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Who’s To Blame For Lagging Automated Guaranteed Adoption? Everyone.

September 19, 2014

by Vedant Sampath

Premium digital media buying has been a surprising laggard in adopting automation.

Publishers, agencies and ad tech vendors share equal responsibility for this.

As the digital market matures, media buying is likely to stabilize around three channels: RFP-based negotiated buys for truly custom units, publisher-served guaranteed buys for industry standard units and real-time bid-based buying over exchanges, also for standard units.

While all three buying methods benefit from automation, the publisher-served guaranteed segment suffers the most from a lack of automated buying. This has resulted in unnecessarily high transaction costs for both agencies and publishers.

Why has this sector resisted the push of automation? Technology to automate this sector certainly exists and is not a major factor. The main inhibitors to adoption are entrenched processes and a lack of trust between the buyer and the seller. What is needed is a change in mindset.

Agency Buyers Fear Lack Of Price Control

Our experience with a broad segment of North American media buying indicates that RFP-based buying at a campaign level represents a majority of the spending in the publisher-served guaranteed segment. There are several challenges from the buyer’s perspective slowing automation adoption in this segment:

Price comparison across like inventory is difficult without a futures marketplace.

Buyers don’t trust publishers to offer a fair price without some level of arm-twisting that is typical in the RFP process.

Even when negotiated prices exist, the multitude of product placement variations created by combinations of targeting, creative unit and type of ad unit make it hard for the buyer to readily apply pre-negotiated prices.

A combination of data science and newly empowered media investment teams is starting to change the dynamic among agencies. Data science can reduce the complexity of recognizing and comparing like products. Media investment teams are looking to consolidate price negotiations and scale the buying process, a trajectory that could help overcome the inertia to automating the buying process.

Publishers Fear Commoditizing Top-Tier Inventory

If past experience with real-time bidding (RTB) is an indicator, publishers equate automated buying with lower prices. This perpetuates the status quo of high-touch selling for all premium inventory. Tentative attempts at supporting automation have suffered from a combination of less-than-premium inventory and unrealistic prices. Success has been further undermined by not treating this as an independent selling channel resulting in channel conflict within media sales teams.

Context matters to brands. Automation-driven buying by itself does not commoditize inventory. Automation in this segment can create a more scalable sales model while retaining realistic pricing. Success is dependent on a combination of support at the executive level for this channel, and appropriate incentives at the field sales level.

Technology Needs To Support Full Transaction Life Cycle

Campaigns run not only across digital channels but also across multiple buying methods. A campaign containing custom sponsorships, premium run-of sections and programmatic RTB executed buys is commonplace. A buyer should be able to work across buying methods – whether that is an automated RFP process, an automated futures buy or an impression-based RTB buy – without having to change contexts. Research tools, third-party audience data, publisher media kits, inventory comparisons, historical pricing information and proposal and order revisions should seamlessly integrate with the buyer’s workflow.

Likewise, publishers should have inventory, price and yield management tools, product catalogs and integrated order management systems to enable these automated sales effectively. Open APIs are required to connect all aspects of the buying process and integrate buying and selling systems.

All of these are available in the market today. Let’s have the will to make automation happen and then we can continue to target the rest of the downstream digital processes that are fraught with manual steps, such as trafficking and creative, and reconciliation and invoicing. Ironically, digital buying will then move a step closer to TV buying, which has benefited from electronic buys and invoicing for more than a decade.

Via AdExchanger