"Data-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 Richard Sobel, senior director of account management and platform solutions at PubMatic.
There are very few industry conversations I’ve had over the past year that perplex me more than the “Why ad tech?” discussion.
When speaking with publishers, advertisers, media executives and industry influencers, I find myself scratching my head when I hear something like this: “Why do I really need ad tech? What is all this hoopla about?”
If the facts – reports of hefty revenue generation, the increased buying and selling of digital inventory and the astronomical shift in consumers’ use of tablets and smartphones to engage with content – haven’t yet given you a figurative kick to the face, I’m not quite sure what I can do for you. Luckily, both for my sanity and the industry, this conversation has occurred less frequently over the past year.
Smart publishers have moved on from needing to understand why they should adopt programmatic tools to asking how they can best implement those technology solutions. The truth is that the era of programmatic direct has arrived. Both the sell side and demand side either need to get ahead of the curve or take their antiquated media strategies back to the days of AOL Instant Messenger and MySpace banner ads.
Couple these cutting-edge developments with new media that are beginning to take firm hold, such as mobile and video, and that makes for an industry that looks completely different than it did two years ago.
The Power Of People
One indication that our industry is evolving: The focus is now shifting away from technology to service.
A recent AdAge article profiled publishing industry leaders at Hearst, The New York Times and Condé Nast, all of which are paving the way for automated sales at some of the world’s best media companies. What they said is true: It’s people, not algorithms, that make programmatic work for media buyers and sellers.
As an industry, we’ve made impressive strides, but we have a long way to go before we are generating the high-value CPMs that are possible. This is because we still focus our energy on the transaction rather than the man-powered decision-making that actually makes things happen.
Why? I believe it is because programmatic buying has changed business processes and demands new, more strategic action from a whole range of people who work on the sell side. While there is sometimes a fear that ad tech is making people increasingly extraneous, that couldn’t be further from the truth. People become more, not less, valuable in this new environment.
So how does full planning and implementation really work? The first step begins with the publisher team working to understand and act on data: How do you see your data, how does the world see it and how do you find its best match? Asking these questions allows companies to discern the value of that data and take it to market.
This kind of analysis must be done with greater granularity than ever before. There needs to be a set of business rules that allow you to prioritize what’s important from pricing, audience and inventory. Data is the foundation, but prioritization and business rules set up by the programmatic lead are what give this information value. And only people are capable of creating this value.
A Team Approach
After the actual transaction you need insights, intelligence and analytics to assess what is not happening and what you could be doing given what transpired on an account-by-account level.
Who contributes to this process? In some cases this might be yield management, ad ops or revenue strategy. Comp planning and salesmanship in a nonsales role are also a part of it. Everyone in the chain of action needs to be incented – it’s a team approach, not just driven from the top down.
In an ideal scenario, it’s important to put a publisher in the position to engage with the market in a real-time way. This lets publishers optimize against what they deem important, to see the results and then mine opportunities, allowing their team to make a programmatic strategy run, scale and integrate into the larger revenue strategy.
Here are a couple of useful examples to consider:
• A publisher uses a data-management platform (DMP) to index buying behavior against first-party data and package the results. Implementing a DMP will enable a publisher to figure out what their long-standing retailers are most likely to buy, thus allowing them to create custom segments for that retailer using programmatic. This then allows the publisher to pull in data from offline and identify consumers in print and digital so that they can run across platforms and cross channels, ultimately resulting in winning a larger share of that advertiser’s spend upfront at guaranteed pricing.
• Integrating first-party data with the buy side’s first-party data for publishers can result in an upfront commitment for a larger buy. Combining this data creates an exclusive opportunity with proprietary audience measurement. That advertiser then can work with the publisher on a special program that grows the partnership. This is a great example of how optimizing one transaction can bolster the end result for a publisher by focusing on where they need to get to, not just how to get there.
And finally, it’s important for small teams that are challenged with implementing large volumes of inventory across many properties to coordinate using data to optimize deals time and time again. This will allow the publisher to optimize units, data segments, spending and blocking activity and bid activity at the advertiser and site section level. This kind of collaborative quantitative analysis goes on all day as adjustments are made in real time. As a result, the publisher can handle anywhere between 40 to 300 deals at any given time and radically decrease the amount of unsold inventory while driving higher returns.
What’s the commonality among the companies that are really seeing returns out of programmatic? They all think strategically about what they are going to accomplish: What are the pieces and who are the people?
Sure, everyone in the space wants to be more profitable, but what’s the right path? Tech has to play into that approach, but ultimately it’s the people – call it the “human API” – that makes programmatic work for all sides of the equation.