“Do you see over yonder, friend Sancho, thirty or forty hulking giants? I intend to do battle with them and slay them.”
“Now look, your grace,” said Sancho, “what you see over there aren’t giants, but windmills, and what seems to be arms are just their sails, that go around in the wind and turn the millstone.”
“Obviously,” replied Don Quixote, “you don’t know much about adventures.”
― Miguel de Cervantes Saavedra, Don Quixote
Back in June, I participated in a panel discussion at AdMonsters’ OPS New York conference called “Beyond E-Business: When IO Automation Comes to Town.” Ramona Gonzales of the IAB started the discussion by showing how automation has transformed many other industries. After Ramona’s introduction, Sudha Mahajan of Yahoo!, Lucas Black of AOL, and I discussed how automation, particularly the electronic insertion order, is going to transform the process buying and selling of digital media. This is the branch of advertising automation that has recently become known as Programmatic Direct.
After extolling the virtues of automation, a digital advertising veteran in the audience, Matt Barash, raised his hand and called on the panel, “This all sounds like the same Jetsons talk I’ve been hearing for years now. Frankly, I’ve never seen any real progress. Why should I believe anything is going to happen now?”
Matt’s is a fair criticism. He’s exactly right: as an industry, we’ve so far failed to make any significant progress in this area.
For more than ten years, the IAB and has been leading the development of electronic standards. Six years ago in 2008, the IAB released electronic standards for orders and invoices under the moniker of “e-Business.” Since then, there’s been virtually no adoption. We’re still using the same manual, cumbersome, paper-based process we’ve used since the first banner ad was sold twenty years ago. The process is embarrassingly expensive with a stratospheric non-working media ratio.
The IAB has recently revived this standards effort as part of its Digital Advertising Automation Task Force. I signed on as a co-chair of this group along with Geoff Petkus of Operative.
Frankly, I was a bit reluctant to sign up to lead this initiative. Based on the failure of past efforts, striving for electronic standards seems to be quixotic – an impractical pursuit of ideals.
But things are much different today than they were six years ago. And I believe the “impossible dream” of electronic standards will finally become a daily reality in digital media. This has nothing to do with the standards themselves, but rather because we’ve now a much more fertile environment for these standards to take root and to grow. Here are four new factors that are driving the motivation and innovation required for the widespread adoption of workflow automation.
The infrastructure for Programmatic Direct is finally here
One of the reasons earlier standards failed to be adopted was because they were too hard to implement. Yesterday’s systems could not handle electronic transactions and required an expensive overhaul. Although there’s still a lot of obsolete technology in the ecosystem (particularly on the buy side), there’s been a lot of innovation lately using modern cloud-based architectures. These systems are built from the ground up to enable electronic transactions.
Paper-based direct sales are under attack by RTB
Until recently, there were no viable alternatives to paper-based direct buying. Programmatic RTB buying has come along and proven that transaction costs can be driven to zero, taken market share away from direct deals, and is threatening to take more. It’s much more convenient to buy advertising inventory through Programmatic RTB than to buy directly. According to the Pittman Doctrine, “When given the choice between convenience and quality, convenience beats quality every time.” Therefore, despite all the quality problems, budgets will continue to shift from direct sales to RTB unless direct sales become more convenient.
Major buyers are pushing for Programmatic Direct
Ari Bluman, Chief Digital Investment Officer, North America of GroupM, recently stated (watch this video at the 5:20 mark) that “Programmatic to me is simply automation. RTB or open exchange buying is just a subset underneath that. Our drive is to only buy direct from publisher … using pipes to do so. Every brand that we speak to is very excited about that evolution. They understand the benefits. They want to buy from real