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]

There’s No App for That

Building the Technology Stack for Next Generation Digital Media Buying and Selling

Last week’s IAB Network and Exchanges conference was full of the usual self-congratulatory “use cases” of byzantine, data-based strategies for squeezing conversions from web-based display banners for direct response campaigns—or, alternatively, helping to drive “branded performance,” based on the listener’s preference. I was sitting next to an attorney from a large media company, tasked with making sense of the ad technology business. “I have to be honest,” she said, “I have been looking at this business for 18 months, and I still don’t understand what you people are talking about half the time…and I’m a smart person.”*

Unfortunately, that is the exact sentiment of many media planners, account managers, and marketing managers confronting the vast array of choices in display advertising. Once they figure out the alphabet soup of DSPs, RTB, and (now) DMPs, they start to wonder if they actually want—or need—the technology in question. Agencies are trying to figure out how to be the gatekeepers, and advise their clients on the best technologies and practices to drive branding and performance, but the work required to string together all of the various options makes earning money difficult. Digital media margins are in the toilet right now, and will remain there until agencies can manage all of these disparate systems with efficiency.

In the ad technology business, there’s an “app” for almost any way one wants to find and buy an audience—and many more applications for getting and understanding performance. Unfortunately, there is no operating system that can host all of these and make them work together seamlessly. The ideal scenario would be a world in which marketers could bring the different media applications they want to use into a single, unified system. Call it a “media dashboard” that would enable an agency to create a campaign, plug in their 3rd party research data, ad server of record, segmentation data licenses, audience measurement/verification providers, and billing system and enjoy access and control from a single interface. Down the road, as more mature APIs become available, the OS would enable marketers to “plug in” their mobile ad providers, video DSPs, and bid management tools for search marketing.

Almost everyone agrees that this is the future of the business. A famous media investment banker recently remarked that “there are some very smart companies out there

Are you developing your ad technology for the wrong system?

building a technology stack” to address these very issues, but wondered whether SAP or Oracle will be first to the party. My opinion is that the IBMs and SAPs of the world will let a smaller company fight through the growing pains, and let the preferred standardization technology come to light, before swooping in. The big boys can afford to be patient—and nobody wants to be the guy who backed Betamax. The question now isn’t Betamax or VHS—or even PC vs. Mac. The question is, what will be the operating system of next generation digital media, who will support it, and can an active “ecosystem” be maintained that enables technology companies to develop smart applications for it?

I think the answer is yes—and that the next 12 months will be critical in determining what companies will fit into the increasingly complex landscape and those that fail to meet the task. Not long ago, it was extremely difficult to buy from a variety of networks and exchanges efficiently. In comes AppNexus, and suddenly every Tom, Dick, and Harry has access to over 800 inventory sources, and a great bid management tools to boot. Their OS for real time bidding creates real efficiency for marketers—especially when they go through the pain of integration on your behalf. I know quite a few AppNexus users—but very few who will work with data segments that are not natively available in the platform.  The next great media technologies are going to be built for integration into specific systems, offer APIs that enable “easy” data export and ingestion, and flexible so that others can customize them for specific needs.

Evolution is natural to the technology business. Networks become “platforms”…data providers become “DMPs.” Technology companies will forever try and stick their hand in the middle of the transaction between the demand and the supply side, and shave off a sliver of the pie. But, eventually, evolution becomes “revolution” and the game changes for everyone. We are about to find out who has the capital, talent, and vision to devise the next generation operating system for digital media. That system is going to be the one that every company has to develop an “app” for and support, and that system is going to shape the way digital media is bought and sold for a very long time.

As an ad technology company, it’s time to start figuring out how your technology will fit into the larger puzzle if such an OS becomes standard. Is your technology built for an open system, or does your technology (and, more importantly, business model) only thrive in a closed environment? There are a lot of “platforms” out there, but eventually there will only be one operating system. I think there are a lot of really awesome “apps” out there waiting to be plugged into this new operating system, which would benefit from standardization and an installed base of users.

There’s definitely an “app for that.” We are just waiting for the OS.

*That sentiment was also expressed wonderfully in Doug Weaver’s amazing keynote presentation which he was kind enough to make available this morning on iMedia.

[This post appearred on 5/23/11 in Business Insider]