saved people over 50,000 days of productivity last year,” the engineer explained, adding, “I wonder what those people are doing with all that extra time.”

There are a lot of young people who go into an agency thinking that they are going to help make the next kick-ass viral ad, but they end up working until 10 o’clock at night pasting line items into an ad server. I really think that, if we can change that, great things will happen.

[Originally published 12/5/2013 on the Econsultancy blog]

Digital Display · Programmatic Direct · Programmatic Premium · Publishing

Programmatic Direct is in the Top of the Second Inning

ScoreboardLately, I have been working on a whitepaper about the “programmatic direct” phenomenon. Part of the research involved surveying a bunch of influential people in the space, and asking them where they thought this new buying methodology was in terms of adoption. Their answers kind of surprised me.

If “programmatic direct” was a baseball game, we are in the top of the second inning.

The game has basically just started, and a few balls have been put into play, but the action is just getting started—and the big sluggers have yet to step up to the plate. If you are a regular AdExchanger reader, you would be justified in thinking that programmatic direct was quickly gaining steam by progressive agencies and publishers. After all, there has been a good deal of hype surrounding the idea of enabling programmatic access to higher classes of inventory, and it seems like almost every ad technology player in the display space is getting into the game.

Sure, some real innovations are happening in programmatic RTB that are enabling private marketplace transactions. Initiation-only auctions and fixed rate deals inside of exchanges are only the tip of the iceberg, though. New web-based technology and advanced ad server APIs are starting to provide real process automation—the tools that will make it easier to buy and sell the 70% of inventory currently procured through the “transactional RFP” process.

However, there are a few major things that need to happen before “programmatic direct” can really take hold:

A Directory: It may sound strange, but one of the biggest failings of digital media has been the lack of a directory for buyers. In direct mail, you can look up how many people get the L.L. Bean mailing list, add all kinds of criteria (males of a certain age that have purchased with a credit card in the past three months), find out exactly what it costs, and who to buy it from. No such thing exists in digital media. Hence, the RFP process, where buyers have to go through hoops just to get a sense of pricing and availability. This simple act of discovery adds time and complexity to every transaction. Today’s programmatic direct systems are being built from the ground up—starting with good information, and also with dynamic pricing and availability information thanks to API connections to DFP and other publisher ad servers.

Standards for Electronic Ordering: Another obvious thing that needs to happen before real process automation can happen in digital is that a set of standards have to be agreed upon. The IAB has known this since 2008, but five years later the “eBusiness Task Force” (now called the “Digital Automation Task Force”) seems no closer to its original mandate. Its stated mission: Updating the XML schema and implementation testing for the electronic delivery of digital advertising business document.” Those documents include Requests for Proposals (RFPs), insertion orders (IOs), and invoices—documents that must be standardized in order for adoption of programmatic direct buying to occur at scale. However, there is urgency like never before to get such standards implemented, and a source close to the action says that “we will see more movement in the next nine months in standards and protocols than has happened in ten years.” Let’s hope so. The wide adoption of a common set of standards and protocols opens up the door to the electronic IO—the key to achieving scale in programmatic direct.

Culture Change: While a directory can be created and standards adopted with lots of hard work, those things are actually easier than the real key to programmatic direct adoption: culture change among agencies and publishers.  Agencies must leverage technology to empower the “23 year old media planner” and give them a reason beyond sneaker parties to go to work. Technology will unleash their creativity and get them focused on solving real problems for clients. Likewise, publishers need to escape the “$200,000 a year salesman,” with his accompanying high T&E and schmoozy selling style. Publishers need data-driven sellers that understand how to drive programmatic adoption, and can sell based on the new “media investment” paradigm happening at agencies—understanding tactically how to spread digital dollars across a broad portfolio of channels. Agencies now they cannot remain stuck with the current cheap labor model. Publishers understand that they cannot keep their higher classes of inventory outside of programmatic channels. Change is hard, but it’s already here.

About a year ago, I said that 2013 would be the year of programmatic direct. It turns out that 2013 has been the year of programmatic direct hype, and a ton of valuable behind-the-scenes work on the technologies that will drive it in the future. But unlike the perennial “year of mobile” programmatic direct will become a reality quickly if some of the above building blocks come together.

[This post originally appeared in AdExchanger].

Digital Display · Programmatic Direct · Programmatic Premium

Programmatic Direct isn’t Just about Efficiency

When clients call, speed matters.
When clients call, speed matters.

When you are selling anything, it’s really easy to get caught up in pitching the benefits of your product, and ad technology is no different. Some of today’s new programmatic direct marketing solutions promise to change the very nature of how media buyers and sellers spend their time. Demand side systems are focusing on replacing Excel and e-mail with web-based, centralized systems that take the manual grunt work out of buying. Supply-side systems are tying into publisher ad servers to help create more streamlined access to inventory, without the hassles of secure it via paper insertion orders. While it’s easy to focus on all of the amazing efficiency benefits offered by today’s web-based solutions, it’s also critical to remember to ask your client what’s important to them.

On a recent sales call to a large agency, my old-school sales training kicked in. After showing off all of the neat bells and whistles of my software, I asked the company’s Chief Digital Officer why my ad technology was interesting to his agency. What he said was simple, but illustrative: “Our clients don’t ever come to us and ask what kind of tools we are using to do our jobs. They really couldn’t care less. But they do come to us and ask for huge media recommendations, due within several hours. And they definitely want to know why we are recommending what we are recommending.”

This made a lot of sense. Nobody wants to see the sausage get made, but it had better taste good once it’s cooked. Over the course of our conversation, I took away a few key nuggets that would be valuable for any technology company looking to sell programmatic solutions to marketers and publishers alike.

Clients Care about “Why,” not “How”

This statement is true for both agencies and publishers. An agency’s big client doesn’t care what tools the agency uses to create and execute its media plans (as long as the cost is transparent and within reason), but it does want to understand the overall strategy, rationale behind its vendor choices, and (of course) obtain measureable results. On the publisher side, the clients acquiring the inventory don’t care what kind of tags or datasets produce a targetable audience—they just want the publisher’s “auto intenders” to see ads for their cars.

In both cases, the “how” doesn’t matter—nor should it. Programmatic done right hides the way the sausage is made, and offers simple controls over complex processes. The best companies in the space will be able to turn a sound engineer’s control board (thousands of knobs and switches) into Avid’s Pro Tools. This is particularly important when trying to scale an organization; it is the difference between trying to turn dozens of people into technicians and having a technical system that everyone can use with little training. Companies with the right, scalable technology can grow…and grow fast.

For my agency client, being able to tell his client how he selected the programs on his media recommendation was critical. Using software that could help his planning team make choices based on past performance, alignment with demographic data, or even the client’s first party data was the key. When you have 40 20-something media planners spending millions of dollars, data-driven guidelines are essential, along with the platform to generate them. Likewise, on the publishing side, publishers need to tell their agency clients why certain programs were recommended, and have a systematic way to put together inventory packages that will perform well enough to avoid the dreaded out-clause.

Speed Matters

Another thing the agency CDO told me was how important speed was. They say efficiency doesn’t sell, but when your client is looking for a thoughtful media recommendation in two hours, being able to deliver a plan you can justify means having the tools to move fast, and move smartly. “It’s hilarious to me that our clients ask us for a completely unique, groundbreaking idea—at 6:30 PM—and expect something the next day.” This rolls down the hill to publishers, who are ultimately asked to help contribute to such plans on even shorter notice. Although there’s no cure for overly demanding clients, there is starting to be new programmatic direct solutions that help take some of the viscosity out of the transactional RFP funnel, increasing the speed to which proposals can come to market.

No Data, No Strategic Advantage

“Big Data” is all the rage, but even relatively small data can be the key to success when it comes to digital media buying and selling. “We know that every plan is going to have Facebook, AOL, and Yahoo on it. Access to their inventory and securing it is not the problem,” the agency CDO told me. “The real problem is, how do I know how much to allocate to each? What should my media channel mix be? That’s what we struggle with. Oftentimes, it comes down to gut instinct.”

Right now, data that can help with making those allocations is hidden all over the place: Excel-based media plans and performance reports, ad serving data that’s hard to report on, audience verification data from measurement tools, and in the brains of media supervisors. This structured data, centralized in the right place, can mean the difference between creating accessible insights—or being just another 10 gigabytes sitting on a computer’s hard drive. Agencies should be able to query all of the data available to them programmatically, and offer media choices chosen from algorithms that get smarter every time a campaign is run. Likewise, publishers should be able to systematically recommend inventory packages based on past performance, demographic and contextual relevance—and even whether or not they were re-purchased over time.

Programmatic direct solutions are starting to bring the type of data-driven efficiency once only found in RTB to both advertisers and inventory owners, creating a more “bionic” dynamic, where humans leverage technology to be better, faster, and smarter.

[This article originally appeared in AdExchanger on 10.28.13]

Media Buying · Media Planning · Programmatic Premium

Stealing Some Of Microsoft’s 76% Ad Tech Market Share

downloadWhen you think of advertising technology in the display space, the first names you’re likely to think of are Google, PubMatic, Adobe, and AppNexus. But Microsoft? Not really top of mind, unless you are thinking of its disastrous aQuantive acquisition in 2007. Sure, every now and then MSFT will pick up the odd Rapt or Yammer, but is it really having a huge impact in the ad tech space? Even if you’re a regular AdExchanger reader, you’d be justified in thinking it’s not.

But you’d be 100% wrong.

Microsoft has been quietly running the inner ad-technology workings of digital display since the first banner ad was purchased in 1995. According to some recent research, the company’s ad-planning software boasts an amazing 76% market share among agency media planners. MediaVisor ranks a distant second with a measly 9.7 Almost nine in 10 planners who use Excel spend more than an hour a day using its software, while almost 35% use it for more than four hours per day[CO1] . [l2]

That software is called Microsoft Excel.

Released in 1985 (originally for Macintosh), Excel is nearly three decades old and has been powering digital-media planning since its inception. Combined with Outlook, Word, and PowerPoint in the Office suite of products, Microsoft tools have been central to the digital-media planning process for a long time. Planners plan in Excel, publishers pitch in Excel and PowerPoint, contracts are made in Word, and everything is communicated via Outlook. And then there are the billing and reconciliation tasks that occur inside spreadsheets. Nobody ever seems to wonder why more than $6 billion in digital display media transactions (representing nearly 70% of all ads sold) use Microsoft tools and the occasional fax machine.

While innovative companies have challenged the dominance of these systems in the past, early efforts fizzled. The complexities of modern digital-media planning, combined with the reluctance of agency planners to change their behavior, have hindered innovation. Looking at past and current “systems of record” for media buying, it’s no wonder planners are scared of change. If you have ever seen legacy agency operating systems, you wonder if a single dollar was ever spent on user experience or user interface design.

Why Programmatic-Direct Planners Use Excel

As an ad technology “evangelist” of sorts, it is my job to show agencies the future of digital-media planning. This is starting to be called programmatic buying, a term which encompasses both “programmatic direct” buying, which targets the transactional RFP business that accounts for the bulk – 70% – of digital display ads, and “programmatic RTB,” which accounts for the impression-by-impression purchases that represent another $2.4 billion, or 25[CO3] % of the pie.

Companies like MediaMath and AppNexus have made the latter category wildly efficient. Buyers don’t use Excel to create an audience-buying campaign across exchange inventory. Instead, they log into a web-based RTB platform.

For automating guaranteed display buys, though, Excel has become the default for media planners, even though if it doesn’t have the features of many web-based systems available. For example, Excel doesn’t track your changes. When planners change something, multiple files are created, and it’s easy for two people to work on a plan at the same time, duplicating work and botching it up. Excel isn’t Sarbanes-Oxley compliant, either. Agencies end up with thousands of Excel sheets on hard drives and servers, and a complicated file versioning and access system that makes replicating and tracking plans really difficult. Excel doesn’t integrate easily with other systems. At the file level, Excel is great. You can import and export Excel files into almost anything. But Excel can’t send out an RFP, or accept an order. Excel can’t automatically set an ad placement inside an ad server like DFA or MediaMind, or get Comscore updates. Excel is amazingly flexible, but it wasn’t built for media planning.

Today, the average digital-media plan costs nearly $40,000 to produce and takes as many as 42 steps to complete. That’s why, according to a recent Digiday survey, more than two thirds of agency employees will leave their jobs within the next two years. Digital-media planning should be fun and innovative, and young, smart people should want to be spending their time influencing how major brands leverage new technologies and media outlets to sell their products.

The reality is that young media planners are finding their days are filled with reconciling monthly invoices and ad delivery numbers. Have you noticed media planners’ eyes glazing over during your latest “lunch and learn?” That’s today’s young agency employees’ way of calling bullshit on ad tech. Our technology has been making their lives harder and their hours longer, rather than ushering in a new era of efficiency and performance.

How We Can Finally Beat Excel

I believe that dynamic is rapidly changing now. Buy-side technologies from innovative software companies, combined with offerings from sell-side players that are plugging into publisher ad servers are creating a programmatic future by building web-based, easy to use, and extensible platforms.Here are a few reasons these types of systems will start to get adoption:

  • Pushback on agency pricing models: Big agencies have been getting paid by the hour for years, but their clients are starting to push back on cost-plus pricing schemes. After exposure to self-service platforms and programmatic buying, they are getting used to seeing a larger percentage of their money applied to the media, and that trend is only likely to continue. Brand advertisers are demanding more efficiency in direct-to-publisher buys, and that means agencies must start to embrace programmatic direct technologies.
  • User interfaces and user experiences are improving: Young people plan media. They are used to really cool web-based technologies, such as Snapchat and Twitter. Today’s platforms not only centralize workflow and data, but increasingly come with something even more critical to gaining user adoption: a nice interface. When we start building tools that people want to use and a user experience that maps to the tasks being performed online, adoption will quickly increase.
  • Prevalence of APIs: Today’s platforms are being built in an open, extensible way that enables linkage with other systems. Since there are so many phases in modern digital media planning (research, planning, buying, ad serving, reporting, billing) it makes sense for platforms to be able to talk to one another. While some legacy APIs are not the best, they are getting better. Servers-to-server integrations make a lot more sense than 23-year-old planners updating spreadsheets. As David Kenny, CEO of The Weather Company, once remarked, “If you are using people to do the work of machines, you are already irrelevant .”

Because of these factors, I expect 2013 will be the year that programmatic direct buying changes from a fun concept for a planners’ “lunch and learn” to a reality. It’s time for us to finally get cracking on stealing some of Microsoft’s ad technology market share.

[This post was originally pushed in AdExchanger on 4-23-13]

Data Management Platform · Programmatic Premium

A Publisher’s History Of Programmatic Media

EvolutionIt’s hard to argue that the banner ad era has been good to publishers. After a brief initial period in which banner inventory matched audience availability, publishers enjoyed double-digit CPMs and advertisers enjoyed unique access to a valuable audience of online “early adopters.” Prognosticators heralded a new golden era of publishing, and predicted the eventual death of print. Fifteen years later, print is barely breathing, but publishers are still awaiting a “golden era” where the promise of online media matches its potential. What happened on the long road of publisher monetization, and how did we arrive in this new “programmatic” era?

It didn’t take long after HotWired sold the first banner ad to AT&T for other online properties to start making banner ads part of every page they put onto the Web. Not immune to Adam Smith’s economic theory, banner CPMs lowered as impression availability rose. Suddenly, publishers were in the single digits for their “ROS” inventory, and had plenty of impressions left over every month. Smart technology companies like Tacoda saw an opportunity to aggregate this unsold inventory, and sell it based on behavioral and contextual signals they could collect. Thus, the Network Era was born. Because networks understood publishers’ audiences better than the publishers did, they were able to sell ads at a $5 CPM and keep $4 of it. That was a great business for a very long time, but is now coming to an end.

While not creating tremendous value for publishers, the Network Era did manage to pave the way for real time bidding, and the start of the Programmatic Era. Hundreds of millions of cookies, combined with a wealth of third-party data on individuals, presented a truly unique opportunity to separate audiences from the sites the visited, and enable marketers to buy one impression at a time. This was great for companies like Right Media, who aggregated these cookies into giant exchanges. For advertisers, being able to find the “auto intender” in the 5 trillion-impression haystack of the Web meant new performance and efficiency. For publishers, this was another way to further segregate audience from the valuable content they created. The DSP Era ensured that only the inventory that was hardest to monetize found its way into popular exchanges. Publishers ran up to a dozen tags at a time, and let SSPs decide which bids to accept. Average CPMs plunged.

Over the last several years, it seems like publishers — at least those with enough truly premium inventory — are fighting back. Sellers have brought programmatic efficiencies in two ways: implementing DMP technology to manage their real programmatic (RTB) channel; and leveraging programmatic direct (sometimes call “programmatic premium”) technologies to bring efficiencies to the way they hand-sell their guaranteed inventory. Let’s look at both:

  • Programmatic/RTB: Leveraging today’s DMP technology means not having to rely on third-parties to identify and segment audiences. Publishers have been trying to take more control of their audiences from day one. The smartest networks (Turn, Lotame) saw this happening years ago and opened up their capabilities to publishers, giving them the power and control to sell their own audiences. With the ability to segment and expand audiences, along with new analytics capabilities, publishers were able to capture back the lion’s share of revenue, previously lost to Kawaja-map companies via disintermediation.
  • Programmatic Direct: Although 80% of the conversation in publisher monetization has revolved around the type of data-driven audience buying furnished by LUMAscape companies, 80% of the display advertising spending has been happening in a very non-real-time way. Despite building enough tech to RTB-enable the globe, most publishers are selling their premium inventory one RFP at a time, and doing it with Microsoft Excel spreadsheets, PowerPoints, PDFs, and even fax machines. RTB companies are trying to pivot their technology to help publishers bring efficiency to selling premium inventory through private exchanges. Other supply-side companies (like iSocket, ShinyAds, and AdSlot) are giving publishers the tools to sell their premium ads (at premium prices) without bidding—and without an insertion order. On the demand side, companies like Centro, Facilitate, MediaOcean, and NextMark (disclosure: I work there) are trying to build systems that make planning and buying more systematic, and less manual.

As programmatic technology gains broader acceptance among publishers, they will find that they have turned the monetization wheel 180 degrees back in their favor. DMP technology will enable them to segment their audiences for targeting and lookalike modeling on their own sites, as well as manage audience extension programs for their clients via exchanges. They will, in effect, crate a balanced RTB playing field where DSPs and agency trading desks have a lot less pricing control. Programmatic Direct (or, more correctly, “systematic reserved”) technologies will help them expose their premium inventory to selected demand side customers at pre-negotiated prices, and execute deals at scale.

The Programmatic Era for publishers is about bringing power and control back into the hands of inventory owners, where it has always belonged. This will be good for publishers, who will do less to devalue their inventory, as well as advertisers, who will be able to access both channels of publisher inventory with greater efficiency and pricing transparency.

This article originally appeared on 3/14/13 in AdExchanger.

Media Buying · Media Planning · Programmatic Premium

If it’s Not Programmatic Premium, Then what is it?

CountryAndWesternI recently returned from an exciting IAB Annual Leadership Meeting in Phoenix, where a packed Arizona Biltmore resort was host to over 800 digital media luminaries. On the tip of many tongues over a two day session was “programmatic premium,” the term our industry is using to describe the buying of digital media in a more automated way.

One particular “Town Hall” type meeting was particularly spirited, as leaders sparred over what “programmatic” meant, whether or not publishers should be using it, and how agencies were leveraging it. Here is what I heard:

We are calling it the wrong thing. Like it or not, the term “programmatic” is tied to the concept of real time bidding. This is natural, given the fact that the last 5 years in ad tech have largely revolved around DSPs, SSPs, and cookie-level data. This creates a problem because, when you add the word “premium” into the mix, you have a really big disconnect. Most folks don’t really consider the large majority of exchange inventory “premium.” Doug Weaver said we should just call it “process reform,” since we are really talking about removing the friction from an old school sales process that still involves the fax machine. Maybe the term should be “systematic reserved” for deals that happen when guaranteed buying platforms (like NextMark, Centro, and MediaOcean) plug into sell-side systems (like iSocket, AdSlot, and ShinyAds) to enable a frictionless, tagless, IO-less buy. It is early days, but I suspect this may be what people are talking about when they utter the term “programmatic premium.”

Private Exchanges Seem like a Fad. For programmatic premium to take off inside of RTB systems, something like having “Deal ID” and “private exchanges” need to be implemented at scale. Yet, for all of the conversation around programmatic premium, I heard very little about private exchanges, Deal ID, and the like. I really think this is because of publishers enjoy having RTB as a channel for selling lower classes of inventory. They are getting better average CPMs from SSPs than they were getting in the network era, and they can experiment with who gets to look at their various inventory and play with floor pricing—a much higher level of power and control then they recently enjoyed. But do they want to sell the good stuff like this? The answer is no. They do, however, want to find ways to get out of the RFP mill that makes the transactional RFP business they manage so cumbersome and people-heavy. Again, that seems to be in the domain of workflow management tools, rather than existing supply-side platforms. If any of the many publishers at the conference were leveraging private exchanges to sell double-digit CPM inventory to a select group of customers via RTB, we didn’t hear a lot about it.

Agencies Love Programmatic. We heard programmatic perspectives from many major agencies throughout the conference, mostly in bite-sized chunks in networking sessions. When asked whether large agencies had less of an incentive to create efficiency in media planning and buying (since they get paid on a cost-plus basis), some agency practitioners admitted this was true but offered that “times were changing quickly.” Clients, having access to many highly efficient self-service buying platforms for search and display (and some, like Kellogg Company, having their own trading desks) there is a lot less tolerance for large billable hours related to media planning. It makes sense; the easier it is to plan a campaign, the cheaper it should be. Marketers would like a bigger chunk of their money going to the media itself. That said, we also heard that agencies are being pushed hard on meeting KPIs—and that even goes for brand marketers. Meeting those KPIs is easier to manage in a programmatic world, and that means pressure to buy through DSPs, rather than emphasizing guaranteed buys. That means lower prices for publishers, and probably necessitates plugging higher and higher tiers of inventory into RTB systems.

We Got Both Kinds

Like the honkytonk saloon in the Blues Brothers that offers “both kinds of music—country and western,” we have to accept two types of “programmatic premium” right now. The first is the notion of buying real premium inventory inside of today’s RTB systems through private exchanges. The second is the notion of buying reserved inventory in a more systematic way. Both approaches are valid ways in which to create more efficiency, transparency, and pricing control in a market that needs it. We just have to figure out what it’s eventually going to be called.

[This article originally appeared in ClickZ on 3/6/2013]

Data Management Platform · Programmatic Premium

Pubs that Want Reach Extension Need to Own the Programmatic Channel

CaptureShould publishers go beyond the boundaries of their own inventory to sell “reach extension” packages to their clients? Publishers have long struggled with the problem of how to deliver a $100,000 campaign when they only have $90,000 of inventory. Without a strong partner network, the natural answer to that question used to be click arbitrage, an expensive and risky method of campaign fulfillment that often came with less than desirable site visitors.

These days there are several major factors that make reach extension a great opportunity for publishers, rather than a sales mechanism that strays outside their sore realm of expertise.

Publishers with premium inventory sell in three principle ways: Their best inventory is sold in large, customized “tent pole” sales; their standardized premium IAB units are sold through the transactional RFP process; and the rest is sold programmatically, through their remnant daisy chain. They do the first thing really well, especially for big branded advertisers, where they act like a mini creative/media agency to build custom programs. Publishers are also getting much better at the transactional business by leveraging great tools to bring efficiency to RFP response and enabling better demand-side access to their premium inventory (AdSlot, iSocket). The third thing (“remnant”) is the ball publishers continue to fumble, even though enabling an “owned” programmatic channel is getting easier for publishers every day.

Data management is the obvious solution. With the right tools, publishers no longer have to rely on third parties to understand the composition of their audience. The combination of a publisher’s CRM data and site tag data, ingested into one of a dozen amazing DMPs can enable them to segment and target their audience on the fly. Want “auto enthusiasts” on my site? Not only can I sell you a highly creative, customized program and back it up with a large share-of-voice in standard IAB banners within the site section—but now I can find your own customers right on my site…and on Facebook as well.

The last part of that equation (leveraging the client’s first-party CRM data) is where today’s reach extension differs from sending your excess buy to ContextWeb or AudienceScience, as you would in the old days. Now, publishers can find advertisers’ customers within their own site or publisher network and retarget them.  Better yet, pubs can help advertisers put that same first-party data to work on exchanges, including FBX, where match rates (and performance) are high. Really advanced publishers will leverage their DMP to model the audience advertisers are trying to reach, and build a custom lookalike model which can find “alike” audiences within the publisher network itself, or across the exchanges.

Publishers are acting more and more like agencies when it comes to the big premium sales that take multidisciplinary talent to pull off (sales, media, creative, development). Why shouldn’t they act like an agency (or, more specifically, an agency trading desk) when it comes to helping their clients with reach extension goals? If I am a publisher, and my client comes to me looking for the audience I specialize in, I should be able to tell the advertiser how to reach that audience—starting on my own site, but also across the Web in general. The right data management strategy and tools enable publishers to cover all three legs of the buy: sponsorship, transactional, and programmatic.

[This appeared as part of AdMonsters invaluable Audience Extension Playbook, available here.]