Programmatic ad sales have been touted as the next big thing in digital advertising for years. But now, it seems this automated method of buying ad inventory is growing up and spreading its wings.
A month ago, media distribution giant AOL and Australia's Multi Channel Network (MCN) launched a private marketplace for TV advertising, where media buyers could use automated platforms to buy campaigns. It's programmatic ad sales for TV programmes.
AOL is betting big on programmatic. Earlier this year, it predicted that 50pc of digital advertising would be sold through private digital marketplaces by 2017. The company also put its money where its mouth was - laying off about 150 staff, mostly from ad sales. MCN, for its part, has 68 TV channels, reaches a quarter of Australia's pay-TV subscribers. And it has one key ace up its sleeve - data. And lots of it, thanks to a product called Multiview.
"Multiview is a unique data product," says Dan Ackerman, AOL's head of programmatic TV. "It uses 110,000 homes worth of set-top box viewing data and subscriber data. Then they overlay consumer purchase behaviour data from one of the largest banks in Australia and one of the largest grocery chains in Australia.
"So they have really deep data sets and this gives advertisers the ability to target audiences at a very fine grain. So they have the inventory, and they have the data.
"What the partnership with AOL now enables them to do is put that on a technology platform with a buyer interface at all the agencies - so they can trade on television in a very similar fashion to how they are trading online video and mobile video today."
It all sounds technically impressive. So how is it going? Well, one month in and everyone claims to be pleased. (Though they would say that, wouldn't they?)
The network says it is generating 1pc of its ad revenue through AOL's programmatic platform, but it expects that number to grow to 5pc by the end of the year. And crucially, they seem to be getting the advertisers on board. Agency holding companies like Dentsu Aegis, IPG and OMD have reportedly committed to buying TV ads using the platform.
Ackerman says agencies won't be disappointed with the platform.
"The ability to add the kind of precision targeting that they've been accustomed to in digital brings great efficiency," he says. "It's not because they're getting media at a lower price, they're actually paying a premium for it, but they're zeroing in on very specific audiences that have high value to their clients. And they'll see that downstream, with greater impact of that media on brand and sales."
So, is this antipodean experiment the way forward for buying TV ad campaigns?
It's clear that more and more networks are seeing the benefits of using data to offer advertisers improved targeting. Sky in the UK has invested heavily in AdSmart. AdSmart sends a full library of ads to each Sky Plus HD set-top box. Whenever an ad break begins, only the ads that best match the household's profile are played. This profile is built from third-party datasets, and the info Sky has on its customers.
The result? Ad breaks particular to specific regions, purchasing habits, the type of car parked in the drive, credit history, and so on. Consumers may find the amount of data available a little invasive - but it's gold for advertisers. Big brother for one is big business for another.
The arrival of data-driven TV products was very evident at the most recent 'upfronts' in the US, the annual bazaar where the big networks flog their new shows to advertisers.
Ackerman sees this as paving the way for the full adoption of programmatic selling. "We saw in the upfronts this year in the US, announcements from every major media company; NBCUniversal, Discovery Communications, A+E Networks, and Viacom, all coming out with their own data products," he says.
"They're not selling programmatically today - but they're licensing third-party data and activating their own first-party data to bring a product out to market to advertisers to help them better utilise the media across their portfolio. Huge investments are happening in the US.
"This is definitely where the television market is going. You'll see that this becomes not just a piece of the US upfront process in the next year but a central tenet to how they sell inventory year round."
But does all this focus on data and automation mean the days of sales executives negotiating rates with media buyers numbered? Are face-to-face meetings and insertion orders a thing of the past? Ackerman thinks not.
"No matter how advanced and how good machines and algorithms get, you still need the human intuition to put it all together and operate the machines," he says. "On the sales side, smart people are still needed to operate and make decisions about how they use these new tools to sell.
"You bring in more data and more technology, and it's a difficult thing to sell. There are lots of nuances and a ton of detail and you need to be very educated on these technologies and datasets to be able to communicate the value.
"But there's still a lot of media out there across TV and digital that's going to be sold one to one, person to person. And that's a big part of our business, doing custom content, sponsorships and so on. That stuff is not going to be sold programmatically. It takes smart, skilled people to buy and to sell it."
Sunday Indo Business