Everybody Wins With Programmatic Media
A number of people have been asking me lately about the evolution of display media buying. The fact is that when you look at where things were and compare it to where things are going, you see a distinct story that portends the future of advertising very clearly.
Online advertising, and specifically the display ad business, began as an outgrowth of print, with ads coming as banners reminiscent of basic print ads. Those ads were placed initially on sites that had traffic (literally – any traffic at all was good). There were a couple of search engines, some content sites of value, a couple of portals, a few ad networks, and these folks sustained their businesses with simple ad revenue based on total impressions. In some cases they sold the placements as day, week or monthly rates for fixed positions.
Buying at this stage was based on traffic size and quickly evolved to contextual buys, with media planners identifying placements that had a high composition of the target audience and a relevance contextually to what they were selling. This model dominated the first five to six years of the business as traffic grew, the volume of sites and pageviews exploded, and ad networks began to aggregate more and more of the long-tail inventory.
The next stage of the display business came via behavioral advertising, or buying based on previous Web behavior. Of course, behavioral brought a watershed moment to publishers because you could segment your audience and sell pieces of it for a higher price because of its value to the media buyer, thus also reducing waste against nonessential (that is, untargeted) audiences .
Behavioral signaled the development of audience-based buying: where we are today. Advertisers in today’s economy are far more advanced, bringing first-party data to the Web, accessing third-party data and using the combination to dive deeper into audiences, using demographics, psychographics, behavioral and customer data to power algorithms that deliver hyper-targeted audiences to just about every facet of online marketing, not just display ad buys.
The programmatic media category is growing rapidly because for the very first time, media buying can truly be automated and managed by a smaller team in an enterprise fashion.
That brings us to today, and my view of what tomorrow looks like. I foresee a world truly dominated by programmatic across all media channels, not just online. The last few weeks I devoted significant column space to talking about addressable TV, but the model applies to digital outdoor, print, radio and even guerilla media. All media will be capable of being managed in a programmatic way in the future, though the parameters for the delivery of that media will limit the scope.
For example, print inventory can be managed in an automated fashion, with magazine publishers logging into a Web interface, seeing who has purchased space and delivering the materials digitally, then sending the issue to print with the ads integrated. Digital outdoor is no different than a screen with an ad server, so that’s a no-brainer. TV will always have the upfronts to lock in the majority of the prime programming, but the spot market will offer scalabale programmatic inventory opportunities.
I’m not saying all media will go the 100% programmatic route, but I can see a world where as much as 65% of all media is purchased in this manner, with publishers still selling their highest value, premium placements directly and using the infrastructure of programmatic to book and manage that inventory.
This is clearly because agencies want this. They can manage more media with fewer staff and increase margins. Publishers want this -- they can sell more inventory with fewer sales reps, plus they get higher value for all inventory when it is properly segmented. Marketers want it – it affords them more control and the ability to get in and get out quickly. This is literally a place where everybody wins. The Internet really is amazing – I’m so glad Al Gore invented it :)
Some agencies have already made announcements that they are headed in this direction. I think the ship has sailed, and Pandora’s Box is now officially open. Do you agree with my hypothesis? Let me know on the Spin Board!