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There's a lot of talk about programmatic buying in the media world. But there is also activity, with ads being targeted with big data and buys being executed on an automated basis.
But a discussion of the virtues of programmatic doesn’t necessarily break down into agency vs. ad sales executive. Some companies on both sides of the negotiating table have embraced programmatic and are working to do business in a new way because they think it ultimately will be better for their clients and for their bottom lines.
Magna Global is part of IPG’s Mediabrands unit, which in 2013 set an ambitious target of doing half its business on a more automated basis by 2016. It has announced a series of partnerships with media companies designed to test and enable programmatic techniques.
Comcast’s NBCUniversal unit, one of the biggest media companies, has been busily creating new products, including an exchange for buying digital inventory and a targeting platform designed to identify high performing inventory for clients.
Although they have very different vantage points, Chris Williams, president of Magna, and Krishan Bhatia, executive VP, digital strategy & operations for NBCU’s ad sales division, see data and automation as an important and growing part of what their companies do.
Following are edited transcripts of separate interviews with Williams and Bhatia talking about where programmatic is now, and where it’s headed in the future.
CHRIS WILLIAMS
How big a deal is programmatic buying really?
Chris Williams: First of all, it gets a hell of a lot of attention in the trade press. I think it gets more airtime in the trade press than it does relative to the amount of time you spend with clients talking about programmatic and also the amount of money that you spend programmatically. Although it’s certainly increasing pretty rapidly.
And I guess we have to define what we mean by programmatic. If it’s the use of more granular levels of data to target more precisely and then using technology to execute our media buys, whether that’s through workflow automation or whether it’s through the various platforms that exist across the ecosystem to actually transact upon, it’s certainly dominating the landscape increasingly.
So it’s very important to us. If it’s the ability to reduce waste, to target more precisely—and it is using technology to reduce labor and improve workflow—then it’s a good thing that is not going to stop any time soon. If I was a client I would want to increase my billings in terms of the buys bought through the use of data and technology, absolutely.
Is there high-quality TV-like video available for programmatic transactions?
Yes. If you take the TV landscape in local and satellite you can buy using data technology. There are some opportunities, but it’s going to increase over time. But there’s a scarcity of premium video and that’s still a massing pool of inventory that needs to be unlocked in terms of using data technology in the way that we want to get the kind of performance and targeting that we want to deliver on behalf of clients.
Pricing has been an issue. The owners of premium video are concerned that programmatic will drive down pricing like it did with digital display. What’s your experience with programmatic and pricing?
I think people say that the price in display was driven down by programmatic, but it depended on the inventory. I think the value of some inventory increased. It depends on the quality of your inventory.
Do I think it’s a bad thing that poor inventory, low-quality inventory, low-demand inventory has a readjustment on its price point? I think that’s a good thing, isn’t it? What happened in display anyway where prices did get driven down is, it was over low-demand and remnant inventory. It wasn’t about the programmatic side. It wasn’t that valuable in the fi rst place.
There’s a finite amount of high-quality premium video inventory. I don’t think that by applying the type of customized data we want to in today’s buys is necessarily going to drive the price down. It’s likely to do the opposite.
You’re right in saying there are companies that control that content and particularly the premium content that have a perception of programmatic, and it might also be infl uenced by what happened in display. They are reluctant to open up the potential for more inventory being executed this way. But I think if I was a media owner, it will be more favorable for them in the long term to start testing the value of their inventory by allowing agencies on behalf of advertisers to use data to allow them to target more precisely.
Certainly if I was running a sales team I would want to be leading the industry so I can understand the value of my inventory. That will put those who innovate and embrace it in a better position than those that don’t. That would be my prediction.
A lot of content companies are setting up their own data units and building their own programmatic exchanges. How does what they’re doing mesh with what you want to do on behalf of your clients?
I think there’s a difference because the content owners need to use their data to understand their audiences with much greater depth and accuracy and comprehension. And clients are more reluctant to give their first-party data to the media owner, but they’re more willing to do that for an agency, because the agency’s got a holistic view of the ecosystem. We have a responsibility as an agency to use the data that we have on behalf of clients and marry that with what we understand about media owner audiences and content owner audiences to allow us to ultimately do that great precision targeting.
I think if media owners want to understand their audiences more and we focus on understanding the client’s customers more then meshing that together in a way that’s used advantageously is something that’s good for the industry.
Beyond online video, will other forms of TV be available for programmatic buying?
Some of it you can do now. I don’t think any of the big network companies are really embracing having their core inventory executed in this way, but I think some of them are [for] small parts of their schedule or dayparts or particular categories and content. The main networks’ upfront inventory isn’t going to be transacted programmatically if that’s what you’re trying to understand. But I think of course increasingly the use of data and tech to target all inventory is going to come; it’s just a matter of when.
How do you see programmatic fitting into this year’s upfront structure?
The ability to use data and technology to target inventory is something we want to do and will be an increasing part of the partnership we have with media owners. It will be part of the conversations, but I don’t think it will dominate it. The upfront is a kind of a moment in time to secure a lot of high-quality, scarce premium inventory. I think it will be part of the conversation. But that’s it.
In last year’s upfront, Magna joined with ABC to do a programmatic test. How’d that work out?
Every time we test inventory bought in this way we learn something. And I think if companies like ABC are in a position to learn from it too, then I think that’s when you can see an increase in the amount of new inventory being transacted in this way, as learning from both sides pushes this forward. There are several areas that are becoming part of a broader partnership with the media owners. It’s not just the traditional upfront conversation about how much money you’re going to spend and what’s the rate of change in your pricing. That’s still a fundamental part of what it is, but it’s gotten more sophisticated and strategic. The partnerships we create are more comprehensive and strategic and that’s a reflection of the changing ecosystem that we’re surrounded by.
In the last few years, digital ad spending has exploded while TV has been flat to down. Will data make TV more competitive with digital advertising?
I think that the real value of premium content in driving marketing will come through, yes. I think it’s something I would embrace if I were a big media owner in probably a slightly more aggressive way than they’re doing at the moment. Then again, it’s easier for me to say because I work at an agency, I don’t run a sales team. I’m sure they’ve got challenges and pressure that maybe I don’t appreciate.
What do you see for programmatic TV down the road this year?
I just think short-term and long-term, TV networks are going to embrace it more whole-heartedly, look at it as a positive, look at it as an opportunity—and think if they do that then they’re going to be in a better position than if they don’t, I would say. So I think it’s not going away. It’s going to only increase in intensity—programmatic and the use of data and technology. It’s not something that can be reversed now.
KRISHAN BHATIA
How is programmatic treating NBCU?
Krishan Bhatia: We have made a lot of investments in programmatic, but more importantly, data-enabled offerings, across our portfolio. We believe the marriage of the premium content at the scale that we’re able to deliver it, both on television and on digital with rich data, is the combination that marketers are looking for in terms of increasing the effectiveness of how to spend their media dollars. Last year we rolled our digital programmatic offering, NBCUx.
Have more clients been using NBCUx?
Yes. I think the interesting thing is it’s pretty diverse in terms of the industry category representation. We’re working with clients from automotive to [consumer package goods] to financial services to retail. So it’s a pretty diverse set of clients that are finding this to be a valuable tool. And within each category we have multiple clients that are transacting with us. And we’re starting to really push the envelope beyond display into video and mobile inventory.
At the same time everyone recognizes, including the clients and us, that this is not a ‘set it and forget it’ kind of offering where one platform connects to another and then everyone goes home. It is actually very involved, both technically and relationship-wise. It requires discussion with clients to understand what are they trying to achieve, who are they trying to reach and how can we use data on our digital inventory, in this case to help them reach those audiences.
What kind of results are you getting?
With clients where programmatic and data-enabled offerings are front and center in their buying, we’re doing anywhere between 20% and 30% of business on our digital properties with them in that manner, which is a real meaningful chunk.
You said the exchange was moving into video? What types of video inventory are available?
At this point really any of our digital video inventory, whether it’s short-form clip-based content or whether it’s long-form or what we call full-episode content. So think about any of our broadcast programs, anything from The Blacklist to The Voice, any of our cable shows, are available in a data-enabled fashion and we’re working with multiple clients to determine what the best setups are. So we have a supply-side platform that we’re working with and all of the buyers have demand-side platforms in order to execute data-enabled campaigns. But from our perspective, there’s nothing in our digital portfolio that is not available for data-enabled or programmatic transactions. Video is still in development and so we’re actually working on a number of different setups with clients to determine what ultimately is the best way to do that. But the content itself is available. We’re not restricting any content from being available on a programmatic basis.
NBCU announced its Audience Targeting Platform. How does that fi t with the exchange and other programmatic offerings?
I think the way it fi ts together is more from a strategic perspective, basically the marriage of content and data. Our digital programmatic offering ultimately has the same objective—how do we use data to inform campaigns more effectively on digital inventory. In television, technology doesn’t enable advertising on an addressable basis. What you can do is you can create front-end planning tools that allow you to determine which inventory, which shows, which dayparts may perform more effectively for you based on audience groups that go beyond just traditional Nielsen agegender demographic brackets. That is what the Audience Targeting Platform is intended to do. So it is not programmatic execution. It does use data in the front end to determine where the matches are and where, therefore, I should be running my campaigns.
We’re in the middle of upfront planning. How big a part is data and programmatic going to be in the upfront?
In terms of the focus that agencies and clients are putting on data-informed media buying I think it is paramount in everything that clients are asking them to do and that agencies are planning to do. So it is front and center in virtually every conversation we have with clients or agencies. And not only on the digital side, but now on the television side where people are thirsting for digital capabilities married with the scale and content of television and the effectiveness of communicating through sight, sound and motion that television brings to bear.
So we’re seeing a tremendous amount of interest and engagement on how we do that together. And the ATP is our vehicle and will be our big first step toward being able to do that. I think everyone understands how to buy regular media inventory. I think what everyone’s challenging themselves to do is how do we make media inventory purchasing smarter, and that’s where we’ve been investing in digital. We’ve been proving that out in television. We’re taking big steps towards that right now, so it’s really part of every conversation our sales team and Linda [Yaccarino, chairman of NBCU ad sales] personally are having in the marketplace.
Does a data-based approach lend itself to the kind of early reservations process that is the upfront?
It’s supply and demand and I think what this is meant to do is inform the supply in a more intelligent way so that the ad can be matched with that. If you have identified inventory that we believe jointly is higher performing than other inventory, then you will have a chance to reserve that. That’s ultimately a critical component of how the media ecosystem works, that you have a guarantee that you will be running that and why auction-based selling and exchange-based selling actually makes it very challenging for advertisers ultimately to achieve their media objectives, because you don’t know until the last minute whether you actually captured those audiences or not.
So the upfront reservation process we think continues to be informed by these tools, continues to be an important mechanism of how clients are able to plan out their objectives and make sure that people actually achieve them throughout the year.
If this is higher performing inventory, is there a higher price associated with it?
If there’s higher demand for something that ultimately has constrained supply on it, that drives the pricing conversation and that’s what we’re about to engage with in the marketplace. We’ll identify inventory presumably what are the price points that clients feel make that worthwhile.
By the end of the year, how much of your business will be in the programmatic and data area?
I shy away from those predictions because, one, I don’t know; and two, because I don’t think that’s how we would measure success, quite frankly. I don’t know whether it’s a percentage of the inventory or percentage of our business. I think it is really more about have we created additional value for clients that makes our partnership with them more meaningful. And then that partnership can express itself in many different ways. So we challenge ourselves toward growing our business and growing our business with individual clients and agencies. Whether programmatic or data-enabled selling is a given percentage out of that, vs. sponsorships or other types of capabilities, I think is of secondary importance. It’s really more about, have you been able to enhance the value and therefore, grow the relationship.
Are you seeing those relationships grow as you release more data-enhanced products into the market?
[Yes], 100%, because right now clients are presented with a very fragmented set of choices. They can get what they’re used to in television at scale from one set of suppliers. They can get data and capabilities from another set of suppliers. And so it is increasingly complex for them to plan media. What we’re trying to ultimately achieve is marrying those things and at scale be able to partner with clients to more effectively and efficiently deploy their campaigns. And as a result, those relationships grow because you are creating more of a one-stop shop.
How is what you do affecting what the people in the sales department do?
I think what we do in our groups is identify new tools and capabilities that we ultimately believe make our clients’ media more effective. And then do the partnerships, develop the platforms and create subject-matter expertise that sit side by side with all of those sales teams. If you think about it, really what we’re trying to do is we’re trying to take that digital subject matter expertise and capability and start to apply it to the television ecosystem where increasingly some of those things are starting to be possible because of technological advances or increased access to data. So it’s a digital sensibility and product offerings that we’re trying to enable our core business with, and as a result our entire sales organization will be able to interface with clients in a more advanced way. That’s really the future.
How is this affecting programming choices?
I can’t speak to that specifically. I think we’re still early on. I think what we’re trying to do with this tool and our conversations and partnerships in the marketplace is identify, in partnership with our clients, what types of audiences they’re ultimately trying to reach. I think it’s not a stretch per your suggestion to think that ultimately that can inform how we develop programming as well to appeal to clients of ours. But I think there are a few steps in between.
Is having a mass audience still a good thing for a company like NBCU?
Having a lot of viewers engaged with and entertained or informed by your content is always a good start. Advertisers will have individually specific objectives with respect to target audiences. But collectively they add up to the entire consumer base. The trick is in being able to not just reach a lot of people but within the people you reach being able to slice and dice it. I think that’s really what these tools are meant to do, and say where do we create the highest use in matching audiences we can reach with audiences that clients are looking to reach with their campaigns. So that’s really what we’re focused on.
