The publishers that complain about programmatic advertising eroding yields and destroying their business are “those that have oversold their audience based on a fallacy.” Meanwhile, their sales staff “won't have a job in future unless they understand data and technology”.
They were respective views of RadiumOne's Kerry McCabe and former Facebook honcho turned Kenshoo regional sales boss Liam Walsh.
The programmatic panel session this morning at the AdNews Media Sales Summit also heard from GroupM chief intelligence and investment officer Danny Bass, News Corp digital and product development director Alisa Bowen and Fairfax digital ad development director Tereza Alexandratos. Facebook agency sales lead Ellie Rogers asked the questions.
“Crap inventory gets found wanting when supported by actionable, robust data,” said McCabe. “Good audiences attract a premium. Unless you are a media owner overselling your audience based on a fallacy [you won't be complaining about erosion of margins, commoditisation etc].”
GroupM's Danny Bass questioned why agencies would pay $35 CPMs “when we know we can find those audiences for $2 CPMs. Ultimately, as data gets smarter we know it is the same [audience]. So publishers need to truly articulate the difference [of their audiences] and their value.”
An issue for big publishers today trying to claim premium inventory, said Bass, was that “everybody is playing the click game, the 'BuzzFeed' model. So we have to ask is that a quality environment?”
Bass said that some publishers were catching up with the agency trading desks in moving towards an automated environment. “Some have responded accordingly and will [emerge from transition] stronger than they were. Some won't.”
News Corp's Alisa Bowen said that publishers while “investing material sums” in automation were “still working out whether programmatic was a threat or an opportunity”. She said that all parties “have to get to a centre point” before programmatic trading becomes the de facto for media sales.
One reason why publishers were playing catch-up was because “the publishing industry has struggled to make a call on where they want to play. They have flipped and flopped at the extreme ends of the spectrum versus the middle”. Now though, the question was not whether to play but how to capture the profit margin remaining in the business.
While agencies increasingly have the question of arbitrage and transparency hanging over them, Bowen said publishers weren't concerned about agencies making higher margins through programmatic trading.
Instead, what fuels their “paranoia is that there is something more we should be doing to capture a bigger piece of that pie.”
Kenshoo's Liam Walsh said it was “weird” to have an industry where a publisher “can make as much margin as it likes but if an agency does the same thing, that's an issue. If clients are happy, what is the problem?”
RadiumOne's McCabe agreed. “If you went to buy a coffee for four dollars, you wouldn't question the coffee seller about his net margin before you bought it.”
Fairfax's Tereza Alexandratos said that market consolidation should reduce the number of parties clipping the ticket on its way from client to publisher.
She said Fairfax was hiring staff with maths and economics backgrounds to feed insights to its sales teams “a skill-set that is a great addition.” But Alexandratos stressed that however big programmatic trading ended up (it is currently low double digit for Fairfax) “traditional 101 sales skills become even more important... organisations don't recognise that, and that's a mistake.”
While people have talked for a while about the Mad Men-Math Men blend now required in media, Kenshoo's Walsh was not so sure. He thinks the math factor is primary.
“I don't watch Mad Men much but those guys don't do much and their skills are relatively low. If you can reduce your headcount to improve profit, you will. So in a [data-driven] world we will need less sales people. You have to understand how technology works or you won't have a job. Understanding sales and relationships is not enough.”
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