Let’s Not Lose Sight Of The Real Power Of Programmatic

“Marketer’s Note” is a regular column informing marketers about the rapidly evolving, digital marketing technology ecosystem. It is written by Joanna O’Connell, Director of Research, AdExchanger Research.

Call me naïve but I believe in the open exchange model. I always have. Something about the battle of wits it promises always spoke to me: The buyer who actively seeks out data, and who knows how to make sense of it, will make the smartest real-time bidding decisions – whether it’s bid/no bid or a really smart pricing decision – that add up, impression by impression, to the most optimal media spend, beating out its competitors in the process. In this model you don’t have to be the biggest agency or marketer to succeed; you simply have to be really hands-on and smart. Whoever is smartest with data wins.

I’ve keenly watched, therefore, the evolution of direct programmatic deals over the last several years, with a tinge of sadness, I admit. Sadness, because these deals are not so much about intelligence driving competitive advantage as they are about buying clout ruling the day, i.e., the biggest buyers can bully sellers on price because they control big piles of money – programmatic, then, just serves as the transactional mechanism. In this model, the bigger you are, the “better” you’ll do.

I’d argue though that simply getting the best rates isn’t enough. That’s media buying circa 2002. We’re smarter than that now, and we should act that way. I don’t dispute that there are many, many large buyers who are also smart – they are bringing proprietary data (or data models) to bear on those direct deals to help them make the most intelligent decisions possible. But I would bet you there are plenty of big buyers who are still primarily focused on price – on banging programmatic sellers down on rate and calling it a win.

I hope – naively? – that this is simply a case of the pendulum swinging back (it’s all about exchanges!) and forth (it’s all about programmatic direct!) before eventually settling at a place somewhere in the middle: Intelligent real-time decisioning, as pioneered in the open exchange model, sitting on top of the operationally efficient infrastructure of a massive web of programmatic deals is considered standard operating procedure for any big buyer using programmatic*.

Television ecosystem, I hope you’re listening.

I’ll step down off my soapbox now and take your comments!

Joanna

*Incidentally, there’s a very interesting conversation to be had about the future of the open exchanges. I see a place for them. But as GroupM’s Ari Bluman famously noted, open exchanges won’t be a part of their buying strategy in the long term. (Xaxis’ Brian Lesser, for his part, did not take that same stand in a recent discussion on the subject.) A topic for another day…

Follow Joanna O’Connell (@joannaoconnell ) and AdExchanger (@adexchanger) on Twitter.

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