2016 will be the year of breakups in programmatic


First published in Campaign – link here

In the programmatic space, 2014 can be summed up as a year of snap decisions and bad relationships. There was a considerable amount of hot air and publishers, agencies and advertisers, to varying degrees, reacted to it in the heat of the moment. But 18 months later, I believe we will see a number of these relationships start to unravel.

Today I am so pleased to see that almost all major clients are embracing programmatic with a cool hand, understanding the pros and cons and planning for a future where data and tech are front and centre. The heat has come out of the programmatic kitchen and been replaced with good old fashioned brain power.

But that is not what I am writing about today — although related — I want to return to 2014. At an ANA event in New York last year, I joined a panel on the programmatic revolution, which followed the usual headline-grabbing presentation of whoever had run a survey that day. The air was full of fear and suspicion over transparency and media agencies were in the dock as usual. At that conference I called 2014 “the lost year” of programmatic in regard to advertisers and how they approached it. This was because the entire year had been a series of meetings, conferences and emails concerned with transparency and agency trading desks and all the good stuff we have come to know and love. Very few of those meetings were about the strategic direction advertisers should be taking in the programmatic space.

What happened last year was not just the headlines and the deafening ring of the cash till, as the myriad of consultants counted their earnings on the back of the fear and suspicion. It was worse: some big decisions were taken under those conditions. Major partnerships were signed, deals done and monies committed with an eye on outsmarting whatever the danger was — and that varied. Perhaps it was an advertiser that wanted its own tech deal to go around the agency or publishers wanting to out gun Google and Facebook. Perhaps it was procurement or the CEO asking questions of the brand manager and making them act. Whatever the catalyst was, decisions were made that are already starting to become irrelevant or just plain bad.

Next year will see the unraveling of these relationships; It will be the year that those deals and partnerships formed under intense strain will come apart. Publishers, advertisers and agencies all made decisions — some more than others — but with a new calm descending on the programmatic landscape, and the strong wind of transparency, clarity and understanding blowing through, we will see some of these deals undone. This will likely cause serious financial difficulties for some ad tech companies who sold the dream only to discover that waking up next to a partner who has already checked out of the relationship is a lot harder than they thought.

Anyone who tried to sell a service built around the notion that this topic was simple and easily solved will get called out this year. The market has moved so much in the past 12 months. Whether you are a publisher, agency or client, making a big decision last year was brave because the landscape today looks very different. We can only wonder who the jaded lovers are and who is thinking about how to break up the rather heat of the moment relationship.
Read more at http://www.campaignlive.com/article/why-2016-will-year-breakups-programmatic/1373982#z2CbdEY2Q3jC5yxj.99

Annual interview with Beet.tv in Cannes – entering good times in programmatic

Every year at Cannes before the Rubicon Panel we discuss with Andy at Beet.tv where things stand in the programmatic industry and this year we discussed a brighter future. 2014 was the lost year to the topic of transparency but I sense we are over that now and have moved on to programmatic strategy and all the possibilities.

This year also marks a big step for us as we see the completion of the move of campaign planners and buyers into the agencies out of VivaKi and I hope will be the start of a new age in the agencies.

Programmatic in Cannes

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.

Ryder Cup of programmatic – my review of US vs Europe programmatic

First published in The Drum – click here

Back in 2010 when I started the European arm of VivaKi’s Audience On Demand, I had to turn to the US for everything. Half the companies I dealt with at the time had to turn to their data centres in the US just to make a bid, something that today would be impossible to imagine.

The US led the programmatic revolution, my own colleagues kicking things off in 2008. I was certainly wowed by the work going on in the US and the sophistication with which they approached this new and complex advertising technique.

Europeans often complain that Americans just don’t understand us. Having spent five months in the US last year, I realise that the reverse is also true. We just don’t understand the sheer scale and complexity of the US market either and because of that it creates more challenges for a single country than for Europe as a whole.

People would say without hesitation or doubt: ‘Oh so how is the UK, what are you, about two years’ behind us?’ Frustrating. So often the opinion was based on scale, not sophistication, and the two are fundamentally different in a market like the US. As I consider my time there and compare it with the UK, I would say there are three primary differences:

Scale vs campaign sophistication

There are advertisers in the US who at times spend more individually than two major European markets combined. Daunting as it is, this type of scale drives innovation and startups. It powers research and learnings because budgets are so large that testing new technology and funding research is that much easier than in smaller markets. But take a narrower view of the work, the strategy, and this is where Europe starts to come into its own.

While scale equates to innovation on a macro level, smaller budgets often lead to more rigorous optimisation on a campaign level.

Let’s take something like centralising retargeting. In the space of about a year the UK revolutionised the marketplace. It was a marketplace where an advertiser routinely had 10+ ad networks and publishers each with a pixel on the advertiser’s site. They would happily retarget their first-party data, creating incredible internal competition and price inflation on their audiences as well as data leakage. This is like letting multiple companies bid on brand search terms. It would never be allowed in search so why in display?

UK advertisers realised relatively quickly the problem needed fixing – and it was fixed. The US is still pondering the complexity.

Vendor management

Vast agency networks across multiple cities creates an opportunity for publishers and media sellers to find money in any number of cracks. Policing spend and agency-preferred partners in the US is incredibly difficult. Say no to a tech company in one city, and they will pitch to your counterpart in another.

Europe appears to have a much better grasp on that process. With relatively smaller teams, overarching strategies can be put into play and monitored effectively. This may not be to the liking of some media companies, but it needs to be done to ensure best-in-class partnerships.

Invented in the US, adopted in Europe, private marketplaces (PMPs) are another of Europe’s success stories. The speed with which the UK alone created PMPs surprised my US colleagues and competitors. Building bespoke PMPs is now the norm in Europe to drive programmatic business. In the US there are still DSP providers without PMP functionality, which I find incredible.

At a dinner I attended in New York, publishers were bemoaning the lack of buyer demand. In Europe we see the opposite – publishers and agencies are driving an ever higher proportion of spend via PMPs and there is massive innovation as well.

La Place Media in France is a prime example, and another more recent is theglobal launch of Pangaea, the publishing alliance led by The Guardian but including FT, CNN, The Economist and others. This is not happening in the US, as most players consider themselves too large to need that kind of collaboration. I think this is a mistake as Google, Facebook and others are only getting bigger and stronger.

Agility and innovation

Things just seem to move faster in European markets. Ideas are put into action very quickly. Geography helps. When AOD launched in the UK, I would walk down Charlotte Street in London, dealing with just a handful of leaders. The same approach in the US spans as many as six cities, 10 agencies and an army of people.

This is not a criticism, it is a fact.  Even when you have a well-developed idea, beta-testing is much quicker in a European market as you work with smaller teams who work next to each other.

Innovation is a hot topic and one that I think we lament when we look at the hotbed of Silicon Valley and the burgeoning New York scene.  However huge strides are being made in EMEA with hot new companies emerging from Israel to Amsterdam and Moscow.

One continent awe-inspiring in scale and opportunity. One continent agile and swift.  Operating in parallel? Formidable.

Premium publisher alliances and their benefits : My piece in Drum on Pangaea

Originally posted on The Drum click here.

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Exciting news from the new consortium called Pangaea. It has been a long time coming and represents another big step forward for the programmatic industry. Another step towards the word ‘programmatic’ being a thing of the past as the whole industry normalises as regards the use of tech for the targeting and delivery of ads.

I am still having conversations with advertisers who ask if we are dealing in long tail, unsold inventory. Initiatives like Pangaea add further evidence that the concept of not being able to buy premium, or build brands through programmatically traded media is a thing of the past.

This list of publishers sounds like a starting point and I am sure it will grow. It is exactly the collaboration that all publishers should be looking at.

Important to note however that although many advertisers do not want the long tail and want to avoid fraud we are still faced with a side by side comparison on lowest CPM wins driven by auditors. Pangaea will undoubtedly be at the more expensive end of the pricing spectrum in exchanges. Advertisers can’t have it both ways. We now need to make sure they are not priced out of the market by all the things the advertisers fear most but end up accepting for the sake of lower pricing.

The other plus point for Pangaea is that the advent of technology and data management platforms has changed the dynamics for advertisers. They can now play a more central role by controlling their audiences at the centre and then execute either globally or allow local markets to plug in. Either way, having the ability to partner with a single alliance to work with allows them to act at scale in premium inventory and access strong data to enhance their own.

Being global is essential. It is vital that publishers adapt to a marketplace where advertisers are doing deals with the Facebooks, Googles etc globally as a starting point in their media planning. Scale is becoming paramount.

The alliance will also allay fears from advertisers around brand safety and fraud, a critical issue right now. This group of companies can offer advertisers a vehicle to avoid many of those issues. The combined investment in tech from Rubicon, the publishers themselves and the nature of the sites means this should be a staple part of any global advertisers plans and safe in the knowledge it will bring quality, brand safe inventory.

CampaignLive US article on Advertisers missing the prize of programmatic

My piece in CampaignLive publication in the US – to see click here

How did it come to this? You can’t mention programmatic without talk about transparency, trading desks and advertisers taking it “in-house.” A part of me that would likely get fired says “Go on, then” because it will mean that advertisers spend considerable time understanding the space, in order to appreciate what is required to do this well. They will also be doing the right thing with their media — I don’t mean taking it in-house, but rather the likely improvement in execution and management of their media using the latest technology.

While in-house has been a hot topic this year, all we have right now is a lot of noise. Companies stirring up the ecosystem trying to make hay while the sun shines and consultants with minimal experience in this complex space suddenly getting the light of day. It is a real shame. I spend so much time talking fees and transparency with advertisers and so little on strategy that I truly believe they are missing the chance to make the most of this incredible opportunity.

Advertisers setting up their own programmatic operations is as sensible as Google deciding to set up an agency business and go direct to clients. “They do that,” I hear you cry! Not really. They chase revenue, and if they see that being taken by competitors they step in. Google also has tens of thousands of free sales people — they are called agencies. Clever businesses stick to what they do best. Even brands that have been working away at this for some years are still struggling to keep up.

I recently read that taking it in house was expensive upfront but you get payback over years. I have never read such incredibly ill-informed, ill-thought rhetoric in all my life. It infers that programmatic expertise in agencies after the first couple of years runs on nothing. The reality is people need paying; tech companies need paying; innovation needs to evolve. Nothing goes away after initial set up; it only grows. It is this kind of crazy talk that is distracting advertisers.

Let’s start with talent. Programmatic now commands some of the highest salaries and brightest brains. This creates multiple challenges for employers — motivation, retention and a lack of insights from outside the immediate business. Technology evaluation skill sets, data analytics and audience insights knowledge, data warehousing, contract negotiations, legal, creative, partner management – these all are essential for a successful programmatic business. Spare a thought for the team doing it in-house — two, perhaps three people. They will not be immune from the same standards agencies have. Brand safety is still brand safety. The CEO will be no less unhappy when the Wall Street Journal reports a fraud blow up and an in-house team has been managing it. The same effort needs to be applied in or out of the house and that costs money.

Why would an advertiser want to take that on? Because they are unhappy with transparency? Because tech fees are high and they want to find ways of saving? It is a false economy. “Buy cheap, buy twice” is a phrase I am a firm believer in.

The companies who have managed to do this well are few and often pure-play digital, online businesses with very specific KPIs that are easily tracked and measured and with a culture of digital innovation. Netflix is one example. Moneysupermarket in the U.K., another. Almost all, including the most famously quoted however, are relying on third parties to do the work. That is not taking it in-house, it’s just not using an agency. And they are right not to, but if a little less time was spent on the angst of transparency and fees (easily solved by talking with your agency operation) and more time on the strategy, then the fees will make sense. More time also needs to be spent talking about the amazing case studies of clients that have embraced this space and are turning their media investment around – there are many.

Advertisers who empower their agencies in the programmatic space and invest the time to really partner with them will dramatically change how they do business and the results they achieve.

As a final note on this, While hundreds of millions of advertiser dollars are spent on blind, low-CPM, long-tail ad networks that are taking 60 percent margin, I find it very difficult to believe that an advertiser is achieving the most they can from programmatic or indeed asking the right questions about their media investment, whether that is taking it in-house or not.

Marco Bertozzi is VivaKi’s President, North America Client Services and Audience on Demand EMEA.

Read more at http://www.campaignlive.com/article/programmatic-taking-in-house/1317802#Rwl3QzVofffQABqe.99