The main problem concerning the role of programmatic-buying in the video marketplace isn’t technology or business models. It’s the way people think about the supply of video. The people who have been most vocal in the debate tend to be people and organizations who have a vested interest in making that supply look constrained. They say there simply is not enough video advertising inventory to justify programmatic trading. They also provoke fear among video publishers that if they put their inventory into exchange-based markets, their inventory will become commoditized due to the dynamics of real-time bidding. Let’s put aside the debate over the market pricing dynamics of RTB, and whether it has upside or not (it does), and lets just focus on the discussion surrounding the supply of video inventory. The real answer is the supply depends on how you define the inventory.

 

Mostly, people have defined it by the big, short-tail publishers who supply the most premium video inventory: The online video inventory controlled by conventional TV programmers, or endemic online video supplier and aggregators like Hulu. More generally, premium video i inventory tends to be defined by pre-roll. My problem with that definition is it is that it is very narrow and doesn’t account for the vast majority of online video impressions that are actually out there -- and more importantly, the ones that are yet to come.

 

During a presentation Saturday morning at the Video Insider Summit at the Mohonk Mountain House in New Paltz, NY, Bladimiar Norman, senior vice president-marketing, The Weinstein Company, cited data indicating that only 14% of all the video served online actually has ads attached to them. That’s a lot of untapped potential video ad impressions, because during the same presentation, Norman cited statistics estimating that nearly 85% of the U.S. Internet population views online videos.

 

Programmatic’s video inventory dilemma could grow even more profound soon, if you think about all the other forms of video advertising inventory that are poised to become available through exchanges soon, including out-of-home video via platforms like Vistar, but also addressable TV advertising inventory (your don’t know how many agencies, trading desks and others have told me they are currently either beta testing or actually deploying some version of that).

 

The problem with the programmatic video denialists is that they seem to ignore the torrent of inventory poised to come into the marketplace, and like the little Dutch boy with his finger in the dike, they think they can hold it back. They can’t. And when it begins flowing, the only way to manage it is going to be via the same kind of programmatic exchange based trading systems that have given order to the online display advertising marketplace. Yes, some of that inventory will be traded via RTB auctions, but others will be traded via private exchanges or other models. The point is that the same reason Madison Avenue has begun using machines to buy display, is the same reason it will use them to buy video. There simply will be too much of it for people to handle without it.

 

During the last session of the Video Insider Summit Sunday morning, a panel debated the merits of RTB and programmatic exchanges for trading video, and Patrick Bonomo, COO of WPP’s Spafax unit gave the best reason why the shift is inevitable. Asking the audience whether they had ever seen an RTB dashboard, and how quickly they assemble the specifications for a programmatic trade, he concluded, “That, in itself, would take a planner days or weeks to do.”