It's The DMP, Stupid

If you want to understand how programmatic audience-buying is transforming the way television advertising is bought and sold, do not look to the litany of acronyms cluttering the advertising technology landscape -- focus on just one -- the DMP, because, you know, it’s the data, stupid. It always was. But increasingly, it will be the platform people use to manage audience data that will determine who has the leverage in the TV advertising marketplace. Based on some recent trends, I’d say it’s beginning to shift to the buy-side. And rightfully so, because for the last 75 years or so, TV audience data has essentially been controlled by the sell-side. That’s finally beginning to change, thanks to new forms of data for targeting and buying television audiences, and new platforms for managing them.



And here’s why. Under the historic TV audience data model -- the one controlled by Nielsen -- TV market currency attributes were pretty simple -- the age, sex, income and a few assorted otehr demographic descriptors that have historically comprised TV ratings. There wasn’t a lot you could spin with those, and it was pretty easy for any sell-side player to understand exactly what inventory they wanted from the buy-side. But by shifting away from conventional demographics, and moving more toward first-party data (information advertisers have directly from consumers) and new forms of third-party data (data from other entities that can better describe the behaviors and attributes advertisers are trying to influence or target), marketers and agencies are finally beginning to create their own black boxes -- proprietary systems that enable them to target TV audiences based on their own secret sauce, which the TV supply-side may never be able to fathom.

That’s a huge shift in marketplace leverage, if you ask me, and a much bigger one than suppliers -- especially premium ones -- normally fret about: The shift toward programmatic exchanges. They worry that putting their inventory into machine-powered exchanges will “commoditize” the value of their inventory, making it indistinguishable from other “me-too” options, and driving their prices down, not up. I think they’ve got that completely wrong, and if they learn how to manage the front-end better -- the data marketers and agencies use to determine what audiences they covet most -- the value of their inventory will go up, not down, assuming that what they always say about it is actually true: that their audiences are more valuable, especially when they are watching highly engaged, network TV-quality programming.

Premiums -- whether they are audiences or the media inventory that are proxies for them -- are funny things, and often in the eye of the beholder, or as the case may be, the bidder. I was thinking about this just yesterday when I sat in on special meeting of a top media sales organization updating their team on programmatic developments. The sales chief asked me how programmatic trading would impact “premium” inventory, so I asked the chief, “define premium.”

The sales executive said, from their point-of-view, it was the price advertisers were willing to pay. I said that was an “interesting” point-of-view, because from an advertiser’s or an agency’s point-of-view, premium was the value of the audience they were reaching, and it often has nothing to do with the price they are paying. That last part is true, because there are all sorts of disequilibrium occurring in the current programmatic marketplace that are distorting the relationship between underlying value of audience and the price a marketer might be willing to pay to serve their ads to them, and they have absolutely nothing to do with rate cards. They have everything to do with data. And as soon as big sales organizations understand that, they will stop fretting over exchanges, and start focusing on where the real action is: data, and data management platforms.

Hey, don’t take my word for it. Ask the folks at Interpublic’s Mediabrands why they’ve invested so much in their exclusive deal with Nielsen, and now Adap.TV, to build a proprietary DMP for targeting TV (and yes, online video too) viewers based not on what any suppliers say about them, or even simply what Nielsen’s TV ratings attribute to them, but on what they mean to Interpublic’s clients brands as current or potential consumers.

Interpublic is not alone, they’ve just been a little more vocal than others. I’m willing to wager that every one of the major agencies is developing their own proprietary DMP, whether they call it that, or even use another acronym to describe it. Some are developing it through their trading desks, as I believe GroupM is doing via Xaxis TV. Yeah, Xaxis TV isn’t actually procuring TV audiences -- yet. It’s utilizing TV metrics to effectively re-target TV-like audiences online. That’s something another innovative DMP, Collective, has begun doing too.

And let’s not forget some other savvy TV native DMPs that are beginning to emerge, especially Dave Morgan’s Simulmedia, Visible World’s AudienceXpress and, of course, Jon Mandel’s PrecisionDemand. They all have slightly different approaches in terms of how they’re cracking and harnessing so-called “big data,” but they’re all about the same thing: correlating the data that sends a valuable, meaningful signal to a brand about a consumer, and then tying it to ways they can actually buy television inventory.

If you ask me, this is the most exciting -- and disruptive -- development to hit the TV advertising marketplace during the 30 years I’ve covered it, and the amazing part is that few people on the sell-side actually get that. They’re all worked up over exchanges, and the fact that machine logic may drive the value of their inventory down. When in truth, it will be the logic of other human beings -- advertisers and media buyers -- using more sophisticated data to give them better intelligence, and a competitive advantage, in understanding what inventory and audiences have the most value, regardless of how sellers are pricing it.

The "It's The Economy, Stupid" image provided courtesy of Shutterstock.

6 comments about "It's The DMP, Stupid".
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  1. Tom Cunniff from Tom Cunniff, September 13, 2013 at 4:45 p.m.

    Good article, thought-provoking. But IMO, the biggest coming inflection point for TV advertising is not the rise of data. It's that what we once called "TV" is spilling out of its traditional box and spreading everywhere, on to every available screen. This will flip the traditional supply-demand equation and radically erode TV's once-legendary pricing power. Data, then, becomes not a way to sell inventory for more than we did yesterday -- but essentially the only tool available to prevent pricing from falling to zero. For a long time, TV has been the last medium left to retain pricing power. We are entering a new era in which that will no longer be true. I predict this will become significantly problematic for marketers in the near-term, and I don't see a scenario in which this does not happen. We will find a way to use programmatic to re-aggregate audiences into meaningful sizes, but the continued fragmentation of audience sizes also seriously impairs the economic production model of of TV, and impacts its ability to create quality content. Today, commercial TV offers the Kardashians while HBO offers "Game Of Thrones". This, all by itself, is telling.

  2. William Sears from [x+1], September 13, 2013 at 4:58 p.m.

    Great commentary, the DMP is really the key here. As Joe calls out this comes down to Audience First thinking, and the really MY audience thinking that DMP's help marketers discover, curate and execute. I would extend this in two key areas: 1.) to include not just TV, but true cross channel DMP capability enabling informed audience based targeting on all screens. Mobile, Social, TV, Display, OOH. 2.) Done in REAL TIME, so as your audience watches TV with their tablet in hand, the experience can be coordinated for that individual based on real-time interactions. This is the power marketers should insist on, and what true DMP's like we've build at [x+1] are offering today. Now to Joe's point, this kind of connection will absolutely make that inventory more valuable to advertisers.

  3. Tom Cunniff from Tom Cunniff, September 13, 2013 at 5:14 p.m.

    William, I don't question that the DMP is key. But I don't see a way that TV (aka "video inventory") can escape the supply-and-demand imbalance that places unrelenting downward pressure on CPMs. Am I missing something? (Note: tone is hard to convey online. Please trust I am asking this as a genuine question and not a rhetorical one.)

  4. Patrick Giblin from 451 Degrees Inc, September 13, 2013 at 5:17 p.m.

    Joe - You have been circling these issues for a few months now and we keep trying to share with you that we believe you will find our Patented SaaS solution, Graffiti, is the next step in logical definition for buyers of Media content on all screens. The key has and will always be the AUDIENCE and what they have to say about content is what generates its relevancy. We listen to Audience and deliver meaningful keywords associated with their Comments, Tweets or Reviews in Real Time giving it immediate use and meaning within a good marketplace that benefits all parties and does not drive down the pricing models to content that is engaged with. Viewers engage with good content and their linguistics tell us more than just their sentiment...happy to discuss all of this but the real DMP is going to match Comments with Content as we see it. How can it not? Please explain or let's discuss?

  5. Jon Mandel from Dogsled Enterprises Inc, September 16, 2013 at 10:53 a.m.

    Don't ignore that TV is losing business because its effect is known in general but not using this data and our technology the advertiser can predict with accuracy and achieve and know the results driven by TV. They also know the incremental lift generated by TV across other media. This creates satisfied customers which changes demand. Further, by surgically targeting TV is affordable for brands that can't use the medium due to cost of old-fashioned targeting. And the revenue increases enjoyed by our clients has frankly been of an order that almost sounds not credible yet they are very real. It has been true since advertising started that when a client's business grows the budget grows in the areas that deliver that growth

  6. Tom Cunniff from Tom Cunniff, September 16, 2013 at 11:28 a.m.

    Jon, I must disagree that TV is losing business because its effects are general. There is a reason that consumer marketers have spent billions of dollars on TV: it has offered an unparalleled ability to provide affordable and scalable "general" lift. For consumer brands which must drive fast turns at mass retailers Wal-Mart, this mass reach has been indispensable. The weakening of TV is due to audience fragmentation that began in the 1970s and has radically accelerated with the rise of digital. Marketers are simply following the audience. Also, I am wary of drinking our own digital Kool-Aid: while digital has provided strong results for DR, if we are honest we must admit that its promise has been elusive for brand marketers: today they must work much harder in many more media to obtain the same results. I see great improvement for brand marketers in digital lately and I expect to see much more in the future -- but there is a great deal of work ahead. Brands will get great at digital, but it's not because digital is inherently stronger than TV. Brands MUST get great at digital because a) consumer habits have permanently shifted; and b) TV's ability to deliver affordable and scalable "general" lift will continue to erode badly over time.

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