Videonet interview on Programmatic video

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Broadcasters are currently resisting the march of programmatic buying and its sub-set, Real-Time Bidding (RTB), as a mechanism for selling their online inventory. While in some cases they may be right to fear it, they should understand that this is the way that most digital inventory is going to be sold, so should try to get ahead of the curve and at least start experimenting with RTB. That is the message from Marco Bertozzi, Executive Managing Director, EMEA, at VivaKi, the independent unit within the Publicis Group focused on addressable and dynamic advertising.

The main objection broadcasters have to selling through online advertising platforms that use RTB is loss of control, he says. “Traditionally they have 110% control over how advertising is delivered and reported, and they have direct deals with agencies. This technology takes away a lot of that control from them. They are uncomfortable with the idea that a platform like our Audience on Demand system would decide which advertisement is shown at any given moment. They are not keen on the idea that one of maybe ten advertisers could take a spot. They want to be the ones that decide which advertisement goes where.”

There are other objections, outlined below, but Bertozzi is convinced they need to put them all to one side and start giving advertisers access to their inventory through systems that use RTB. “The horse is bolting and there is no way anyone is going to get it back into its box. More broadcasters will find that the pressure will start mounting from buyers to engage in this form of advertising.

“Today broadcasters are very reticent to get involved in this area,” he continues. “They can resist RTB and maybe they are right to resist; they know their business better than anyone else. But the question is whether they should get on the front foot with this approach and learn about it, get better insights from it and deliver better commercial returns as a result. Pretty much all digital spend based around delivering an advert into spaces, whether that is a pre-roll or a banner, is going down this road. The broadcasters need to understand that.”

Bertozzi points out that what is happening online today on the laptop and tablet will become increasingly relevant to advertising on television screens as more TV sets are linked to the Internet and set-top boxes also become an extension of the online video ecosystem. He thinks consumers will actually come to expect more personalized advertising, too.

RTB is a process that brings together buyers and sellers of advertising for digital (e.g. online) inventory. It started life in display advertising and is now being used for advertising around online video, including for non-broadcaster premium content.

In very simple terms, when you use RTB a publisher site tells would-be advertisers that someone has entered its website on a particular page. It issues a request for an advertisement. Advertisers can assess whether the user is in their target audience based on various data points, then decide if they want to bid for the advertising opportunities on that page, which could include a pre-roll video advertisement, for example.

As the name suggests, Real-Time Bidding means an advertising platform, acting as a proxy for an agency and their advertising client, can bid on every impression, one by one. This requires a huge amount of automation. Bertozzi says the process of receiving an ad request, matching the user data against campaign requirements, making a bid and then delivering an advertisement takes 30-50 milliseconds, so this is all happening as the webpage loads.

VivaKi provides a service for advertising brands and agencies to plan and deliver their digital/online advertising requirements. It has its own proprietary Audience on Demand (AOD) platform to run at least part of those campaigns through a variety of Demand Side Platforms (DSPs) that in turn use RTB to flag and buy online inventory that could be relevant to advertisers. VivaKi also works direct with publishers and the company pools together consumer data from many first-party and third-party sources into its system so it can make the best possible judgements about who makes a good advertising target.

According to Bertozzi, there are a number of components that make one programmatic buying system better than another and which make AOD stand out from the crowd. AOD leads with its VivaKi Verified process, a dedicated team focused on the verification and evaluation of technology, data and inventory. “It is vital for advertisers to have trust in what their partners are doing in a world full of shiny new objects,” he says.

Then there is the quality of the data. VivaKi works with publishers direct to get first-party data and places more emphasis on this than some companies. The quality of the data, wherever it comes from, is key. Third is the quality of the inventory, so again, it comes down to which publishers you are working with, directly or indirectly.  “Viewability and brand safety are crucial from an inventory perspective and VivaKi Verified invests people and time in making sure advertisers can relax,” Bertozzi, declares.

The quality of technologies used by the partner Demand Side Platforms and Ad Exchanges that bring the inventory to the surface in AOD is another difference, VivaKi says. AOD is not wedded to any single Demand Side Platform but has all the big ones plugged in, and clients can choose which ones to use if they want. “No one else has gone to the same lengths to verify and stack-rank the industry’s best data and technology partners,” Bertozzi argues.

He points out that beyond these points, you need to look at the people behind the systems and their experience working in this market. “Audience on Demand launched in 2008 when most other operations were three years from fruition.”

There is a widely held conviction among the supporters of RTB that it increases advertising efficiency because of its better targeting. Bertozzi points out that a company selling mobile phones will bid higher for a 16-34 female who has recently looked at mobiles then an advertiser that just wants to hit 16-34 females. So in an auction-driven open market, each piece of ad inventory should find its true value, with that value determined by how valuable the consumer is to a given buyer at a given time. You can also adjust campaigns as you go, depending on the results from previous inventory purchases.

Bertozzi thinks broadcasters, who can already sell-out their online inventory using direct agency relationships, fear that the only way their pricing can go is down. He acknowledges that in some instances CPM (cost per thousand) rates could fall but in others they will rise because good targeting will make inventory more valuable. Scarcity drives price up. As most broadcasters explain how they are oversold, that should benefit them, he thinks.

“Today an advertiser might want to target a programme that has a high conversation rate for 16-34 year-old men. It could be football but maybe 30% of the audience is actually women. You could instead sell to males and sell to females and I would argue that you could probably get a higher CPM for those specific audiences.”

This is where we start to see the introduction of Dynamic Advertising Insertion (DAI), which splits ad break audiences and delivers different advertising copy to those different audiences. RTB/Programmatic plus DAI are the foundation stones for what could become a major shake-up in television advertising over the next few years.

Bertozzi says some broadcasters are starting to move towards a more data-driven advertising world but usually within their own walled garden and still stopping short of opening their inventory to RTB-based platforms. He points to Channel 4 as a good example.

The UK commercial broadcaster is now selling very specific audiences in their online VOD. “They have enhanced their data insights and are selling those to agencies so they have taken a step towards acknowledging that data will be the thing that informs their inventory,” he explains. “So that is stage one: engaging with data at that level. Stage two is making that data available to more external buying platforms and trading desks as the norm and that is the sticking point today.”

Referring to broadcasters generally, Bertozzi says they might stick at this position for a while but eventually will have to take that second step

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7 thoughts on “Videonet interview on Programmatic video

  1. An interesting viewpoint from the buyside but perhaps built on performance where supply is obese and demand is scarce. Broadcasters however are at a distinct advantage; they sell out. Not only do they sell out but largely on a fixed basis without comprehensive intel confirming the price. Video is scarce, demand is high. The smart money should back economics, not undermine it. Agency’s after all are employed to see profit appreciate not the opposite

    • That is exactly why they have it wrong. You could not have put it better. If that inventory was open season to all demand, at least from an agency perspective then with its quality and scarcity they should be able to see a bidding war. Not only that they can max CPMs against each audience instead of agencies paying for wastage.

      I also know that they are already dropping prices dramatically to keep volumes being committed so going for an auction model would break that erosion.

      Demand and supply. Economics. If it’s quality and in an auction advertisers will pay.

  2. We seem to be in agreement to a degree. Where demand outsrips supply broadcasters should open up to auction, but under their own terms, setting parameters and pricing rules using sell side optimised intel. Publishers should enjoy equal levels of optimisation that the buyside insist on

  3. Hi Marco, I would be interested to hear your thoughts on programmatic buying of video content through a private exchange for broadcasters. If they were to open their inventory to advertisers through a proprietary or white label product; could this lead to clients buying direct and circumnavigating your buying commission & extra fees for laying your in technology? Is this a threat to your position?

    • Hi Alex. Advertisers buying direct is of course always a possibility, I am sure some will. What we charge is not to login to a system but far more across the whole ecosystem of which you are just a part. To be able to make sure you are brand safe, working with good technology and data that is gathered legitimately you need investment. An advertiser can do it themselves but one way or another there is a cost, either they pay someone else or they pay themselves. Cost is not the issue, being able to have a viewpoint that comes from experience across the globe, every sector and with experts that mean no one company, tech partner or media owner takes too much control is worth paying for, if it was not then agencies would not exist.

      Advertisers have always chosen to do some things themselves, there are countless examples of this, often driven by the marketeers own outlook, but there are also many more that want to see the world from many different perspectives so do I see it as a threat? No, I see it as part and parcel of media landscape, always has been, always will be.

      Thanks for your comments, always good to get some feedback.cheers

  4. Marco – this was the best explanation of real time bidding that I have seen.

    I am especially pleased that you managed to comment on personalised adverts at the end.

    Many thanks and please keep them coming!

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