by Joe Mandese
On the heels of last week’s deal naming Adap.tv its primary automation platform for targeting and buying TV and video inventory, Interpublic this morning unveiled a spate of similar deals to automate its transactions with five big media suppliers traversing TV, radio, out-of-home, mobile and online video and display.
Details about how the deals would be structured and how they would work were not disclosed, but Interpublic said it now has agreements with TV programmer A&E Networks, cable operator Cablevision, out-of-home and radio operator Clear Channel, local broadcaster Tribune and online portal AOL, which is in the process of acquiring Adap.tv, to supply assets “not previously available through automated buying systems.”
The initiative, which was developed by Interpublic’s Mediabrands unit, is dubbed the Magna Consortium, and is part of the agency holding company’s mission to automate 50% of its media-buying by 2016.
Interpublic has said it is making the push for several reasons, including both greater operating efficiency for its agencies and its clients as media-buying becomes hyper-fragmented and hyper-complex, as well as greater precision in targeting audiences it says will result by shifting from conventional audience-buying data (ie. Nielsen ratings, GRPs, etc.) to estimates that co-mingle so-called first- and second-party sources of data in a manner similar to the way agency trading desks utilize DMPs -- or data management platforms -- to trade online audience buys.
“The good news is that our charter members were quick to sign on to develop a plan forward,” Magna Global Worldwide CEO Tim Spengler stated, adding: “Our goal is to ignite real change in the way media is transacted for the industry.”
While programmatic trading systems are growing fast in the online display marketplace (Magna estimates this is currently about 25% of all online display advertising), the growth has come largely from the emergence of an over-supply of online inventory and auction-based media-buying models like “RTB,” or real-time bidding, that many “premium” suppliers are loath to embrace for fear it will “commoditize” the value of their inventory.
However, some of the most premium online publishers now participate in programmatic exchanges, and many of those deals are not necessarily auction-based, but function more like private exchanges where sellers can set pricing “floors” and buyers can set “ceilings" to ensure that both sides are in control of the process -- even if it’s being processed by machines faster than humans can manage such deal-making.
According to Frank Addante, CEO of Rubicon Project, one of the biggest suppliers of media-buying automation technology, the speed of such transactions is accelerating and is now down to 30 milliseconds of processing time for the average online buy. That’s an improvement from 300 milliseconds a year ago, and three seconds three years ago, all thanks to improvements in data-processing technologies.
The advances of such technologies, and the shift among advertisers and agencies to use them to improve their efficiency, as well as the data-driven effectiveness of reaching their audiences, has sparked a gold rush among media and advertising technology suppliers, many of whom are now going public. One of the fastest-growing and most sophisticated of those developers -- Rocket Fuel, which utilizes artificial intelligence and robots that can assess and bid for media value faster than any human can -- is the latest to file for an initial public offering.
In its filing late last week, Rocket Fuel noted that advertisers are flocking to its technology, and that its revenues more than doubled last year -- and more than tripled during the first half of this one, thanks to a surge in the number of advertisers using its platform. The filings said Rocket Fuel currently has 784 advertisers (up from 341 last year), and that many of its existing advertisers continue to increase the volume they trade via its systems.
The greatest impediment to Interpublic’s goal of automating 50% of all its media buys by 2016 is convincing the most premium suppliers of media inventory -- especially the major television networks -- that they won’t lose control, or value, by doing so, which is why A&E Networks' direct involvement is so significant.
That said, at least a portion of all of the most premium TV suppliers inventory already is being sold through programmatic exchanges. While it’s not being sold directly by the national TV networks themselves, the trading desks of at least two agency holding companies have already begun utilizing AudienceXpress, a programmatic audience-buying exchange spun off from target TV-ad serving developer Visible World. The portion being traded by AudienceXpress comes from the two minutes per hour that networks give to local cable TV operators as part of their carriage agreements. While the cable operators are supposed to sell that commercial time to local or regional advertisers, AudienceXpress effectively pools their national reach into unwired network buys.
Since it became operational in late January, AudienceXpress Founder and CEO Walt Horstman estimates the two agency trading desks that have been beta testing it have bought 2 billion TV advertising impressions through it.
The reason why AudienceXpress has been successful where others, including Google and Microsoft, have failed, says Horstman, is that its platform is designed to give suppliers 100% control over the floors they set for selling their inventory, while giving buyers the ability to analyze more data that will enhance the value of buying those audiences from their perspective.
As with online publishing, the supply of unsold TV inventory also continues to expand due to the emergence of so-called “long-tail” networks that are not yet rated by Nielsen, as well as a torrent of free video-on-demand audience impressions