In its earnings call Friday, Adobe President and CEO Shantanu Narayen announced the company was shuttering Adobe Advertising Cloud transaction-driven offerings, the TubeMogul TV and digital video ad activation business it acquired in 2016. Narayen remarked that its Advertising Cloud transaction-driven offerings were “low margin,” not core to Adobe’s business, and “in fact are extremely resource-intensive.”
With the announcement, Adobe joined a long and venerable list of companies that have met their match trying to automate the activation of TV advertising. Remember eBay TV-Ad Auction? Spot Runner? Google TV Ads? Microsoft Admira? Aol/Adap.tv? Videology?
Why have so many companies tried and failed to build profitable, scalable businesses automating TV advertising with digital-born techniques?
The reason for trying is obvious: TV advertising is where the money is, generating more than $70 billion in U.S. spend last year. The repeated failure part is a bit more complicated, but having had a front-row seat throughout, I have my opinions.
Here are the main reasons why so many have failed to automate the activation of TV advertising:
It takes more than pretty dashboards. Too many of the TV buying services were mechanical Turks: pretty dashboards that just handed off insertion orders to conventional buyers and traffickers to buy the old-fashioned way.
Trafficking TV spots conventionally is very time-consuming, and the faux precision of tight targeting and fast turnarounds as suggested by digital dashboards created expectations that labor-intensive “managed services” couldn’t deliver on, certainly not without being “extremely resource-intensive” and quite unprofitable.
Retrofitting digital buying systems to TV doesn’t work. The workflow of TV and digital are about as opposite as you could imagine. In TV, demand for inventory exceeds supply. In TV, planning and buying have little to do with each other, with planning now more of a Kabuki dance that occurs the better part of a year before many spots actually air.
Rather than retrofitting, automating TV ad activation means integrating into the TV ad workflow, particularly the internal trafficking, many times using software to connect into TV media owners’ human management systems.
That way of operating is foreign to how most digital ad systems were created, intended more for real-time bidding, largely unchecked access to inventory and rates, and advertiser-managed creative delivery.
Without the capacity to have true automation from planning to buying, ideally integrated and automated to the network spot level, buyers/advertisers are left with a better plan, but no better chance to execute it; basically, too many cards short of a full deck to be useful.
Commingling economics with agency buyers doesn’t end well. When buyers are incented through shared fees (frequently undisclosed) to use an ad activation platform, the platform tends to underinvest in technology and overinvest in client management. As volume grows, advertisers want fees to go down, agencies want bigger cuts, and the number of account managers (costs) keep growing.
It’s a vicious circle, and ultimately death spiral. All you need to do is remember Videology’s bankruptcy. WPP’s Group M was both one of its biggest debtors and creditors. These days, transparency rules.
Access to broad pools of inventory is critical. A digital ad planner for TV that doesn’t connect into a broad and diverse pool of inventory is at a big disadvantage. Google TV Ads was way ahead of its time in many ways, but its reliance on inventory primarily from Dish, with little bits from a couple of the NBCU networks, meant it couldn’t do optimized audience-based campaigns in any significant way. It just ended up being an easy way to buy pre-bought inventory on Dish.
The same thing has happened to those “platforms” that were just dashboards on top of limited pools of pre-bought, bartered or daisy-chained inventory from other intermediaries (frequently non-disclosed to hide provenance and mark-ups).
Truly automating the world of TV ad activation is hard. It has defeated many who have tried. What do you think?