Will media owners and tech vendors be scrutinised by procurement?

25-30 Billion dollars of spend up for pitch. The whole industry is alive with comment on it. What does it mean for the agencies, who is up to lose the most and so on. The reason for it has been unclear, could it be digital capabilities, transparency, a stagnant commercial marketplace meaning advertisers have to extract more from their business, there have been many suggestions. Perhaps it is a simple as no one wanting to miss out.

All that said, the blog is not about that topic per se, more what impact all of this is having on the whole industry. There has not been too much of a knock on effect to the world of technology, technology that is now powering so much of the agency media landscape. Across the whole landscape deals have been done, tech fees agreed and contracts signed. The tech companies and tech/media companies are sitting back and watching this all play out with little impact to them, at least for now. But how long can that continue?

As all these pitches play out one thing is for sure, media fees will have reduced across the board, one way or another. Not to say that with increased billings they can’t find other offerings and models to make it up but at a media level, they will be squeezed. So those fees are reduced but the tech fees remain the same. The managed services and RTB networks and even one could argue Facebook and Google margins remain solid and published. So at what point does the advertiser start to turn their attention to those parties?

If the squeeze continues then how can an advertiser be happy that Criteo and Rocketfuel are taking 50+ of their IO and turning it into revenue for themselves (published numbers). Is the only answer to that ‘they are not an agency of record?’ If you can squeeze a percentage point out of an agency, how about 10 from the people your dollars eventually end up with? The topics of taking it house and aggressive sales tactics direct to advertisers such as Tubemogul and others also means that they are trying to take the role of the agency and so would surely have to make sure that their every transaction, their every margin on data and tech be revealed.

I think we are entering interesting times and auditors and procurement are going to run out of room on the agency approach, something has to give. In my eyes their valuable media dollars being passed to tech and inventory players will have to come under scrutiny a lot more than today, and if you want to be the partner that dis-intermediates the agency then you will have to answer to the same scrutiny an agency does, not just commercial but standards of protection, payment terms and all the other lovely stuff that goes with it. But first lets start with the 50% of the advertisers dollars that don’t make it into media.

Jay Sears interview in advance of Adweek New York Panel

photo for blog

Your Name: Marco Bertozzi

Your Company: VivaKi

Your Title: President EMEA and US Client Services

SEARS: Where do you read your daily news [not just industry news, but all news]? Do you still read a newspaper? Listen to the radio? Use social media?

BERTOZZI: Twitter is usually where I start the discovery. Where I end up reading the news varies. I also use the Guardian News app as an anchor. Occasionally I will grab a newspaper but safe to say most of my news consumption is online.

SEARS: What’s your favorite commercial of all time?

BERTOZZI: My favorite commercial of all-time is an ad for Blackcurrant Tango.

SEARS: Today on average in the United States — out of each $1.00 spent on media (all media, not just digital) by one of your advertisers — how much is spent on automated or programmatic channels?

BERTOZZI: We’re seeing $0.08 of every $1.00 spent on programmatic channels in 2014, and I think we’re still in the early stages of adoption — even in the U.S. — but it’s starting to rise. We’re going to see a sharp increase as education continues across agencies and clients.

SEARS: What was this number in 2012?

BERTOZZI: $0.06

SEARS: What will this number be in 2016?

BERTOZZI: $0.14

SEARS: What is the mission statement of VivaKi AOD?

BERTOZZI: Audience On Demand® (AOD) was built exclusively for Publicis Groupe agencies and their clients. Created in 2008, our sole purpose has been to help our agency partners and their clients control their brands and messaging in a fragmented, digital ecosystem. We work as an extension of the agency team our clients trust to steward their advertising spend and marketing activity.

SEARS: Please tell us:

SEARS: Overall United States managed budget (media spend) for your trading desk, expected in 2014:

BERTOZZI: A lot

SEARS: Percentage increase, United States managed budget (media spend) 2013 vs. expected 2014:

BERTOZZI: It’s a healthy increase

SEARS: How many employees are there in your United States organization [headcount number]?

BERTOZZI:
Total across USA: 261
Total in:
New York: 80
Boston: 8
Chicago: 123
Detroit: 23
San Francisco: 2
Los Angeles: N/A
Dallas: N/A
Other: 25 employees in Seattle

SEARS: What are VivaKi AOD’s three biggest U.S. initiatives in 2014?

BERTOZZI:

Quality and viewability. We launched Quality Index — a proprietary evaluation process that vets all ad placements through AOD. Built on performance metrics and data provided by comScore, Integral Ad Science (IAS), Proximic and various DSPs, as well as ad server performance data, Quality Index also sources inventory according to various metrics that assess viewability, page content quality and historical performance.

This year, we also invested in the building out of the VivaKi OS, combining the AOD Platform and DMP, supported by our established channel solutions (display, mobile, video and social) and our VivaKi Verified teams.

We introduced AOD Brand into the US market. Focused on large-scale formats, it gives advertisers impactful creative in the right locations. It’s the best of RTB with premium inventory, utilizing private marketplaces and giving brand advertisers a vehicle to deliver programmatically against brand objectives. It’s an approach already heavily used in Europe but now formulated for the US.

SEARS: By 2016, what percentage of your holding company’s U.S. media spend will be automated or programmatic?

BERTOZZI: As above

SEARS: Can linear TV be automated, yes or no?

BERTOZZI: Yes! The real question, however, is whether large broadcasters are willing to invest in adapting to new and efficient ways of trading or do they prefer to hold on to “how it has always been done.” Media automation is an inevitability and those that move fastest will benefit the most.

SEARS: Does VivaKi AOD plan to automate linear TV in 2014? 2015?

BERTOZZI: No, but we intend to work with all available and accessible inventory and that includes connected TV inventory which will increase substantially over the coming months and years. The shift from TV to multiple screens will power the increase in inventory and as audiences across devices move away from just traditional TV the opportunities will only increase.

SEARS: Once linear TV is automated, will it be bought by TV buyers or digital buyers?

BERTOZZI: As we are already witnessing, there is a massive blurring of roles within agencies. By the time linear TV is automated I would suggest that roles and in fact most agencies including those in our group will be well under way with planning and buying being very much across screens and channels.

SEARS: On the subject of business models, the best way to describe your company is:

a) Product organization – i.e. you curate a media product for your agencies and advertisers
b) Service organization – i.e. you recommend and manage best practices and best of breed products for your agencies and advertisers
c) Combination of both
d) Other

BERTOZZI: Other. We see our role as threefold. First, we build technology that powers AOD in order to join up the complex programmatic ecosystem. Second, we evaluate and consult with advertisers on technology and data providers that best address their particular campaign needs and goals. Third, we provide marketing expertise and services for agencies and advertisers on campaigns including human oversight, strategic direction, context and advice that a machine simply cannot [offer].

SEARS: On the subject of advertiser clients and transparent vs. non-transparent models:

a) We have a transparent model — clients know media and other costs (i.e. costs are unbundled)
b) We have a non-transparent model — clients do not know media and other costs (i.e. costs are bundled)
c) Combination of both
d) Other

BERTOZZI: A. We make sure that our clients know how much spend is going against working media. I strongly believe this should be an absolute given for any business that aligns its objectives with its clients’ objectives. We also do not arbitrage media, as we believe this is counter to the principles and efficiencies offered by programmatic media-buying and takes us further away from the spirit of collaboration and true partnership with our clients.

SEARS: What percentage of your agency or advertiser’s site direct budget (direct orders) has been automated?

a) Less than 10% (of site direct dollars)
b) 11-20%
c) 21-50%
d) Over 50%

BERTOZZI: A. All of our buys are auction-based and therefore we do not allocate budget for direct-buys.

SEARS: Which of the following will accelerate the automation of site direct (direct orders) budget? Pick all that apply:

a) Dynamic access to all publisher inventory [vs. just “remnant” or “auction”]
b) Ability to leverage publisher first party data
c) Ability to leverage advertiser first party data [against all publisher inventory, especially premium]
d) Availability of rich media, expandable units and larger IAB Rising Star formats
e) Ability to more easily curate audiences for specific advertisers across the premium content of multiple publishers
f) All of the above

BERTOZZI: While all of the above are valid considerations, I believe the biggest factors that will help accelerate the automation of direct orders are actually tech development and greater alignment on inventory. As I’ve previously mentioned, there have been occasions where we wanted to push significant spend across premium publishers but the publishers were not ready to accept it.

SEARS: Tell us a bit more about you.

SEARS: Who was one of your first mentors as a child?

BERTOZZI: My brother. Five years older than I, he was (and is) someone I looked up to and not just because he defended me when I got into scrapes. It was his sound advice that ultimately led me into media agency life — so I should thank him for that!

SEARS: Money is not a concern. You no longer work in advertising or technology. What would you choose to do for work?

BERTOZZI: Having always loved animals, I would choose to work on an African game reserve. The solitude and connection to nature attracts me as does working with the most incredible animals on the planet. I would however probably still look for a connection to data, no matter how slow!

– See more at: http://www.mediabizbloggers.com/rubicon-project/276847701.html#.VCVuSnKwSgI.twitter

Intrapreneurial ambition – succeeding in programmatic

Over the last four to five years I have been employing people into VivaKi and Audience On demand and have been looking for that common thread that links them all together. Is it a passion for programmatic or digital? An innate curiosity and wish to get under the bonnet of the digital ecosystem? Perhaps following the latest trends? In all honesty a combination of those characteristics and more besides. 
 
But then why not all flock to the raft of start ups that are around, bounce around a few and maybe get lucky. There is definitely a type that follow that road but there are many that want that sensation of building something, being part of an exciting growing business but within the confines of a larger organization. These people are intrapreneurs, not salary men, they still take risks. Anyone who moved into digital in 1999/2000 or earlier were all seen as signing up to lose their jobs. The calls from the TV department of will you come and fix my screen still echo to this day. Of course most are now working in digital but took years and years to make the leap. To me this makes them more cautious and not the intrapreneurs of the agency network. They are of course not the most cautious, anyone still in their same job 20 plus years later is either extremely cautious, lazy or very senior! 
 
So where does that leave the people we employ right now in programmatic. The business has evolved at such a pace, it has taken even the most forward thinking people by surprise. I already think it sounds strange when I hear ‘programmatic is growing’ it sounds so disconnected from the fact our whole business is going to be programmatic in a few short years. It also makes those who ridiculed the VivaKi Nerve Center and what we were doing with Audience On Demand look more out of touch as in a few short years they have been exposed as having little or no vision or understanding of digital. 
 
As a large employer of expertise in this area and especially as we hire more senior talent we are dealing with a new scenario. One where it becomes very difficult to answer the question ‘ what does my career path look like?’ My answer to this and one I believe fully is that I don’t have an answer. The reason for that is I believe that when you join our business things will change and keep changing. There will be opportunity all around and perhaps the least of that opportunity is me laying it out on a timeline for the next 48 months.  Instead I explain that I can’t predict exactly how things will develop but that you are in the hottest businesses in town and you are learning and developing skills that will open so many doors, to the extent that I have to admit you will eventually move on.
 
If when I signed up to be the only VivaKi Nerve Center employee and founder of Audience On demand in Europe I had asked for a nice clean career plan from Curt Hecht he would have struck me off there and then. Curt like me did not want someone who needed that, he wanted an Intrapreneur. An individual capable of replicating the same drive and passion but with support from a group and the abilities to navigate it.
 
As has been written about significantly this business of ours, has been turned upside down. Revolution not evolution is the name of the game and continues to be so every day, so anyone who wants to come in and have a nice well lit path to the CEO’s job is going to be unhappy. Whether it is Europe or US – if you work for Audience On Demand you are at the centre of the biggest thing going on in digital and will be set up for a great future – what you do now to make the most of it is important. 
 
It’s worth remembering that even in a Groupe the size of Publicis that the ability to be part of this kind of opportunity – to be intraprenurial- still exists. AOD is a fraction of the Groupe’s revenues and yet we are cited by Maurice in interviews and earnings calls. That makes it exciting. The Googles, Microsofts, Facebooks etc are the most corporate of all machines and their days of making you create something new, unless you are very senior or an engineer are done. Every day we compete with these companies and often they win by throwing money at people but feedback is often the same. It is like entering a science fiction film where you are put in a box and you need to start peddling, without the ability to change anything.
 
When I joined Zenith Media in 1996, the plan was clear, get to be CEO as quickly as possible, there was a path I could follow, others had. Now we have a world that is being rewritten and there is no clear path and opportunities and threats lie all around. Today’s successful candidates have to be open minded, they have to be flexible and adaptable. Get into the right type of business, be passionate, care about what you do and then all good things will come to you. If you want a nice secure line of sight then don’t come to programmatic because this is the fastest, most exciting ride I have been on in my career.
 
I will end by saying the true entrepreneurs amongst you, or even just those who want to keep taking risks and jumping to find a sale or IPO – keep doing it. I know many very average people who have made money by doing it.  There is no right / wrong answer in this amazing business of ours.

Financial Times: Ad fraud article and my small contribution

Solid article in the FT following up on the Fraud issues in advertising. To read the artlcle please click here. You will need to have a subscription or sign up.

My small piece focused on the issue that people talk a lot about fraud detection, as was Rocketfuel’s response, how much they detect, but the real key is to not fish in that pool of inventory in the first place.

‘Fighting fraud requires more than just developing better detection systems, says Marco Bertozzi of VivaKi, the digital ad buying division of Publicis. A big problem, he says, is that the entire advertising industry is too fixated on chasing cheap slots, even if that means “fishing in a cesspool”. Advertisers need to start looking much more closely at the quality of what they are buying, he says.’

The advertising community needs to take a stand and stop buying poor inventory under the guise of performance. Lets spell it out.

Advertiser Demand: I want cheaper CPMs and lower CPAs

Agency: Would you like to be brand safe and not risk having a Mercedes Benz issue?

Advertiser: Of course, have to be brand safe

Agency: Then I cant buy from these networks and deliver that CPM – which is it?