The reason we spend so much time planning is because the consequences of making wrong media calls are very, very costly.
We could buy media against the wrong target, wasting millions of dollars ($4 million for a :30 in the Super Bowl, really?) We could miss a huge target opportunity or put the wrong message in front of a consumer who could care less. So, we plan and plan and plan. Media is just too costly for fumbles.
But now consider a system in which agencies can run a little bit of media and see what works before we buy/waste a lot of media. Oh, and this happens in real time. Meaningful responses are delivered in a matter of days and ideas are conceptualized, aired in digital media and performance analysis is deployed within a week.
Sadly we’re not there yet, but the day is coming soon when programmatic buying will change everything you know about the media business and data jockeys become the rock stars of the agency world.
Already there is a lot of evidence that programmatic buying and trading desks—the agency groups that are using programmatic buying—are transforming how we go to market. Real-time buying hasn’t truncated the planning season just yet, but it has made agencies far more efficient and effective in previously unimaginable ways.
Today, trading desks are enabling media agencies to become much more efficient and smarter. Consider this example: A few years ago a client wanted to increase their budget by several million dollars. The assignment had a budget cap, which they had reached. In order for us to absorb the expanded budget, we had to increase our staff which would have resulted in more fees. The client was aware of this (good problem to have), and we started talking to them about the best way to invest the new resources.
After examining the best performing channels, we decided to invest more money using our trading desk partner to buy audiences. Had we bought sites directly, we would have had to increase our staff by at least three people. The trading desk was able to absorb the entire incremental budget with no staffing consequences. The client saved a lot of money in agency fees and was able to buy significantly more performance.
That event was seminal. The kinds of efficiencies and results coming through the trading desk were just too hard to ignore. The experience led to our theory that we call “High Touch vs. Programmatic,” which lays out how agencies should be structured in the not-too-distant future.
We quickly developed a belief that everything that was an IAB standard should go through the trading desk and be bought programmatically. We started reducing the number of ad networks and direct site buys. That freed headspace to start focusing on the kinds of packages that an algorithm couldn’t buy, like content deals, deep-site integrations and emerging media that had yet to be lit up on the online exchanges at scale. Everything else was sent to the trading desk.
We started hiring people who knew how to develop content deals with publishers and who could put together creative packages. We became far more strategic and creative. We also had to hire fewer people. Our revenue per person increased, and our expense ratios improved. About 20 percent of our nonsearch digital budget is managed by the trading desk. We think that will increase significantly in 2013. When that happens, we’ll need even fewer people.
Our trading desk has also started providing very rich audience insights using a data management platform it calls The Lens. This product has altered our client onboarding process. Historically when we onboarded a client, we asked for lots of historical flowcharts and sales data. Now we ask them if we can tag their site for four weeks to collect enough info to provide a real-time audience segmentation analysis. Instead of turning to Simmons for this kind of information, we’ll have first- and third-party data collected directly from our client’s website to inform our targeting strategies.
Programmatic buying and trading desks are freeing up media agencies to focus on strategy and ultimately be more competitive. How much more will our business change when all media is fully addressable and delivered through digital means? I’ll wager a lot.