NEW YORK If there’s a symbol of the inefficient processes of Internet advertising, it’s the fax. The Internet has long promised advertisers laser-focused targeting, measurable results and sophisticated brand integrations. But much of the business still relies on human-intensive tasks, with the industry run by media plans built on spreadsheets, and buys done through phone calls, e-mails and fax machines.
The problem is at the heart of several recent moves in the online ad industry to use technology in place of human processes. While few believe advertising will cease to be a people business, it’s clear automation is needed to deal with the complexity of digital media — particularly as clients scrutinize marketing budgets in a tough economic climate.
“It’s way too hard to buy display advertising,” said Michael Walrath, svp at Yahoo!. “It costs too much and there’s too much time involved. The reality is that placing a buy across 20 properties is hard, 200 impossible and 2,000 even more impossible.”
Yahoo! last week introduced a new ad-management platform, Apt. The Web-based system is designed to take the headaches out of buying, selling and measuring digital advertising by connecting agencies, publishers and networks in a single system. The effort, along with other moves by competitors and agency groups, are bids to reshape the Internet advertising landscape, potentially changing how publishers sell their inventory and agencies operate.
Yahoo! is pitching publishers to use Apt as a way to supplement the efforts of their sales forces, with the promise that they’ll get higher prices for their inventory than they would with the currently used tactic of letting networks sell what their sales forces haven’t. Publishers will also be able to sell ad campaigns that target their users when they are on Yahoo! properties, potentially further expanding their reach.
Meanwhile, agencies are betting on machines as part of a larger effort to reinvent the way they do business. For all the talk of the “agency of the future,” it’s clear that technology will be a critical component in replacing low-value work, freeing up agency staff from mundane tasks to work on deep integrations and high-level brand strategy.
“You’ve had so much growth in digital, you haven’t had the underlying infrastructure to support it,” said Chris Vollmer, partner and practice leader for U.S entertainment and media at Booz & Co. “You’ve just thrown people at it. That’s not sustainable.”
David Kenny, managing partner of Publicis Groupe’s VivaKi, believes solving the Web’s plumbing problems goes hand in hand with reinventing the agency business. At the IAB MIXX Conference last week, he laid out the bare facts that it takes Publicis 44,000 employees to generate $5 billion in revenue. In his estimation, 40 percent of the work at Publicis shops takes place doing humdrum tasks.
“It’s a massive amount of work for that outcome, and a lot of that work isn’t very interesting,” he said. “I’d like to be able to scale to less people per revenue.”
Speaking with Kenny was Tim Armstrong, Google’s president of advertising and commerce in North America. He noted that until recently, Google’s ad sales contract tallied 71 pages. It’s now down to a page and a half.
“The processes we have today are old,” said Kenny. “They don’t handle complexity or use technology. Fundamentally, the market has shifted to digital much faster than the talent has shifted.”
In response to inefficienes, Publicis and WPP Group, in different variations, are building digital ad systems that automate the finding of target audiences and running of campaigns. WPP bought 24/7 Real Media with this in mind. Part of Publicis Groupe’s partnership with Google is building out an “audience-on-demand” network that will let its agencies combine their own campaign data with those from sellers to find people across the Web. It will hook in with the systems being built by Yahoo, Microsoft, Google and others. Publicis is expected to announce agreements with large vertical sites in the coming weeks.
“Folks are coming around to the fact that there’s going to be a direct-sales channel and an automated channel as well,” said Curt Hecht, president of VivaKi Nerve Center. “The inventory will be machine led and direct-sales led.”
The risk is that it will place too much emphasis on the machines. Former Yahoo sales chief and now Martha Stewart Living Omnimedia co-CEO Wenda Harris Millard has famously warned against Web advertising being traded like pork bellies. The fear is that the growth of these large systems, with sophisticated targeting techniques, will downgrade the importance of context in favor of audience. After all, if an advertiser can find an audience more cheaply through a network or exchange, why pay a hefty premium to a brand publisher directly?
“Media companies would rather not use ad networks, that’s obvious,” said Mike Leo, CEO at Operative, which makes publisher ad-management systems. “There’s no such thing as networks that provide more value than if a publisher sells directly to an advertiser.”
It’s not an either-or proposition, in Hecht’s mind. The hope is that the drive for efficiency through technology will allow agencies to spend less time managing what Hecht calls the “spots and dots” of media and more time working with publishers on big ideas. “There’s not a goal to make one dominant over the other,” he said.