Commentary

Programmatic Radio Enters Test Phase, But 'Tech Tax' Still Looms

The Katz programmatic radio ad exchange is up and running in pilot mode, with Geico being the first named advertiser to buy an ad via the exchange. Real-Time Daily has the full story. 

But what the news also shows is that the “tech tax” appears to be just as prevalent in programmatic radio as it is in the digital world.

Despite the “streamlined” workflow and boost to targeting Katz’s programmatic ad exchange promises, there are still a lot of pipes in place. At least a half-dozen players were involved in Geico’s ad: Jelli, Katz, Geico, Horizon, Entercom and Strata, whose tech was used by Horizon to execute the buy. One would imagine some data providers were also used, although that was not revealed.

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It also wasn’t revealed how much Geico paid for the ads, and how much of that money will actually end up in Entercom’s pocket. However, according to a recent Interactive Advertising Bureau (IAB) report, ad tech firms received approximately 55% of all programmatic revenues in 2014; publishers saw the other 45%.

There’s not enough information about this Geico radio buy to know what the split was, but with the sheer numbers of (known) players that touched the buy, it appears the tech tax has found its way into the budding programmatic radio industry.

As Real-Time Daily noted: “The programmatic radio space continues to gain traction. The news of Geico’s pilot buy comes just days after WideOrbit launched a programmatic radio marketplace of its own. Entravision, Entercom, Radio One and other WideOrbit clients were named as early participants. Earlier this year, Marketron announced that it had sold its first programmatic radio ads.”

At least at the moment, there doesn’t appear to be an obvious solution; none of the links in the chain connecting Geico to Entercom for this transaction appear weak.

Horizon has its own programmatic division, HX, that uses a number of DSPs, but Strata was needed in this case because Strata has access to Katz’s nascent exchange. Perhaps over time, Horizon will gain direct access to the exchange, trimming the “tech tax” -- but that’s just speculation. 

In any event, programmatic radio’s test phase is now in full swing, with some of the biggest advertisers and broadcasters participating in the dry run. We now have a starting point to compare to as ad tech’s application to broadcast radio inevitably evolves.

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