Building Ad Platforms: Will Digital Ad Tech Absorb TV Ad Biz (Before TV Can Build Ad Tech to Absorb Digital)?

AOL’s Tim Armstrong told us yesterday that the media and advertising business is on the verge of its most significant transformation since the Internet came on the scene 20 years ago. In Armstrong’s Ad:Tech San Francisco keynote, and in a subsequent interview with Mike Shields of The Wall Street Journal, he made it clear that the future of AOL is in platform-driven, cross-channel ad technology, to be built out on the company’s newly announced ONE platform.

In Shield’s CMO Today interview, appropriately headlined, “Watch Your Back Cable,” Armstrong talked about the “mechanization” that is coming into the business, which will take place on unified, global ad platforms, and which will be much more robust than just simple automation like we see in today’s first-generation “programmatic” online ad platforms. He also talked about AOL’s early work packaging linear TV ad inventory in partnership with IPG’s Matt Seiler through their Adap.TV unit.

I agree with Armstrong and his vision that massive, second-generation technology-driven disruptions are about to impact the entire ad industry, that the TV industry will be a big part of this trend, and that new, integrated and open advertising technology platforms will emerge to power it. Assuming this is what's going to happen, here are some of the issues everybody will have to think about:

Technology and data will be large, critical value drivers in media, as important as the content itself. As we have known for decades in the analog media world, great content without distribution is like a tree falling in the woods. No one hears it (or sees or reads it), and it generates very little economic value. The same will be true of great content in the future, but data and technology are quickly replacing distribution as critical value-enablers. Great content without great data and technology won’t be consumed or monetized effectively.

Unified platforms will drive and enable the future. The digital ad industry can’t scale on point solutions alone -- tools just for targeting, measurement, display,  mobile or video or email or search (though Google’s massively dominant position here might create an exception for some time). These will fade away as marketers use multiple channels together (display, rich media, video) and require unified targeting, measurement and accountability.

TV is the wild card. The power of television advertising to reach massive numbers of people in the U.S. very quickly with high impact messaging, driving tens of millions to take actions overnight, is still unmatched by any other media, and probably all other media added up together. It will continue to be the anchor of brand spending in categories like retail, packaged goods, automotive, movies and financial services for many, many more years to come. If the TV industry builds its own data and tech platform before marketers and media buyers absorb TV media inventory into their online-centric systems, the TV industry uniquely might be able to control its own destiny as these unified platforms emerge. Comcast, through its recent announcement to acquire Web video ad server FreeWheel, shows that some of the TV companies get it.

Metrics and back-end systems will be critical. While Web-based user interfaces and automation are sexy and rate a lot of  trade press attention, I agree with Armstrong that the “mechanization” of this industry will be much deeper and more robust. I believe that it will be anchored in systems that produce and drive targeting, measurement and metrics (which is my biased view pretty clearly, since I founded and run Simulmedia). The metrics and back-end are where transactions are driven -- and consolidated -- so I prefer to follow the money, not just the sexy interfaces.

Armstrong has articulated a powerful vision for the platform-driven future of the media and advertising business. With the company’s ONE platform, he is putting his money where his mouth is. What do you think?

Recommend (6) Print RSS
3 comments about "Building Ad Platforms: Will Digital Ad Tech Absorb TV Ad Biz (Before TV Can Build Ad Tech to Absorb Digital)?".
  1. Paula Lynn from Who Else Unlimited , March 27, 2014 at 7:36 p.m.
    As your father used to say when you wanted something extra, "We'll see." How much has been written (all media) which hasn't been appreciated for years later ?
  2. Tom Cunniff from Tom Cunniff , March 28, 2014 at 5:07 p.m.
    I would predict that digital ad tech will absorb the TV ad biz well before TV can build ad tech to absorb digital. Culturally, the TV business will almost certainly be reluctant to trade "analog dollars for digital dimes" and to willingly abandon more than 5 decades of unbroken "TV exceptionalism". In the end digital ad tech -- which has everything to gain -- can make far bolder steps than a TV culture that cannot help but worry about what it will lose. Here I should take care to be clear that I am NOT suggesting TV is dead or anything like that. What I'm saying is that TV will slowly begin to lose its once-unstoppable pricing power.
  3. Dave Morgan from Simulmedia , March 28, 2014 at 5:14 p.m.
    I agree Tom. The big challenge the TV industry faces is its culture. It has most everything else it needs to win long-term.