Automation Infatuation

I’m a big process, math and science guy yet I am not one to fall head over heels for programmatic buying. Last week IPG announced they would be using an automation platform for buying video inventory not just for web-distributed video but for traditional TV outlets as well. They’ve set up deals with multiple networks, local station operators and cable operators. IPG’s goal is to automate up to half of its media buying by 2016. Media Post had a quote by Tim Spengler, Magna Global CEO who said that their “goal is to ignite real change in the way media is transacted for the industry.”

 http://www.mediapost.com/publications/article/207108/interpublic-strikes-deals-to-automate-buys-with-5.html?edition=63600#axzz2cVuTF8FJ

 That’s a great goal for a media buying agency. Not. I see no mention of client benefits and, in fact, the article suggests that clients could be harmed because programmatic buying isn’t an auction or a way to drive media prices down. It’s a way for sellers to set a floor price at which they will not go below. While it also enables agencies to set price ceilings the only thing it accomplishes is allowing the agency to better predict the pricing by reducing the range of pricing paid. It also removes most, if not all, of the human and qualitative factors from the show selection process. Some TV shows are better than others at adding value to a marketer’s commercial—I’ve got case studies to prove this. Robots and computers cannot discern that from the numbers they are analyzing. Some shows are highly marketable to the trade based on name alone for purposes of getting higher quality merchandising in-store. In true Real Time Bidding situations a client cannot tell the retailers in advance what programs are going to be on a buy

There are some positive aspects of these developments. Incorporating more than Nielsen audience data is in my opinion the biggest benefit.  I’m sure access to data from set-top-boxes and over-the-top boxes are part of the agreements between the cable operators and IPG, or at least I hope it is. Combining this with shopper loyalty card data on product purchases can be beneficial IF the agency is driving to the proper metric.

Programmatic buying doesn’t help an agency make better decisions for its clients as much as it helps an agency make better decisions for itself because the agency can manage more work with fewer people. It helps the sellers because they will have even more control over pricing—most notably their worst inventory–and it harms clients IF they are not using the right metrics to select programs.

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One thought on “Automation Infatuation

  1. Hey David,

    I always enjoy your thoughts. I believe that while finding simplified ways to purchase is great, it should not come at the cost of client benefits. It would be the same for any industry. Once you take the focus off of the client and put it on the seller, everybody loses. I can see it being a great short term boost to the bottom line, but if clients see their ROI drop it will have the opposite effect. It is my opinion that to entirely remove the human element from the process costs more than it saves.

    As Dennis Miller would say – That’s just my opinion, I could be wrong.

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