Forget About Man Vs. Machine, Programmatic Is Becoming More About Price Vs. Flexibility

A couple of stories breaking in the last couple of days have me thinking about that old adage: The more things change, the more they stay the same. The thing I’m talking about is the media marketplace -- in particular, the way the programmatic media market is evolving to be more like the way people have always bought and sold media. Funny how that happens.

The two stories I’m referring to are OpenX’s announcement of a new flavor of real-time media-buying it calls “real-time guaranteed,” and the story we're publishing today about Digilant parent ISP Digital’s bigger play. At their core, both stories are about offering advertisers greater flexibility in their media-buying decisions.

ISPD’s strategy, says CEO Don Epperson, is to offer CMOs the flexibility of plugging into and playing with whatever model of programmatic servicing or technology makes the most sense for their organization. Want a complete managed service? ISPD has an offering for that. Want guaranteed pricing? ISPD offers that, too. Want to hedge your own market positions? Yep, ISPD can help you with that too. Want to do it entirely in-house and use their infrastructure to enable it? Yeah, sure, why not.

In the end, Epperson knows the best technology is invisible to its users, and there's no sense letting it get in the way of what they actually want to do. So ISPD is building a full suite of programmatic media services -- spanning paid, earned and owned, of course -- and enabling CMOs to decide which approach works best for them. And if they choose to change or at least try another model later, well, ISPD can do that too.

This approach should not be surprising coming from Epperson, an early digital agency pioneer whom some say (including me) helped create the modern day DMP and agency desk models. Epperson has always been about using technology as a means to an end. And in programmatic media, as well as marketing tech more broadly, the end is about a marketer’s objectives and outcomes. 'Nuff said, but stay tuned to see how ISPD evolves its offering over time.

Regarding OpenX’s new real-time guaranteed model, when they explained it to me, the first thing I thought of what how much the programmatic media marketplace is evolving to be like old-school media hedging -- specifically, the television upfront.

“What,” you say, “nothing could be further from the network TV upfront than programmatic?” Well, hear me out.

Yes, the upfront was always high touch and highly human, even long after computerized TV optimizers came into play. But that’s not the analogy I’m striking. I’m talking about the market mechanisms involved in upfront deal-making and how closely the programmatic marketplace is evolving to be like it. And how OpenX’s real-time guaranteed is part of that progression.

Except for its earliest days, the upfront was never just about access to inventory. It was always about hedging risk and trading price vs. flexibility associated with that risk.

One risk the upfront mitigated was the potential for future price spikes should TV’s scatter marketplace tighten and prices soar. But on the downside, upfront advertisers also got other terms and conditions to protect a softening of marketplace conditions. You know, cancellation options. And while it was frowned on for upfront advertisers to exercise their cancellation options solely because of scatter market downturns, in principle, an upfront advertiser could do that.

What I learned over the time I covered the upfront is that it was actually a mix of negotiated -- and often renegotiated, or “stewarded” -- risks that buyers and sellers managed over time, including cancellation options, makegoods, upgrades, etc., etc., etc. Even the percentages of cancellation options were subject to negotiation depending on how soft or firm upfront market conditions were. Still, there is no free lunch -- so the more flexibility advertisers demanded in their upfront commitments, the more they’d have to give up somewhere else, and usually that mean price.

So I suppose the development of something like OpenX’s real-time guaranteed was inevitable, because whether it is people or machines buying media, advertisers like to manage their risks -- and when they want more flexibility, they are sometimes willing to pay for that.

You can read other publications' coverage of OpenX’s announcement story about real-time guaranteed. I specifically took a pass on covering it, for reasons I don’t want to go into in this column, but there’s a good piece on AdExchanger, and Beet.TV has a good interview explaining it.

Still, the short version of the stories is that OpenX’s product falls somewhere on the spectrum between a completely open RTB marketplace and a completely closed, guaranteed, direct private marketplace. I think that’s a good thing. People should have the flexiblility to make a market where they want, and to hedge that market anyway they want.

It’s up to you how much risk you want to take, or how much insurance you want to buy -- and how much you’re willing to pay for having those choices.

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