Many of us think of Madison Avenue as single, collective industry of advertising agencies -- and their clients -- who represent the advertising business. But the truth is, there are many versions of it, and many diversities of opinion, including about programmatic trading. And today, we got our first look at how the other half lives, breathes and thinks about it. Not so much, apparently. At least not according to the latest quarterly tracking study from media-buying data processor and software developer Strata, which polled its agency clients on programmatic buying and found out that they’re mostly not using it, and don’t really trust it -- at least not yet.
Part of the problem, they said, is language -- that there is no unified definition of what programmatic actually is. That may be true from the sense that there is nothing etched on any stone tablets, but there there are plenty of good working definitions for what the practices actually is. So for the benefit of all those Strata shops, let me cite one of them here. And just for the heck of it, I’ll use Interpublic’s Magna unit’s -- not because they’ve been the most aggressive of Madison Avenue’s short tail -- you know, the big agency holding companies that seem to be driving programmatic’s train -- but because I think it’s a pretty serviceable. According to Magna, programmatic encompasses “all automated media buying platforms including social API,” not just the kind purchased through RTB exchanges.
That said, I can understand why there is confusion among different Madison Avenue constituencies, and I think they aren’t language barriers so much as they are cultural ones. I think smaller- and medium-size shops just think differently than the big agencies do. They think differently about who they are and what they do. They think differently about what their clients need. And they differently about how to leverage media on behalf of those things. Thank god, because it is what leads to real diversity -- and honestly, innovation -- on Madison Avenue. If it all came from just six of seven companies, imagine how undifferentiated the agency world would actually be.
And while the short-tail’s voice may be loudest, the truth is that the long-tail is where just as much of the action is. By its own count, Strata estimates its client agencies represent about 30% of all media buying. But I think the long-tail is actually much bigger than that. I think it’s the usually silent majority of the advertising world. Years ago, when I was media editor at Advertising Age, I would take the magazine’s annual agency report, tally up the billings of the six agency holding companies, and divide it by total ad spending, and you know what, as big as those big holding companies are, they represented less than half of all ad spending.
I haven’t done that exercise recently, but I think that, if anything, the margin has grown even wider, because so much more of the fastest-growing media -- display, search, social, etc. -- are inherently long-tail media options. The irony here, is that programmatic evolved as a market mechanism to organize all that long-tail inventory to create a marketplace people could trade efficiently. Now that it exists, the biggest agencies have laid claim to it, but the real success of programmatic will be based on how well it is utilized by the rest of the marketplace. And not just for “digital,” but for all media -- because all media are hyper-fragmenting and need more efficient market mechanisms, including some programmatic ones, to manage how they trade.
Lastly, I’d like to point out that the Strata survey, while an interesting new look at a previously silent majority on the subject, isn’t 100% projectable either. It’s part of a rolling quarterly survey the tech company fields to get a handle on what its clients are thinking. But as some of the comments on the news story we posted earlier today show, there are some smaller shops that are making their mark by embracing programmatic trading.