For Programmatic Direct, It's Top Of The Second Inning

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chrisoaharaData-Driven Thinking" is written by members of the media community and contains fresh ideas on the digital revolution in media.

Today’s column is written by Chris O’Hara, co-founder and chief revenue officer of Bionic Advertising Systems.

Lately, I have been working on a white paper about the “programmatic direct” phenomenon. Part of the research involved surveying a bunch of influential people in the space, and asking them where they thought this new buying methodology was in terms of adoption. Their answers kind of surprised me.

Regular AdExchanger readers might reasonably assume programmatic direct has quickly gained steam with progressive agencies and publishers. Almost every ad-technology player in the display space is seeking ways to enable programmatic access to higher classes of inventory.

Sure, some real innovations in programmatic RTB are enabling private marketplace transactions. Invitation-only auctions and fixed-rate deals inside of exchanges are only the tip of the iceberg, though. New Web-based technology and advanced ad-server APIs are starting to provide real process automation— the tools that will make it easier to buy and sell the 70% of inventory currently procured through the “transactional RFP” process.

However, there are a few barriers to overcome before “programmatic direct” can take hold:

  • Access to pricing and availability: It may sound strange, but one of the biggest failings of digital media has been the lack of good information for buyers. In direct mail, you can easily look up the details of the Computerworld mailing list, add all kinds of criteria (breakdowns by job title and purchasing authority), find out exactly what it costs and who to buy it from. Not so in digital media. Hence the RFP process, where buyers have to go through hoops just to get a sense of pricing and availability. This simple act of discovery adds time and complexity to every transaction. Today’s programmatic direct systems are being built from the ground up — starting with good information, and also with dynamic pricing and availability information.
  • Standards for electronic ordering: Another obvious thing that needs to happen before real process automation can happen in digital is that a set of standards must emerge. The IAB has known this since 2008, but five years later the “eBusiness Task Force” (now called the “Digital Automation Task Force”) seems no closer to its original mandate. Its stated mission: updating the XML schema and implementation testing for the electronic delivery of digital advertising business document. Those documents include requests for proposals (RFPs), insertion orders (IOs) and invoices — documents that must be standardized in order for adoption of programmatic direct buying to occur at scale. However, there is urgency like never before to get such standards implemented, and a source close to the action says “we will see more movement in the next nine months in standards and protocols than has happened in the last 10 years.” Let’s hope so. The wide adoption of a common set of standards and protocols opens up the door to the electronic IO — the key to achieving scale in programmatic direct.
  • Culture change: While a directory can be created and standards adopted with lots of hard work, those things are actually easier than the real key to programmatic direct adoption: culture change among agencies and publishers. Agencies must leverage technology to empower the “23-year-old media planner” and give them a reason beyond sneaker parties to go to work. Technology will unleash their creativity and get them focused on solving real problems for clients. Likewise, publishers need to escape the “$200,000-a-year salesman,” with his accompanying high T&E and schmoozy selling style. Publishers need data-driven sellers that understand how to drive programmatic adoption, and can sell based on the new “media investment” paradigm happening at agencies — understanding tactically how to spread digital dollars across a broad portfolio of channels. Agencies know they cannot remain stuck with the current cheap labor model. Publishers understand that they cannot keep their higher classes of inventory outside of programmatic channels. Change is hard, but it’s already here.

About a year ago, I said 2013 would be the year of programmatic direct. It turns out that 2013 has been the year of programmatic direct hype, and a ton of valuable behind-the-scenes work on the technologies that will drive it in the future. But unlike the perennial “year of mobile,” programmatic direct will become a reality quickly if some of the above building blocks come together.

Follow Chris O'Hara (@chrisohara) and AdExchanger (@adexchanger) on Twitter.

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