Buzz words come and go and no more so than in the media industry. Working for RightMedia years ago was one of the most challenging roles and companies to work for, a newbie in the advertising world meant I had to get to grips with the basics before even ever understanding the ad-exchange business. What kept me sane was applying knowledge from my oil and gas days and understanding the concept of futures, forwards, options and the spot market.
RightMedia was a spot market for advertising; a clever piece of revolutionary technology that allowed anyone from any country to buy and sell inventory in an automated fashion, through one common platform. It was the tipping point…..
Programmatic buying is a glam word for exchange buying the real change has been in the ability to process information much more quicker. This is where cloud computing came to the rally and where companies like AppNexus built its technology and processing on. Efficiencies within media buying and selling has largely come about through cloud computing the data processing element which is fuelling the growth of RTB. RTB is complex, a mine-field of decision tree mapping and can’t at this moment in time utilise 100% of inventory through RTB – the amount of processing of every piece of intricate black box attribute is impossible for 100% of inventory in real-time.
It will be when all ad exchanges are RTB enabled and each DSP is capable of that processing power so programmatic buying in theory is the utopia but when inventory is not being traded 100% through DSP’s then programmatic buying has inefficiencies. It’s not an absolute but it’s so close.
I’m working with some large publishers and ad networks that are moving into this arena in Asia and one of the problems I encountered in the early days of RightMedia was how do you explain simplicity when the audience thinks that the platform is a magic pill and complex? The simple answer is you have to go back to the drawing board and explain the intricacies within media buying and that as great as programmatic buying is; it’s still needs managed hands. In other words it’s not 100% automated; the best DSP’s out there actually have huge managed service teams; because as amazing as mathematical probability is in deducing a predictive outcome on whether someone is likely to click or convert – the one big difference is statistical significance; that can take hours, days or weeks depending on budget and other factors.
The human can see in some cases faster than the automation of programmatic buying because the algorithmic decisoning that is working in the background has to go through qualified levels of variables before it assesses whether it should buy or not buy an impression. Imagine doing that for every single impression.
Asia is leap frogging from traditional media buying towards programmatic ad buying by the emergence of DSPs in the marketplace. You have Julian’s Brandscreen setting up office in Singapore outside of its AU HQ, Adgile growing from HK and USA and now ADZ which has just recently appointed Eduardo Saverin from Facebook fame to join its board and lead one of its investing rounds.
I’d also expect some large publishers to start selling media through these asian DSPs – just imagine the Indonesian market is over 250M people almost 70% of the US population, that is just one market. Asia is going to be huge. However, not all markets are equal in Asia and the Australian market is disruptive and publishers are not embracing programmatic buying. With good reasons….. they will see revenue plunge initially. Fairfax is indicating that it will not make any of its inventory through these platforms. Publishers if in agreement could in theory alienate such platforms if they continue to resist and are large enough to oligpolically force change. Its unlikely in the long-term as the push is coming from advertisers. If advertisers continue to bulldoze through programmatic buying then publishers have no residual power left to command a revolt. When you mix this in line with our economic instability you can glare that advertisers will win in the long run.
It also is evident that the growth of asian silicon alley is booming also; quite a few VC’s are swirling around and the Asian Governments like Singapore are handing out some very lucrative tax advantages in investing in home-grown businesses. This is further fuelling the growth of digital technology.
Its certainly exciting to be in Asia right now….