The boys and girls can’t be too happy upstairs.
They’re about to get hit by the second phase of media’s disruption. In the first phase, internet upstarts disrupted its content. Television lost its grip on video, while newspapers and magazines lost their grip on news and feature stories. Now, their audiences can consume them from a lot of new internet-based media and technology companies.
But these upstarts haven’t really figured out how to disrupt the relationships between a publisher’s sales staff and its advertisers.
Until now. This week, AOL said that it plans to hold a “Programmatic Upfront” for advertisers in late September. It wants to use the event – usually a star-studded, glamorous affair – to convince several big advertisers to commit to buying $50 – $100 million in programmatic ads from it over the course of a year. Chief exec Tim Armstrong is so excited about the idea that he says rivals can attend the event to pitch advertisers too. That’s no real surprise.
The event may well represent a figurative end to the best job in media – ad sales. As Armstrong, an ad salesman himself, surely knows, programmatic buying is breaking up the publisher-advertiser relationship.
Here’s why: Programmatic buying relies on automated systems that work without hand holding. First, advertisers place an order for ads with one of these systems. Then, the system scours the internet in real time for ad slots that are about to be shown to people who match criteria that the advertiser has defined in advance. When there’s a match, it places a bid. If it wins, the advertiser’s account is debited.
The tactic helps advertisers find highly targeted audiences, while also crushing advertising prices via a real-time bidding process that’s basically open to anyone. (Many exchanges are “private,” but it’s a slippery slope.)
The real key is that the whole programmatic process is automated.
Whenever automation is involved, there’s really just one way forward – more automation. Programmatic buying is headed toward portals that anyone can log into in the dead of night. Without so much as a phone call, or even a stiff drink during an after-work meeting, they’ll let anyone quickly set up massive online ad campaigns that run across the entire known internet as easily as sharing a story on Facebook.
In other words, buyers won’t have sales people cajoling them about relationships, brand reputation, or any of the other things sellers say in the heat of the moment to close a deal, because, frankly, the buyers won’t need them.
The impact of this will probably be much greater than anyone cares to admit yet. The reason is simple – television. The race is on to connect it to the internet. It’s only a matter of time before someone is successful in a big way. Once that happens, programmatic buying will become the standard by which more than $65 billion in TV commercials are sold too.
That’s not to say huge tech and big media companies aren’t trying to prevent that.
A lot of them are developing complicated internet TV systems that are very expensive to build and operate. That could turn them into gatekeepers for internet TV – effectively minimizing programmatic buying’s effect on it.
But their plan is ill fated. Eventually, people will just plug the internet into their TV sets. Google made the point this week by announcing Chromecast, a $35 widget that anyone can stick into their TV to put the internet on it.
The march of technology really is relentless. As AOL’s Armstrong says: The future is here, and it’s called programmatic buying. So, maybe you should buy a few of these ads from him upfront.
(Disclosure: James Abels runs a software start-up focused on media creation and distribution.)