The impact of programmatic media, or the automation of the buying and selling of digital media, will as we have seen with other markets such as taxis and accommodation, be overwhelmingly positive.
But time is short and media agencies need to take their clients on the transition with them. Fee and cost structures are changing dramatically and budgets need to be allocated differently to include the cost of technology, consultancy and data fees.
The traditional commission and rebate structures will disappear in favor of performance bonuses based on actual programmatic trading outcomes.
The real question is what should clients be paying for and what is the value the ‘new media agency’ delivers?
At the end of the day a trading platform is just that: an auction platform to buy and sell advertising. No different to a platform that trades shares or pork bellies.
The president of the trading giant, Appnexus, Michael Rubenstein says programmatic buying is an artificial name to explain how technology is disrupting the media industry like so many other industries.
He’s right. The real value-add lies in understanding the value of what is being sold: think about it in ASX terms— is the real value in the intelligence to buy the right share, or the process of buying the share?
For a period programmatic trading was the story. It worked a treat for some of the large media agencies with big platforms as they could sell “the programmatic revolution” to clients on the “anywhere, anytime” slogan while arbitraging, or some would say gouging, a big cut on the way through.
But no longer: as programmatic buying becomes pervasive, data targeting capabilities better, and the cost of trading is driven down, getting value will increasingly turn on what’s fed in to the platform.
For example, how well a client’s audience is profiled and segmented and the ability to combine off-line and on-line audience data to make the targeting even more accurate. For many larger clients there will also be the opportunity to share databases, as we are seeing airlines do with banks.
Media and communications strategists should carefully consider the impact, and improvements, a wealth of new behavioral and consumer data will bring to the strategic planning for clients. Set and forget strategy and trading plans are a thing of the past.
There is a similar major challenge for publishers. If you don’t have a premium programmatic strategy you risk having your audience commoditized and won’t be on schedules for much longer.
So, we are at the tipping point of an accelerating transition.
Michael Rubenstein, made a big claim when in Sydney for the launch of Apex Media last year. Simply put, he said that ‘programmatic media buying’ wouldn’t exist in a couple of years.
There will be no special teams in dark rooms. No Xaxis, Cadreon or any of the other trading brands that will instead focus on being media technology providers.
These were brave words at a breakfast co-hosted by Fairfax and NEC, who are still struggling to articulate a clear market-wide programmatic strategy. But of course he is right. No-one talks about Cloud Computing now that all computing is conducted via the Internet. It’s just computing.
Rubenstein also predicted a seismic shift within two to three years but he naturally views the world through the lens of the progress in US programmatic media buying.
A November 2015 report by Nielsen and Pathmatics puts Australia’s migration to online programmatic buying way ahead than the US on any device. 46% of Australian desktop media versus 35% of US desktop media is traded programmatically. The real figure would now exceed 50%.
Unlike the US, we do not have the luxury of time.