Programmatic trends in 2015

2015-trends-blogBoy oh boy, 2015 was a big year for advertising debate.

To try and bring some closure to a year of fervid discussion on the Econsultancy blog, we asked two experts on performance marketing to give us their view on programmatic in 2015.

And if you want to learn more on this topic, book yourself a place at our Programmatic Training Course.

Is there a creativity vacuum?

David Carr, Strategy Director at DigitasLBi 

As we all raced to keep up with the exponential increases in options and terminology, maybe new realism began to creep in.

Had media left creative behind? Was programmatic only about cheaper buys and cheaper dynamic creative optimization with production efficiencies, real-time price updates and maybe a “personalized” colour-way and call to action based on someone’s browsing history?

When you asked around the industry for great creative examples the same ones would come back: Axe Brasil’s Romeo Reboot with its 100,000 dynamic videos, Diesel Decoded’s 400 bespoke copylines and the Amanda Foundation’s digital “Pawprint” work.

Yet programmatic is not just about direct response and CPAs. Programmatic is people. Programmatic allows creative to build a tailored story arch for the individual.

This makes brand ideas and human truths more important than ever to stimulate and organize the work making it consistent, relevant and distinct.

It means rethinking storytelling through a lens of data and technology to give personalization at scale and enable a brand relationship that learns – not just buying on a DSP.

Axe Brasil’s Romeo Reboot was an example of dynamic video.

romeo reboot

Brands seek transparency and control

David Carr, Strategy Director at DigitasLBi 

It is this technology lens that means new ways of organizing an agency are needed along with new client-agency relationships.

Creative, media and technology need to be re-integrating or at least work far more closely together. This way savings from spend can be used to create more effective work and technology can give greater transparency.

When at most 45 cents in the dollar reaches publishers and even an in-house or managed service on a shared platform leads to unknown ad-tech, DSP sell-side, reseller SSP and primary SSP fees plus data leakage to competitor algorithms, transparency is vital.

Taking a brand-first approach where clients control the bidding strategy AND the tech roadmap while not being lumbered with platform development and management might be a solution here?

Chris O’Hara, VP Strategic Accounts at Krux Digital (author of Econsultancy’s Programmatic Branding report)

More and more, we are seeing big marketers decide to “take programmatic in house.”

That means hiring former agency and vendor traders, licensing their own technologies, and (most importantly) owning their own data.

This trend isn’t as explosive as one might think, based on the industry trades – but it is real and happening steadily.

What brought along this shift in sentiment? Certainly concerns about transparency; there is still a great deal of inventory arbitrage going on with popular trading desks.

Also, the notion of control. Marketers want and deserve more of a direct connection to one of their biggest marketing costs, and now the technology is readily available.

Even old school marketers can license their way into a technology stack any agency would be proud of.

The only thing really holding back this trend is the difficulty in staffing such an effort. Programmatic experts are expensive, and that’s just the traders!

When the inevitable call for data-science driven analytics comes in, things can really start to get pricey! But, this trend continues for the next several years nonetheless.

Only app development is outsourced more than display advertising (source:Organisational Structures and Resourcing Best Practice Guide)

outsourced disciplines

Users suffer (especially on mobile) without union of creative, data and tech

David Carr, Strategy Director at DigitasLBi 

As all media continued to go mobile in 2015 the underbelly of programmatic was exposed. Hundreds of competing cookies on a page with javascript that bloated page weights above 1mb – if they even allowed the page to render at all – became a too common occurrence.

In this context programmatic became not just the future of ad buying but perhaps the best advert for Adblockers you could have.

Creative, data and technology consolidation for a mobile world is one potential solution but ultimately the only way that programmatic can live up to its promise is for all three to work together.

That way we can get back to people. Where do they go, what are they interested in, how do they respond to content and messages and how do we offer them something useful, usable and delightful?

Targeting with purchase data improves segmentation

Chris O’Hara, VP Strategic Accounts at Krux Digital

Remember when finding the “household CEO” was as easy as picking a demographic target?

Marketers are still using demographic targeting (Woman, aged 25-44) to some extent, but we have seen them shift rapidly to behavioral and contextually based segments (“Active Moms”), and now to Purchase-Based Targeting (PBT).

This trend has existed in categories like automotive and travel, but is now being seen in consumer packaged goods.

Today, marketers are using small segments of people who have actually purchased the product they are marketing (“Special K Moms”) and using lookalike modeling to drive scale and find more of them.

These purchase-defined segments are a more precise starting point in digital segmentation – and can be augmented by behavioral and contextual data attributes to achieve scale.

The big winners here are the folks who actually have the in-store purchase information (such as Oracle’s Datalogix, 84.51, Nielsen’s Catalina Solutions, INMAR, and News Corp’s News America Marketing).

archery targets

Programmatic direct as a route through complexity

Chris O’Hara, VP Strategic Accounts at Krux Digital

For years we have been talking about the disintermediation in the space between advertisers and publishers (essentially, the entire Lumascape map of technology vendors), and how we can find scalable, direct, connections between them.

It doesn’t make sense that a marketer has to go through an agency, a trading desk, DSP, an exchange, SSP, and other assorted technologies to get to space on a publisher website.

Marketers have seen $10 CPMs turn into just $2 of working media.

Early efforts with “private marketplaces” inside of exchanges created more automation, but ultimately kept much of the cost structure.

A nascent, but quickly emerging, movement of “automated guaranteed” procurement is finally starting to take hold. Advertisers can create audiences inside their DMP and push them directly to a publisher’s ad server where they have user-matching.

This is especially effective where marketers seek an “always on” insertion order with a favored, premium publisher. This trend will grow in line with marketers’ adoption of people-based data technology.

For more on programmatic in 2015, see other blog posts and research by Chris O’Hara.

Ben Davis

Published 7 December, 2015 by Ben Davis @ Econsultancy

Ben Davis is a senior writer at Econsultancy. He lives in Manchester. You can contact him at ben.davis@econsultancy.com, follow at @herrhuld or connect via LinkedIn.

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Punching the Monkey

BannerAdI recently tried to explain what I do for a living to my 14-year-old son. I found myself telling him about ad tech.

“Basically, we make technology that helps marketers buy different kinds of banner ads,” I told him.

“You mean the kind of annoying pop-up ads that everyone hates?” he asked.

His look of profound disappointment said it all. I explained that the kind of work we do wasn’t just about populating the Internet with the “Lose five pounds with one stupid trick” type of banner. But even though we are getting a lot right, my explanations eventually started sounding pretty weak.

I have been working in this business since 1995. Aside from doing some ad implementation testing, I have probably clicked on about a dozen banner ads in as many years. Today’s robust, real-time ad tech “stack” has been purpose-built to optimize the delivery of the kind of banner ads most people already hate: standardized IAB units, retargeted ads, auto-play video pre-roll units and even the dreaded pop-up and pop-under.

Publishers without robust direct sales options depend on networks and exchanges to monetize the endless streams of traffic they create, and they happily collect their $1.10 eCPM (cost per mille) payments. Advertisers looking for cheap reach and performance plumb the depths of such inventory to find the rare conversion, and hope they are getting what they pay for rather than a shady “last view” attributed banner.

Today, the highest and best use of the standardized banner has enabled marketers to leverage their first-party data to bombard site visitors with retargeted ads – an effective tactic, since they are essentially paying to accelerate a conversion that has a great chance of happening on its own.

As an industry, it seems pretty clear that we will look back on this era in digital ad technology and see how primitive it was. Have we built a trillion-dollar real-time ad serving machine for punch-the-monkey ads, or have we really innovated and created disruption?

RTB Is Dead, Long Live RTB

The recent acquisition of [X+1] by Rocket Fuel is a great sign for our industry. It basically validates the idea that, for programmatic RTB to be effective, real data science must inform targeting. [X+1] is one of the best at cross-channel targeting, and they have already started to figure out the cross-channel attribution puzzle. An everlasting always-on stream of RTB banners for branding and retargeting might prove to be a hugely important part of unlocking a broader multi-channel strategy – if the data can dictate it. If data management platform technology can be leveraged to truly optimize addressable marketing, then RTB will survive and thrive. With consumers always on the move, and every form of media starting to be addressable, real-time programmatic will be something marketers have permanently switched on, and we’ll see the true value of the pipes we have created.

Programmatic Direct

How about inventory that is relatively standard, but a bit nicer than that found within the exchange environment? Transacting on this tier of inventory works quite nicely with all kinds of one-to-one connections within RTB, and buyers and sellers are quickly leveraging the pipes to make private marketplace deals.

If I am a quality financial publisher, why wouldn’t I sell within RTB for $8 CPMs, rather than pay a $200,000 salesperson to sell at $12 CPMs? The math just makes sense. Delivering higher tiers of inventory at scale to private buyers is a great use of RTB, but not a panacea for overall inefficiency in media procurement. But, we have seen those RTB pipes service entire new classes of inventory, and start to appeal to brand marketers.

Workflow Automation

The problem with getting really good inventory has always been the difficulty understanding rates and availability. That’s why the RFP exists today, and isn’t going away anytime soon. Publishers will always want full control over the really good stuff. Because they know their inventory better than any algorithm, there will always be a need for human control and creativity. Big, custom sponsorships and custom-curated native executions will only increase over time, as more television and print budgets shift into addressable digital. You just can’t automate those deals. Marketers and agencies will demand programmatic efficiency to compress an expensive, 42-step process for securing guaranteed inventory. This is one area that programmatic RTB has not been built to handle (these deals are neither “real time” nor “bidded”), but we are seeing real innovation from a number of companies trying to bring programmatic efficiency to guaranteed deals.

It’s hard to explain everything that we are getting right to a 14-year-old who spends more time on mobile apps than in an Internet browser. His assessment, in surfing the desktop Internet, is probably right – it looks like a lot of weight loss ads and sneaker retargeting. But, it’s still early days nearly 20 years after the first banner ad was served.

Do Digital Media Agencies Have a Plan?

dude-wheres-my-carDigital agencies used to get paid for unpacking an incredibly complicated digital landscape for marketers. Faced with all kinds of new marketing opportunities, advertisers turned to savvy digital agencies to figure out where to spend their money, and how much of it to dedicate to display, mobile and social channels.

The dingy little secret was that the agencies didn’t really plan much of anything. The way it worked was that agency planners would make an Excel template, create an RFP document, instruct the media owners to send back all kinds of creative ideas and fill out the media plan template. RFPs sent publisher teams spinning into action, churning out exciting-looking PowerPoints with screenshots and suggested spending levels.

Not much of this was scientific. Publishers often promised more inventory than could be delivered, knowing they would never get the full budget allocation. Agencies asked for various “budget levels,” knowing they would allocate only $50,000 per publisher – but asking to see $200,000 plans to get a better sense of where CPMs might be negotiated. At the end of the day, the agencies would pick the winners and losers, usually the five publishers on the last plan, plus a few “challengers” or new ideas to impress the client with “innovation.” Once the plan went live, publishers could count on a quick cancellation or massive change to the contracted plan. Nothing ever seemed written in stone once the first impression was served.

Sounds pretty lame, right? Sadly, a lot of media is still planned this way. But, thanks to all kinds of programmatic innovation, times are rapidly changing and digital agencies are going to have to find out how to change with it.
In the old paradigm, agencies largely provided value by dealing with the intricacies of negotiating with vendors, moving data from plans to ad servers and billing systems and keeping clients in the loop on how their digital media “investments” were performing. Optimization was largely defined as cancelling a bad deal and re-allocating budget into a better one.
Today’s ad technology has given marketers and their agencies a lot more knobs and buttons to push. We are rapidly seeing a shift away from manual, Excel-based processes to nimble, web-based planning technology, driven by centralized data.
There are no spreadsheets inside of MediaMath or AppNexus. Publishers don’t offer PowerPoints in iSocket or AdSlot. And agencies are pushing legacy media-buying systems like MediaOcean and Strata to adapt to a digital world without spreadsheets and fax machines. A host of new, web-based planning and buying systems (like Bionic!) are also starting to disrupt the status quo, as agencies try and reconcile the old ways of buying media with a world in which billions of ad impressions are available through interfaces and big clients like P&G say they are going to buy up to 70% of ads programmatically.

Recently, a big European group of publishers introduced an RFP to have their entire digital inventory catalogued and made available through “programmatic direct” technology. Publishers want to give advertisers the efficiency and access they crave but have complete control over pricing and availability. That’s where the world is heading.
So what happens to an agency whose sole digital expertise consists of sending out Excel templates for publishers to fill out with pricing and avails? Sounds like the value they have been providing – lots of manual horsepower to help with complicated workflow – is going to become completely irrelevant. You can buy all the social media you want through easy-to-use interfaces.

It’s easy to hire a few smart “traders” and give them access to a DSP and gain access to the universe of inventory available in programmatic RTB. And now it’s increasingly easy to negotiate premium inventory deals inside programmatic platforms and secure those guaranteed impressions. A number of big marketers have decided it’s so easy that they are starting to do it themselves by bringing digital marketing in-house.
Digital media agencies’ legacy business models are expiring faster than a Madison Avenue parking meter. What should innovative agencies be doing to change and continue to provide real value to their clients?

  • Planning: “Planning” is not planning anymore. It’s investment management. Even though there are new ways to procure the media, your clients still need to know how it’s performing and moving the needle for their business. Figure out how to measure beyond clicks and common CPA metrics and try to get inside your clients’ real budget numbers. Are you gaining access to the client’s P&L and first-party data so you can help them measure by more important metrics, such as net new customers?
  • Teaching: Just because desktop display and social ads are commoditized doesn’t mean clients don’t need to understand the latest ways to rise above the noise. Are you schooling your clients on nascent native mobile opportunities or the latest ways to leverage RTB video to enable branding at scale? These are ideas that come with the help of vendors and publishers, but agencies need to stop collating others’ ideas and start helping vendors translate their opportunities into the framework of the client’s business. That is where the right digital agency can provide value.
  • Doing: The manual, spreadsheet-driven world of “22-year-old media planners” where labor, rather than strategy, was at a premium are over. But, in a programmatic world, execution – the “doing” – is more important than ever. Reallocating budgets to match performance cannot be totally algorithm-driven when spending is across multiple channels in systems that do not speak to each other. Agencies are perfectly positioned to be in the middle of dozens of systems, reconciling spending and performance against both long- and short-term client goals. That’s a job that can only be done by people.

The irony of today is that lot of systems are starting to make digital media planning less complicated from a transactional and workflow standpoint but the overall digital landscape is more complicated to navigate than ever. The digital media agencies that survive must change the way they plan, teach their clients and execute in order to survive and thrive.

[This post originally appeared in AdExchanger on 7.25.14]

Fraud and the Pivot Towards Programmatic Direct

ImageThere has been a lot of talk about the pervasive amount of click fraud and bot traffic happening in digital. Marketers are reportedly spending anywhere from 30% to 70% of their digital budgets on fake impressions and clicks, and an entire cottage industry is cropping up to help marketers combat fraud and try and protect their digital marketing investments.

Some people claim that price of fraud is already built into the programmatic RTB ecosystem. Marketers are using programmatic RTB for direct marketing, and they are measuring sales using CPA metrics. If they are paying $100 per verified acquisition, should they care whether it takes 10 million or 20 million impressions to produce a conversion? Some say that they don’t, and take the view that they only pay for results, justified by their backend conversion metrics which take media cost into consideration.

I hope this is not the case. Ignoring fraud with these justifications is what ultimately may kill the digital advertising business before we ever get to scale.

Another big problem is faulty, fraud-like attribution. Let’s take the case of the big programmatic marketing platform that has been getting great conversions for their customers. Marketers look at the results of such platforms and think that the technology has managed to effectively separate the wheat from the chaff in popular ad exchanges and find the “sweet spot” of cookie targeting that converts. But, dig a little deeper and you notice that many of the conversions are happening on webmail subdomains (mail.yahoo.com). In other words, the platform is getting last-view attribution from successful e-mail marketing. This is a more subtle case of fraud…but really more of a tax on digital ignorance for marketers. But again, the marketer sees this channel producing results that align with his CPA goals. Did the conversions get attributed correctly? Maybe not, but those questions get overlooked when the blended CPA is on target.

Cookie bombing and other types of fraud are just as likely to limit digital advertising to performance budgets, and keep real growth at bay.

If we are being honest with ourselves, we must admit that there doesn’t seem to be a ton of desire to solve these inherent problems in programmatic RTB. There are too many people making too much money to want to fix it. And it’s going to destroy programmatic RTB as we know it. Who benefits from the current scenario?

  • Publishers: Most publishers benefit greatly from the programmatic RTB revenue stream.  Big publishers “fill” their long tail inventory with ads. Mid-sized publishers without large direct sales teams depend greatly on network and programmatic fill for their revenue. Long tail pubs are fully committed to their AdSense checks for survival. A lot of publishers’ Comscore numbers are a lot bigger than they should be, thanks to cheap inventory of unknown provenance.
  • AdTech: Every vendor in programmatic RTB benefits from inventory flowing through their pipes. Most charge on a percentage-of-spend, which means they might sacrifice 50% of their revenue if they had to stop charging for fraudulent impressions. New fraud detection and measurement firms are also profiting (albeit in a virtuous way).
  • Agencies: What would today’s big agencies do without the ability to leverage programmatic RTB to arbitrage inventory, or charge a premium for “unpacking the ad tech space” for their clients? The new programmatic landscape has been a boon to smart, nimble agencies that have built, bought, or leveraged ad technology to pivot their dying media businesses. How eager are agencies to expose the fundamental flaws within the programmatic RTB ecosystem?

The biggest loser in the entire room is the poor marketer, who ultimately pays the bills. But it’s easy to turn a blind eye, because the numbers look good. But how long will big marketers confuse true marketing success with today’s flawed digital attribution metrics? Marketers are starting to think about real measurement frameworks (net new customers), rather than CPA metrics. They are also keenly interested using brand messages to interact with their customers across screens. And they won’t be using CPA to measure brand growth.

So why do marketers continue to leverage programmatic RTB despite the inherent risk of fraud and current limitations for brand advertising? To paraphrase Clear Channel’s Bob Pittman at the recent IAB annual meeting, “Given a choice between quality and convenience, convenience always wins.”

The biggest question lately is whether or not we can make it as convenient (and cheap) to buy guaranteed media at scale. Seeing this opportunity, a lot of players in programmatic RTB are looking hard at the money being spent on guaranteed media (the “transactional RFP” channel), and trying to add new “programmatic direct” tools to their arsenals.  RTB players know that brands are still uncomfortable executing brand campaigns in the wilds of the open exchange, and they know truly premium inventory won’t be available unless publishers have more granular control over pricing, availability, and partner selection. Put more simply, the lion’s share of digital money still gets transacted manually, with paper insertion orders, and successful automation means a big piece of the action.

Providing a layer of automation for direct deals helps with fraud (guaranteed deals, by their nature, offer inventory transparency), and adds the ability to scale within higher classes of inventory.

Marketers are actually looking forward to having their agencies leverage new technology to secure quality digital placements. Whether these innovations come from tweaking existing programmatic RTB technology (private exchanges) or from new, API-driven “programmatic direct” providers doesn’t matter to them. They need to execute cross-channel digital campaigns at scale, and those campaigns (if they are for brand purposes) cannot contain fraud.

Does this spell the end of programmatic RTB? Nope. I think there will always be exchanges and technologies that let direct marketers plumb the depths of the Web to drive online sales. Ten years ago, folks were writing about the death of shady affiliate, click, and CPA networks—but they are still around. But, will today’s programmatic RTB business have to fundamental transform to win brand dollars? Yes, and the path to success is what we have been calling programmatic direct. It will be interesting to see the various technology executions of programmatic direct, as they form the gateway for branding to flourish online.

I See Dead People… Responding to my Marketing!

ImageI was recently at a Digital Marketing Association awards dinner where data legend Charles Stryker was being honored. After accepting his award, he told a famous story about data that every digital marketer should know.

A long time ago, the US Postal Service discovered they were paying a ton of money to deliver mail to deceased people. Charles was hired to help them get a handle on their records and create a sort of “Do Not Mail” list. Part of doing the work involved considerable A/B testing to ensure he was making the correct assumptions about the data. Direct response mailers were being sent to groups of dead people and similar groups of folks who were still alive. Something astonishing happened when the results came in.

The dead people responded at nearly twice the rate of the living.

Of course everyone at the dinner (about a hundred senior direct marketing executives) laughed uproariously. They have seen all kinds of unpredictable results with direct marketing. In today’s digital age, marketing is moving faster than ever. The velocity of data is increasing in orders of magnitude, and attribution is going to get even trickier.

What happened with the “dead” people was pretty interesting. It turns out that the successful mailers went to households where the husband of the family died, and the elderly spouses were taking great care to go through and read the mail of their deceased partners. The wives wanted to make sure there was nothing important in those letters—and probably were connecting with their husbands through that simple, daily task. Those widows made a great mailing list “select” since they actually opened and read the mail!

In today’s digital marketing, where we seem increasingly dependent on algorithms and attribution models for targeting and measurement, I wonder if we are too deep in the weeds. Are we forgetting the real, human element of marketing? Do we really understand how success and failure happen with our campaigns? At a recent iMedia agency conference, a lot of the talk was about trying not to forget that advertising is first and foremost about storytelling. Leading with emotion is so important. The marketer has to make an emotional connection with his audience and get them to care.

That struck me when watching a joint town hall workshop with Google and Kellogg’s about dynamic creative. Yes, changing the background color or “call to action” on a 300×250 ad in real time can bump the lift of a campaign incrementally—but are we tweaking a  broken process?

Can we really tell great stories on standardized banner ads?

With the rapid rise of programmatic, a lot of platforms and data companies are fully committed to a standardized industry where scale is king. Display, video, and mobile—biddable and accessible at full scale—is the mandate. Kellogg’s wants inexpensive access to a large electronic palette where Frosted Flakes ads can be constantly tweaked to get optimal performance. Nothing wrong with that.  American Express recently announced an “100%“programmatic” initiative for digital marketing. Why not? Both companies spend tons of money on TV, and optimizing the bottom of the funnel makes complete and utter sense.

But that’s all we are talking about: Optimizing the bottom of the funnel with standardized ads. Sorry, but we are not creating new customers with dynamic 300×250 ads that get a .05% click-through rate. If you are in this business, working for a venture backed startup or newly public adtech company whose value proposition is around driving audience targeting at scale, then you are not “creating stories” online.

As an industry, we need to create digital campaigns that get people to “open the mail.” This is incredibly hard to do with standard display banners, today’s woeful “native” executions, and interruptive social ads. Video has promise, but scale still eludes marketers, and low video completion rates erode available reach considerably.

So, how do you leverage programmatic technology to get great creative out at scale? The only real answer is to automate the workflow behind securing premium inventory and custom programs. That’s where the promise of programmatic direct comes in. Marketers want great ideas from publishers, access to the best inventory they have, and non-standardized units. They just don’t want to pay 10% of their media budgets for planners to cut and paste data into spreadsheets.

Innovation in the space is not just limited to programmatic direct companies with API connections into the publisher side (iSocket, ShinyAds, AdSlot) and workflow automation players (Centro, MediaOcean, and Bionic Advertising)—but also includes RTB players like Rubicon and MediaMath who are building new automation capabilities to augment their RTB stacks. In other words, it’s all about automating the deal right now.

Do they want access to evergreen programmatic campaigns that drive their most likely customers through the bottom of the sales funnel? Of course, and that’s a great job for programmatic RTB. But it does not, cannot, and will never replace the kind of media you can secure through a guaranteed transaction. Also, speaking of dead people responding better—that kind of sounds familiar. In programmatic RTB, some of the best click-through rates come from the dead—fake visitors created by robots.

That said, I think more and more digital advertising will go programmatic, and that programmatic RTB will command the lion’s share of performance budgets. But, when it comes to building brands, bringing automation to the process of securing quality inventory will win.

[This post originally appeared in AdExchanger on 5.13.14]

The Battle for Workflow Automation: What’s Next for “Programmatic Direct”

ImageEven though programmatic RTB has seen the lion’s share of venture capital funding and an enormous amount of innovation, RTB buying only accounts for 20%-30% of all digital media dollars. The real money still flows through the direct buying process, with agencies spending up to 400 hours and $50,000 to create the typical campaign, and publishers burning through 1,600 hours a month and 18% of their revenue responding to RFPs. What a mess….and an opportunity.

Everybody’s battling for a slice of that direct sales pie, and the game is all about helping buyers and sellers automate the manual processes that drive almost 80% of transactional value.

The Holy Grail for both sides is a web based, connected platform that will enable planners and sellers to thrust aside Excel, and start to transact business in the cloud. Although a number of companies have tried and failed to deliver on the promise of workflow automation, the time seems ripe for true adoption, as agencies are being challenged by their clients to create the same programmatic efficiencies across all media channels that they have embraced with RTB. As we speak, winners and losers are being selected, so let’s look at the landscape.

When you look at all of the companies providing a slice of the end-to-end workflow just in digital media execution, it’s hard to imagine that there can be “one system to rule them all” or a true “OS” for digital media. Yet, the dream is just that: An end-to-end comprehensive “stack” that handles media from research through to billing, and eliminates the many manual tasks and man hours involved in connecting the dots. But what are the realities? Let’s saddle up this unicorn and take a ride:

The End of the End-to-End Stack?

The notion of a single end-to-end “stack” for the digital marketer is a tough vision to execute upon. Build a system that has every little feature that a huge agency needs and you have effectively built something no one else can use. The flip side is building something so standardized that individual organizations find little value in it. The “operating systems” of the future that will win should enable agencies and marketers to leverage a standard operating system, but customize it with their own pricing, performance, and vendor data. This enables the efficiency of standardization while enabling data to provide the “secret sauce” that media shops need to justify their fees.  More importantly, the modern operating system for media must be extensible, to allow for a wide variety of point solutions to integrate seamlessly. The right system will certainly eliminate a few logins, but must not limit the numbers of tools that can be accessed through it. That concept necessitates a highly modern, scalable, API-driven, web-based platform. It will be interesting to see how today’s legacy systems (which are exactly the opposite of what I have described) adapt.

Hegemon Your Bets

Several years ago, I wrote that the merger between Mediabank and Donovan may actually be a good thing—provided it offered more choice, flexibility, and open standards. Looking some three years later, I am not sure agencies have any more of that today. Like any other near monopoly, Mediaocean has a disincentive to open up its ecosystem because it invites competition. So time will tell whether their nascent “Connect” effort will become a way for agencies to quickly consolidate their “stack” around a flexible operating system—or if it’s just an integration tax for vendors (a revenue strategy quickly becoming known as the “Lumascrape”). After an IPO, the company will face enormous quarterly pressure for growth. It will be hard to raise prices on already stretched agencies, so publishers will be in the crosshairs. I smell “marketplace” and some monetization strategies around “programmatic direct” enablement for guaranteed media. And what about open standards? Despite years of work by the IAB, the standards and protocols for creating electronic ordering and invoicing are still very much in flux.

Connecting the Dots

More than anything else, the most exciting thing happening in digital media is seeing real programmatic connections between buyers and sellers for guaranteed media. After so much innovation in programmatic RTB (hundreds of vendors, billions in venture capital), we now have some amazing pipes that impressions can flow through. Unfortunately, this has largely been limited to lower classes of inventory and focused almost exclusively on the DR space. Creating the same programmatic efficiencies for “premium” brand-safe inventory is now starting to happen. Whether it comes from new “programmatic direct” pure play technologies, or happens through the RTB pipes, it will not happen successfully without transparency. That means giving publishers control over their inventory, pricing, and what demand partners can access their marketplaces. Will these connections thrive? Not if vendors charge network-like fees, arbitrage media, or don’t provide transparency. Will the endemic fraud in programmatic RTB push more transactions outside the RTB pipes? I think so, and a lot of publishers (see Yahoo/AOL/Microsoft deal) are betting that there are better ways for buyers to access their inventory.

Time for Real Time

Look at all the RTB players who want a piece of the guaranteed action. Three of them (Rubicon, Appnexus, and Pubmatic) will IPO soon, and be under tremendous pressure to increase revenue, margins, and continue to innovate and find new markets. When international expansion stops providing double-digit growth increases, then it’s time to look toward new streams of demand generation—namely, the 80% of deals not currently flowing through their pipes. Those pipes have been engineered for real-time bidding, but guaranteed deals are neither real-time nor bidded. Can they innovate fast enough to provide real value between buyers and sellers? Can they apply years of innovation in DSP and SSP tech to the more prosaic problem of workflow automation? Probably, but there are still business model issues to work out. Most of these companies have put a stake in the ground for either publishers or marketers, and a transactional platform must be agnostic to sit in the middle. It will be interesting to see how new offerings are received in the marketplace.

As the Chinese curse says, “may you live in interesting times.” Indeed, the past several years of ad tech has been nothing but interesting, but the real action is just starting—and it’s taking place in what was the most uninteresting field of workflow automation.

[This post originally appeared in AdExchanger on 3.12.14]

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]