Optimize Thyself: Ad Exchanges Draw Crowd At ContextWeb/Ad Club Event in NYC

ContextWeb and Advertising Club EventWhoa, Nellie – full house!

People are getting the message about new opportunities in display ad exchanges and platforms as an impressive crowd of nearly 400 attended today’s Times Center event in NYC entitled, “Agency Demand Platforms: Art vs. Science in a Real-Time World,” co-sponsored by ContextWeb/ADSDAQ and New York’s Ad Club.

After intros by the Ad Club and ContextWeb EVP Jay Sears (AdExchanger.com Q&A available here), Wenda Millard, a ContextWeb board member, moderated a panel of agency execs along with Ross Sandler of RBC Capital Markets who provided several questions with Wall Street’s perspective.

Among the panelists were:

To view in-depth, pre-event Q&As with all of the participants including Nathan Woodman of Havas/Adnetik, visit the ContextWeb blog here.

Great Start

A clever beginning to the morning’s proceedings was Millard asking audience members to raise placards that had been passed out to all so that they could indicate whether they were “Buyers,” “Sellers” or “Traders.”    Though fairly evenly divided between buyers and sellers, many said they were traders (14% according to ContextWeb’s pre-show poll).  Traders, already?  Yes!

There were many interesting observations throughout the hour long session (video of the entire event will also be is available on the ContextWeb blog.). Here’s just a sample…

RBC’s Sandler was notably cautious about prospects for display (see ThinkEquity’s different take):

“I don’t think the buyers are convinced yet [about display advertising] and given the state of the economy, this is a year where display is going to have  a bit of a reset.  3 years from now, we’ll be in a different place but it’s not going to be in 2009.”

VivaKi’s Greg Green wasn’t taking the bait and said:

.. I’m not sure I’m with you on that. Things are doubling in size – it feels like every quarter there are 50% increases in these new areas.  If there was a little bit more confidence that it could be this year, and what do we do to put it in play this year – I’m not playing the game personally that this is 3 years out.

Bant Breen didn’t take Sandler’s bait either and added that even though search still is in the lead from where he sat:

“One of the reasons why things like Cadreon and marketplaces are interesting is that we find that performance that we’re getting now matches or exceeds search.”

As Millard probed on opportunity within the inventory of the Long Tail, Omnicom’s Matt Spiegel suggested that more “science” is a key to unlocking its potential.

“It’s interesting. This industry gets caught up in false categories. It’s all media and advertising when we all go back to the office.  I understand that on some level we have to label things in order to put strategies around them.  But if we go back to doing a better job of reaching consumers our clients are looking for – we’re saying we need to bring more science to that.”

Arbitrage, or the decreasing lack thereof, was a hot button issue, too, as agency execs seemed to dance gingerly as to whether or not agencies arbitraged – or should.

Sloan Broderick said:

“Fundamentally arbitrage means buy “low”, sell “high” or re-sell higher.      That’s just taking advantage of a position in the marketplace. I think it’s ok where in the agency or holding company is actually taking the risk – assuming the risk and not using client’s money.  That’s a different version of arbitrage.

I think when you apply some form of intellectual capital, IP, some technology, some science on top of it, and clearly articulate to the client when, where and why there’s a premium being associated with that action or purchase that is driving value or incremental margin back to the agency, I think that is ok. But I think it’s absolutely critical to be able to keep an open dialogue with clients. This is a litigious, risky areas if you don’t have those open conversations.”

Ross Sandler pushed the panel on how they can accurately price inventory in advance (reserved inventory).  VivaKi Nerve Center’s Green offered:

“I think there are platforms and technologies available today with real-time decisioning on an impression within an inventory [buy].  In VivaKi we have a product that has a group of publishers that are participating with their inventory and we’re able to decision on an impression in real-time and essentially decide on the value of that impression. Is that the impression that we want? Is that the audience that’s appropriate for that client?  To me, it’s real-time versus arbitrage.   I don’t think arbitrage is the vision we have for an efficient marketplace. It’s part of the past. You could take positions and arbitrage.  Real-time with no waste means there is no need for the arbitrage and I think technology is there today.”

Green, Breen and Millard jousted on media’s place next to creative – and the art and the math inherent.

Green said:

“I really think a blend of creative and media is the vision and the ability to influence the art at the same level we influence the math.”

Bant Breen countered:

“Let me explain what I mean media-led creativity. For us, it’s creativity-driven around the data that we’re collecting from media to shape that messaging and concepting and making it extremely relevant and engaging.”

Millard returned the discussion back to the consumer:

“Aren’t we really talking about consumer insights? You can get data anywhere. But the extraction of insight from data – that’s the precious pearl inside the data.  Isn’t consumer insight what will feed the creative?”

Breen responded:

“For us it’s a little bit of both. When we talk about an audience marketplace, the reason we talk about it, is that it’s false to say that we can target a precise audience using the basic tools we have in the digital space today.   What we want to do is go to a more granular level for specific objectives set by our clients and use a broader set of data to reach a specific audience.”

Ross Sandler later turned the panel toward a more Gladwellian topic in trying to understand when the ad trading and ad exchange model will finally take off:

“I hate to use clichés like “tipping points” but it seems like from most of your comments that the technology is there and from all of your clients that the metrics and understanding is there from the client-side so really what’s going to get us from a few hundred million dollars on ad exchanges to 4 or 5 billion. We feel we’re at the same stage that search was coming out of the last downturn – a very quantifiable, software-driven buying platform where inventory is available.  What’s it going to take to get it to 4 or 5 billion?”

Sloan Broderick let a few more cats out of the WPP B3 bag:

“What’s important is to note that none of the agencies are building platforms [at WPP], it’s 24/7 which is a technology company that happens to have been acquired (and is building B3).   There are technology people who are building the system (B3) we’re looking at – and they will engage in any and all platforms that make sense.”

During the Q&A with the audience, MDC/Varick Media Management‘s Darren Herman delivered a tough question on agency culture and how it will need to change given this new trading environment.

“All of us are creating a technology platform but we need to effect culture in order for the adoption of this platform within all of our media strategists and planners.  So, we’re changing a business that goes to lunch with all different partners everyday and gets free sneakers from other vendors all the time.  And, now we’re changing it over to a tech driven platform.  For large agencies such as yours, how do you see thousands of media planners changing the way that they are doing their buys?  At the end of the day, the 5 of us can sit down and talk about this across a table but we’re not the ones placing the media buys.  How do you see penetrating this down to the lowest ranks, the 20 year olds that are doing the plans on the day to day basis?”

Bant Breen suggested that IPG was prepared as planners/buyers only need to keep doing what they’ve always been doing with ad networks:

“Cadreon is something that’s  been in the works and we ran early campaigns before we officially launched with clients and definitely have our digital planners tied into this very closely. The reality is that on a broad macro level, you’re absolutely right, we’re going to see fundamental changes on how our service-side businesses are structured.  You’re definitely going to see digital planners focus on a broader set of issues. But, today the way Cadreon is fitting in, it’s similar to the way our buyers would make an ad network buy. They work with Cadreon in that matter.  It’s not something that’s fundamentally shocking or changing the way they’re working on that specific element of the buy. The bigger change is we’re seeing is the broader skill set and the broader areas where we have to play in a broader set of digital matters.”

Greg Green disagreed and said that the culture must change:

“The challenge with that is that if the planner doesn’t understand an audience, how can they really take advantage of what the product can do?   If the planner is going to buy the way they always have bought, is that really going to work?  How much change management is part of your agenda? We’re finding that it has to be quite a bit of our agenda. Not just we offer that it’s so easy to transact with, you can do it the way you used to do it.  No, I think you need to think about the environment in a new way and take advantage of the new technology. I think you made it sound a little bit too easy.”

Breen fired back:

“There are complexities here. But, I can tell you that’s how we’re structuring things right now from a business process perspective.  Certainly. as things get more and more involved, as Cadreon results come back, and you start to realize other things you can do to create even greater efficiencies, then it starts to get a lot more complex.”

Matt Spiegel echoed Green’s point-of-view saying that new innovations have not been “traditionally” part of the online display world and that “there’s still some skill sets and fundamental approaches” that will become part of the new display world – of which ad exchanges are a part.

The End

All in all, today was a great day for moving the conversation forward and getting the advertising community excited about the new advances in media optimization available through data and ad exchanges.

And, it’s plain to see, we’re just at the beginning of a very big trend.

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