Automated Spot Buying Looming On Horizon
It may no longer be a matter of if automated buying and selling services will move into the spot TV realm, but how soon, and to what extent.
Even as broadcasters express major reservations about automated buying, at least two companies, IPG and Visible World, say they expect to light up automated platforms and begin making spot buys with them by the end of this year.
Automated buying of spot is likely to be fairly common “within the next five years, and probably within the next two or three years,” says Jack Myers, chairman of the research firm MyersBizNet.
And it will be a positive development for broadcasters, he adds. “This will ultimately help create increased value for premium [spot] inventory, not less,” Myers says. He believes that automation won’t “prevent demand from being extracted from the product.”
Such systems are commonplace in digital media, but they had far less success in the spot market. Google TV Ads may have been the highest profile TV effort — and the biggest bust. It shut its digital doors at the end of 2012.
A few platforms like bid4airtime.com persist at selling so-called remnant TV time, but they have had minimal impact on the business.
The renewed interest in automatic buying is coming mostly from the buy side, media agencies weary of the back-and-forth with broadcast sales people and their reps that adds time and expense to the process.
IPG is leading the charge. The agency holding company wants to make half of its buys via programmatic platforms across all media by the end of the next year, says Janice Finkel-Greene, EVP of IPG’s Magna Buying Analytics.
To that end, IPG formed Magna Consortium and has been recruiting like-minded media companies. IPG already has one broadcaster on board, Tribune, and is talking with others. IPG hopes to make its first spot buys through the consortium by the end of this year.
The consortium also includes Cablevision Systems, A&E Networks and Clear Channel.
Another major agency holding company, WPP, is also pushing automated buying. Along with Viacom, Time Warner Investments and Comcast Ventures, WPP is a backer of Visible World, whose Audience Express automated buying venture intends to move beyond cable TV and online and into spot by the end of the year.
"We don’t support real-time bidding or auctions for TV inventory, because TV is a plan-based medium,” says Walt Horstman, general manager of Audience Express. The goal is to raise rates on spot avails that are undervalued and bring in additional buyers.
WPP's new Modi Media unit will focus on interactive and addressable TV advertising, but will also involve automated TV buying. That’s according to Brian Gleason, managing director of WPP’s Xaxis North America, which handles programmatic buys in other media. Modi’s president, Michael Bologna, was not available for comment.
WideOrbit, the dominant supplier of traffic and billing software to broadcasting, has been working on an automated system practically since its founding in 1999, says President Eric Mathewson. But because of the complexities, he says, he doesn’t know exactly when it’s going to launch.
Among the major broadcasters, Tribune stands alone as a proponent of automated buying.
“I think some level of programmatic or digital transaction is inevitable. It’s our view that we would rather strategically participate in that process than wait for it to participate at us,” says Larry Wert, president of Tribune Broadcasting, which has joined the Magna Consortium.
Some of the concern of other broadcasters is unwarranted, he says. Human engagement in the sales process will be needed “for the foreseeable future."
“I understand the concerns about potential commoditization, but I don’t think that’s a reason to not have programmatic transactions be part of your model. The owner of the inventory can decide what, if any, inventory they want to put in the market in that process. And they can decide their own pricing,” Wert says.
Wert says he believes Tribune can increase revenue through programmatic selling because “price is a reflection of supply and demand. If you increase demand because you’ve tapped into bigger pools of prospective customers, that can influence price in a positive way.”
Other station sales executives are biding their time, fearing that automated buying will devalue spot inventory.
“We’re certainly in favor of exploring anything that makes local broadcast easier, more affordable, and less labor-intensive to negotiate and buy," says Wayne Freedman, VP of sales at Raycom Media.
"And there’s certainly an opportunity to offer non-premium inventory. But we do have a real concern about any further commoditization of our business."
Valari Staab, president of the NBC Owned Television Stations, expresses a similar view: “The closer you can make [inventory] a commodity the better it works for automated systems. And obviously the last thing we want is our viewing to be commoditized.”