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So it’s been over four years since we first posted “Are Ad Exchanges and RTB the Next Big Thing?“. We are amazed that the article is still being referenced as a resource for this topic. Let’s take a look and see what’s developed since 2010.
Real Time Bidding (RTB), is now often associated with “long tail” remnant inventory and being risky in terms of transparency around placement of impressions. Buyers cannot always determine exactly what site their ads run on. Publishers have often referred to the technology as “Race to the Bottom” as automated auctions drive CPM’s lower.
Now for the good news. The technology developed for automated auctioning of inventory has been re-branded as “Programmatic”. Programmatic is as buzz worthy in 2014 as RTB was in 2010 and has the potential to be even more influential. Here’s why:
Data: The technology stack enables the ability to target audiences in real time based on first party (publisher or marketer proprietary), second party (syndicated) and third party (aggregated) data. This technology has not only driven digital marketing growth rates, it will likely revolutionize the linear broadcast, cable television and on demand ecosystems as well. Television advertising is shifting from targeting based on the demographics of the show to targeting specific audiences based on data. Sound familiar?
Workflow productivity: Traditional digital buying revolved around the same workflow as traditional media: humans negotiating the terms of an insertion order. That means phone calls, emails and lots of excel. Top talent coming out of college, often with student loans to pay off, are not flocking to media agencies to do low paid grunt work. Conversely, top engineering talent that once headed to the financial services industry to build trading desks are now building Demand Side Platforms (DSP), Supply Side Platforms (SSP) and Data Management Platforms (DSP).
These exchanges can be public like RTB, open to all marketers, or private, where publishers can control who has access to the inventory and at what price.
Note the reference to “marketers” vs. “advertisers”. The technology has evolved far beyond just buying and displaying ads. With rich data integration, marketers have converted the “Marketing Funnel” into the “Consumer Journey”. They can put the right message to each interested consumer at he right place at the right time. Awesome, right?
Not so fast kemosabe. Challenges remain:
The ecosystem is fragmented: Venture capital and the desire for profits has fueled literally hundreds of start ups and not all of them will survive. There are so many technology vendors and inventory sources in the space that marketing campaigns at scale are difficult to manage. There is a wave of consolidation happening and this will likely accelerate.
Lack of transparency around price and placement: Agencies and exchanges profit by being principals in transactions, often not revealing the prices paid for the inventory. Marketers are starting to push back, in some cases bringing the technology in house. Marketers are also concerned with brand safety issues. They often do not wish their messaging appearing alongside objectionable content.
Fraud: The technology that enables the ecosystem is vulnerable high tech criminals intent on manipulating it for financial gain. Fraud is the biggest threat to the growth of the programmatic ecosystem.
Cookies: The cookie, which is the linchpin of most targeting mechanisms, is long overdue for replacement. The technology was never meant for what it is being used for and is arguably the weak link in the system. Additionally, cookies are not pervasive in mobile and mobile is the fastest growing digital platform. Marketers want to be able to target audiences across all platforms.
So, is Programmatic the next big thing? No, It’s already a really, really big thing. Depending on who you ask anywhere from 23% to 85% of marketers have embraced programmatic buying. As is often the case, the real number is probably nearer the middle of that range, but it’s still a big number and growing.
What’s next? Marketing Automation. Plugging customer relationship management (CRM) and internet of things (IOT) data into the ecosystem. Yes, your refrigerator will send a push notification to your car to tell you that you are low on milk and present you a coupon for your favorite brand at the retailer you are about to drive by. And since you aren’t physically driving the car, you’ll just tell it to stop and park.
The shot heard around the media planning and buying technology world provoked much commentary. Here’s our two cents:
It’s about time. MediaBank (MB) has been making inroads at the holding companies, notably IPG and Publicis. However Omnicom Media Group and WPP’s GroupM seemed to be firmly in the DDS camp and weren’t planning to switch to MediaBank any time soon. Now DDS can spend less time defending business and MB can scale back business development efforts allowing the combined entity to invest further in R&D.
MediaBank is further along at the task of developing Digital planning and buying applications. DDS has had a tougher time with iDesk, although the latest version is gaining traction.
The back office applications are where the rubber meets the road. The DDS IBM mainframe accounting package (ACCPAK) is mature and the industry standard for traditional media billing. The holding companies have a huge investment in integrating ACCPAK with their data warehouses, dashboards and reporting systems. No way OMG, GroupM or Aegis were rebuilding that infrastructure.
DDS has been scaling back staff over the past few years, and quite a few of those talented folks ended up at MB. They are well positioned to lead the integration efforts.
Speaking of integration, it is not going to be easy. DDS is based on IBM 3270 mainframe technology with custom built application interfaces. It requires connection to its WAN and proprietary Windows client applications. MediaBank, because of it’s legacy of acquisitions, has .Net, Unix, and Oracle tech stacks. MB has both self hosted and ASP delivery models as well as desktop and web based client applications. There is little common ground here. The strategy behind integrating the technology will be critical.
They seem to have the right guys at the helm. Bill Wise, who put together the first digital ad exchange at RightMedia obviously gets it. So does J.T. Batson, formally of the Rubicon project. These are guys with cutting edge digital experience. Yay. And Michael Donovan is still the guy…. he has owned this space with the holding companies for the past 30 years.
When we last reported on this topic there was anticipation around this sort of a development. It’s happening. Very exciting times in the media planning/buying technology space!
The hard disk in my DVR died recently. I should have known it would happen at some point, all hard disks fail eventually. I’ve lost track of how many I’ve replaced over the years. Of course, I’ve learned to consistently back up important data, and restore it periodically (you don’t have a backup if you can’t restore it). From my iPhone to the RAID arrays in the enterprise I’m always backed up. Except my DVR.
When the drive started clicking, my heart sank. All those episodes of “The Voice” that I was saving to watch in order, the recording of Tracy on “Today” getting a make over, the episodes of “Muscle Car”… gone. No backup.
Almost as bad, I now had to watch TV in linear mode. No pause, no rewind. No skipping commercials.
I realized how important that one little hard drive was.
I started thinking. Should I cut the cord? Should I base my video entertainment around online, cloud based services? Should I get a Roku or Boxee? How frustrating would the fragmentation of content be? Would the quality be ok? Bandwidth? Would it be free? If not, would it be cheaper than Cable?
Sounded like a lot of work. Entertainment should be easy.
In the end, I switched to different provider. Might as well go for triple-play, I thought, especially since my telephone land line goes out every time it rains… save a few bucks and get a new hard disk to boot. Question: do I still call it “Cable” even though it comes to my house via fiber?
Now if only someone would come up with a way to back up that hard disk…
Found a way to attach eSata drives to my Motorola set top box. Stay tuned…
Panel at the IAB leadership conference debates whether publishers will lose leverage with guaranteed inventory unless they respond to agencies and advertisers needs for increasingly detailed data on their audiences. Some interesting comments:
“…buying digital is 2.7X the labor cost of buying TV” – Quentin George Chief Digital Officer, Mediabrands
“publishers may have a fantastic audience… oftentimes the agency may know more more about their audience than they do…” –Ramsey McGrory, Head of Yahoo!’s Right Media Exchange
“…we don’t want to sell the lifetime value of one of our customers for one flight of advertising” – Michael Zimbalist, Vice President Research and Development Operations, New York Times
The software applications used by media agencies to facilitate planning and buying media have long been a source of frustration for both users and management. These tools have not kept pace with developments in PC application platforms. Forget web services and even client-server. The most popular media buying application suite is based on 1980’s IBM mainframe technology (3270 emulation). Worse, the database is not relational across media, so reporting for an integrated campaign is often a manual process using desktop applications.
Configuring these systems to share data with other applications is problematic. Typically agency employees re-enter the same data several times due to this lack of integration.
Client accounting and media payables represent the bottom line in a media agency. Historically the mainframe accounting application is the system of record. While broadcast, out of home (ooh) and print media accounting is well understood and processed relatively efficiently in these systems, digital, with it’s complexity, evolving technology and lack of standards is the wild wild west. The spreadsheet is the common denominator.
With integrated campaigns and digital media becoming more prevalent and broadcast becoming less dominant, these issues have become critical to the management of media planning and buying agencies. In today’s economic environment, “throwing bodies” at agency back office processes is no longer an acceptable solution.
Perhaps most importantly, there is increasing momentum to revamp the “traditional” media planning and buying process around the digital model: buying a targeted audience driven by consumer behavioral data and auctioned in real time. While RTB obviously does not directly apply to print and ooh, broadcast could move in this direction once media owners establish a model to monetize it and the technology (the addressable STB) is standardized. If this shift gains traction, the legacy traditional buying systems will face the same issues with broadcast that they are currently facing with digital. Evidence that this is more than hypothetical is seen with IPG’s Cadreon and Visible World announcing their partnership “is bringing its demand-side Internet ad platform approach to cable”. Cadreon has invested in building proprietary applications to manage their trading desk.
Apparently the software vendors agree. Donovan Data Systems (DDS) recently announced the hiring of J.T. Batson to head up it’s digital planning and buying product division. Mr. Batson comes to DDS from The Rubicon Project, a leader in the Ad Exchange and Yield Management technology space. MEDIABANK announced the hiring of Bill Wise. Mr. Wise was previously at Yahoo’s rightmedia, arguably the pioneer of the digital ad exchange technology platform.
Advertising Perspectives will be monitoring this space closely as the agencies and vendors grapple with finally revolutionizing the technology supporting media planning and buying operations. Stay tuned, it should be interesting.
(This article was first posted April 29th, 2010 so some information may be out of date. However the basic concepts are still valid…)
There is a great deal of buzz in the industry around Ad Exchanges and the technology associated with them. However, it is not well understood how they operate and what the benefits to publishers and advertisers are. In researching this topic, we found that while Real Time Bidding (RTB) receives a great deal of attention, there are other attributes of Ad Exchanges that are not widely discussed, yet have the potential to make a major impact on the digital marketing ecosystem. We’ll attempt to clarify some of the concepts used in the Ad Exchange technology stack in this article. First let’s examine traditional Ad Networks. [click to continue…]
Welcome to the Advertising Perspectives Blog. The purpose of this site is to publish Advertising Perspectives’ thoughts and ideas about the Media 2.0 landscape and to share other voices and points of view about our industry. [click to continue…]