Programmatic Buying For TV
Programmatic Buying has become an unavoidable economic imperative of the media industry, manifesting itself as the next evolutionary phase in commercial transactions. As impression-based selling across multiple mediums increasingly becomes the norm, several business impacts are emerging in the advertising world.
Firstly, advertisers are increasingly expecting diversified multi-platform campaigns in pursuit of ever fragmenting audiences, and; secondly, the transaction volumes associated with these campaigns is increasing the average complexity and cost of campaign management.
This has directly impacted the cost of transacting business for the media Buyer. And, it is becoming a limiting factor in the Buyer's ability to manage costs effectively on behalf of the client.
At the same time as the Buyer's business model becomes increasingly affected, the ad Seller's business has required correspondingly careful management and valuation of both inventory and associated audiences.
This need to support scale and complexity, creates economic pressures that is driving the media industry to automate the buy-sell process.
The Linear Trading Model
Strictly speaking, programmatic buying corresponds to the Buyer's point of view of an ad-exchange. In the ad-exchange model, the Buyer utilizes a demand side platform (DSP) to purchase the Seller's inventory, which is generally based on unsold or remnant inventory.
However, the practice of merely trading against remnant inventory has often led to unrealized audience value expectations for both Buyers and Sellers.
This document presents the benefits of an enhanced trading model. It describes a Sell-Side Platform (SSP) that is being proposed to a leading consortium of Buyers and Sellers to provide tangible business benefits for both parties. These benefits are focused on ensuring that all players in the media advertising value chain win. In so doing, this approach forms the basis for a true open trading model for linear advertising industry.
Ensures mutually optimal goals
Sellers have a portfolio of tiered inventory, both linear and addressable, that supports their constituent audiences. Most Sellers are extremely sensitive to opening up their inventory to alternate sales channels that may either conflict with normal sales motions, or may lead to the cannibalization of existing revenue.
This mechanism drives mutually optimal goals. It ensures that the Seller maximizes the value and utilization of inventory at the highest possible market price based upon supply and demand, which dynamically changes. Furthermore, the Buyer is provided the broadest available candidate inventory set for subsequent algorithmic selection for achieving the smallest cost per impression. Quite apart from price, the offered inventory enables the Buyer to satisfy other campaign criteria such as program affinity and Reach and Frequency.
By satisfying the mutual goals of Buyers and Sellers, trust and confidence in the fidelity of the trading model will grow resulting in Sellers increasing access to more valuable inventory. In turn, this will enable Buyers the opportunity to avail themselves of a greater spread of audiences across times and properties. As a consequence, the current practice of gleaning impressions from remnant or distressed inventory for suboptimal results will dissipate.
This approach enables both Buyers to buy and Sellers to create new audience profiles that currently do not exist in a ratings only world focused on spot buys. Mining viewer behaviors across the entire inventory portfolio will enable both parties to explore new campaign tactics by aggregating fragmented audiences and leveraging new marketing niches.
Lower transactional costs
For Buyers, reducing transaction costs through automated processes enables more efficient advertising campaigns on a target audience impressions basis. It also enhances business efficiency by removing the requirement for highly skilled media Buyers.
From the Seller's perspective, the process surfaces candidate inventory without necessarily distracting skilled media sales staff. In this manner, the Sell-Side Platform enables inventory demand to be measured, projected and priced accordingly.
The resultant reduction in sales friction ensures that both parties can enjoy better service levels. A critical distinction of this approach is that the Seller cannot offer inventory that is not available for sale at that precise moment. This promotes the common goal of ensuring that transactions are consummated as quickly and efficiently as possible so that offered inventory can be secured with surety at the current guaranteed price.
Competitive pricing for both spots and impressions
Buyers typically use Programmatic exchanges to obtain offers from multiple Sellers. Buyers aggregate these competitive offers in order to assemble their ideal campaign based upon impressions or units from the advertising slots presented.
Naturally, Buyers will not purchase availabilities from any Seller's inventory that is perceived as too expensive. Sellers that programmatically track demand will respond with a lower price in order to sell their inventory. Conversely, inventory that is priced too low will create high demand and the system will adjust pricing in order to ensure its availability.
This benefits both parties by ensuring that the market price is truly reflective of demand, satisfies availability, and has a verifiable economic basis for value. It directly confronts the indeterminate advertising performance that both Buyers and Sellers experience with exchanges that offer 'unsold' inventories.
Transparency and security
A well-defined protocol that is publicly available for system integration ensures that both parties have access to the right information as quickly and efficiently as possible. The ultimate goal is to enable a timely and cost-efficient transaction. Both authenticity and security of transactions is built into the trading protocol utilizing well-accepted and verifiable technologies.
The protocol provides accurate trading codes as part of the messaging exchange. These codes are supported by both parties legal and business practices to ensure frictionless trading from order to billing.
Most importantly, support of current business systems requires minimal technology investments to start trading ensuring that transactions can be secured, audited and reliably reported.
In Summary
This approach is focused on addressing the following real-world business issues:
- Providing appropriate audience data (either the currently traded currency such a Nielsen, Rentrak, SQAD, Set-Top Box Data or a combination) to build a rich picture of the ideal customer.
- Optimizing campaigns based upon current inventory at the optimum market price.
- Ensuring the best practices for security, auditability and reporting of results.
- Integrating existing systems with a well-documented, supported and transparent protocol.
There will always be a need for people to buy and sell media.
For the Seller, much of the sales process today is mechanical and repetitive order-taking work. This has inherent risks of under fulfillment resulting in ADUs or over fulfillment that wastes valuable inventory.
This process clearly can be automated, resulting in the most efficient use of available inventory enabling Seller revenue maximization and Buyer purchasing optimization. A win-win proposition.
By leveraging a common programmatic Buy-Sell process and protocol, the Seller’s sales resources can be focused on building better customer relationships, and educating Buyers on the unique or specifically valuable attributes of their properties.
While programmatic methods will streamline the Buy-Sell process and make it more efficient, media buying (and especially planning) doesn't go away. The role of the media agency becomes, in many ways, more critical and certainly more technical. Planning will become a bigger focus of campaign management as the execution will now be faster, resulting in greater emphasis on getting things right before the campaign runs.
About Decentrix Inc.
Decentrix is a technology and consulting company specializing in Media Business Intelligence (MBI™) and Media Data Warehouse Solutions tailored specifically to the needs of Media, Entertainment, Telecommunications and Advertising companies. Founded by technologists with decades of experience in media transactional systems, Decentrix offers a fast-track, fully working enterprise solution for Media Business Intelligence using SQL Server 2012 architecture. The BIAnalytix™ Solution was purpose built to help large media corporations solve the challenge of rapidly and accurately accessing the large amount of data locked up in their "transactional" systems, by ingesting the critical granular data into a single enterprise-wide media data warehouse and providing fast, intuitive reporting from a "single version of the truth."
Decentrix Contact:
Mike Sutton, Vice President of Sales, 303-899-4000 x203, msutton@decentrix.com
